Tag: finance

Elon Musk has survived a shareholder vote to strip him of Tesla’s chairmanship and replace him with an independent director, a plan that was backed by Norway’s sovereign wealth fund, the world’s largest, among other Tesla shareholders. The proposal, which was defeated in a vote at yesterday’s shareholder meeting, represented the strongest challenge yet to Musk’s power over the Silicon Valley car manufacturer.

According to Reuters, Norges Bank Investment Management, favored dividing the roles of CEO and chairman to boost corporate governance. The fund also opposed the re-election of board member Antonio Gracias, though it backed the reappointment of both James Murdoch and Elon Musk’s brother, Kimbal Musk. This isn’t the first time the wealthy Norwegians has opposed Musk: the company previously voted against Musk’s pay package back in March, which at the time was valued at $2.6 billion, but might ultimately be worth much more. The wealth fund holds a 0.48% stake in Tesla at the end of 2017, making it worth $252.5 million.

Meanwhile, despite the recent underperformance of Tesla stock, shareholders appeared willing to look through the growing production problems. Though Musk has consistently overestimated Tesla’s ability to meet production goals, investors proved once again that they’re willing to take his projections at face value – no matter how fantastical they might be – when Tesla shares jumped after Musk said it’s “quite likely” that Tesla will build 5,000 Model 3 sedans a week by the end of the month. The company’s profit- and cash-generation targets for the rest of the year are dependent on reaching this target, Musk said.  Musk added that production has improved to 3,500 Model 3s a week.

After retaining the Tesla chairmanship, Musk claimed that it’s “very difficult” to become a “mass-manufacturing car company” and that “no one has succeeded in doing this in a very long time in the US.”

Of course, these production hiccups have been one of the reasons why Tesla burned through more than $1 billion in three of the last four quarters. And one activist group said it would oppose the reappointment of all three Tesla directors up for a vote yesterday because of the production delays.

Countering growing skepticism, Musk said that the addition of a third general assembly line at Tesla’s Fremont Factory has helped Tesla turn the corner on manufacturing – adding that cars are moving through the new line “crazy fast,” according to Bloomberg.

“The biggest constraint on output is general assembly,” Musk said. “We can probably get to 5,000 a week with the current two general assembly lines. But with the third one, I’m highly confident that we can exceed 5,000 units per week.”

As Bloomberg notes, manufacturing has befuddled Tesla ever since Musk predicted 11 months ago that “production hell” would be ahead for the first car the company was trying to make in high volumes. If indeed Tesla is up to 3,500 Model 3s, on its way to 5,000 by the end of the month, Tesla may soon move from hell to just purgatory.

Tesla is also toying with the idea of expanding capacity by adding another plant, which would produce cars, battery packs and powertrains in Shanghai. More details should be forthcoming next month, Musk said.

Despite having not yet reached its targets with the Model 3, Musk is already touting new models that will start production next month – like the all-wheel drive version of the Model 3. Tesla will unveil the Model Y crossover in March, which will go into production in the first half of 2020. Tesla then plans to unveil the Model Y crossover in March. That will go into production in the first half of 2020, along with the Semi truck and Roadster models.

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Global stocks, US equity futures and Treasury yields extended gains while the dollar slumped as “risk-on” sentiment returned after the U.S. and China exchanged trade proposals meant to avoid an escalation of economic tensions, while European bonds declined and the euro strengthened following a Bloomberg report and hawkish comments from ECB speakers suggesting that the ECB’s next, June 14 meeting will be “live” to debate the end of QE.

Not even persisting concerns about the Italian political situation and “radical” budget of the populists, manifesting in another early blowout in Italian yields, with 2-year yields climbing as much as 50bps despite no news flow…

… could dampen broader bullish sentiment with Europe’s Stoxx 600 Index rising led by energy, miners and materials stocks, though it faced a headwind as the common currency rose for a third day, hitting the highest level since May 23, amid a short squeeze prompted by a Bloomberg report that the ECB may announce the end of QE next week, while ECB chief economist Peter Praet on Wednesday confirmed that next week’s gathering will be pivotal for reaching a decision on when to end the institution’s bond-buying program.

Boosting the euro was a slew of ECB speakers following source reports yesterday. As a reminder, Tuesday saw the release of a Bloomberg “source” report, stating the June meeting as “live” to discuss QE exit. In light of this and ahead of the ECB blackout period commencing on Thursday, a slew of members came out with comments:

• ECB’s Praet (Dovish) said inflation expectations are increasingly consistent with their aim, post QE forward guidance on policy rates will then have to be further specified. He further added that markets are expecting an end of QE at end of 2018, this is an observation and input that is up for discussion and that it is clear that next week will need to discuss end of QE programme.
• ECB’s Hansson (Hawk) said the ECB could lift rates before mid-2019 due to “moderately” rising inflation. (Newswires)
• ECB’s Weidmann (Hawk) said that inflation is now expected to gradually return to levels compatible with their target, adding that market expectation of end of QE by end of 2018 is plausible.
• ECB’s Knot (Hawk) said it is reasonable to end QE soon inflation outlook is stable and less dependent on stimulus. He adds that the ECB should wind down QE as soon as possible.

Perhaps the take home message here is that as Bloomberg’s Lisa Abramowicz said, “it’s kind of amazing that the ECB has to spend so much time deciding whether or not to even talk about exiting its bond-buying program.“

Still, not all was well as Italy’s FTSE MIB slumped -1.0%, weighed on by Italian banks (-1.6%) following Conte setting Italy on a collision course with the EU Tuesday, even though analyst comments pushed the narrative that for now Italy’s problem is not Europe’s problem: “The problems in Italy are only Italy’s problem again,” said Commerzbank’s Esther Reichelt. “For the euro there is a small but significant difference between a crisis in a member state that euro investors can avoid by shifting their portfolios to a different euro zone country and a systemic crisis of the single currency.”

Earlier the MSCI Asia Pacific Index climbed after China was said to offer to buy more American products and on reports the U.S. Treasury Department favors less sweeping investment limits on the Asian nation. The U.S. and China continued to discuss the shape of a deal to fend off an impending trade war, with China offering to boost purchases of American goods and the U.S. finalizing a deal to allow China’s ZTE to resume purchases from American suppliers.

“European markets will remain focused on the latest chapter of the political development, which covers the subject of trade tariffs given that we do not have any significant data on the agenda today,” said Naeem Aslam, chief market analyst at TF Global Markets U.K.

Meanwhile, trade “has an impact on sentiment, but doesn’t necessarily have an impact on the broader fundamentals,” Dwyfor Evans, head of Asia-Pacific macro strategy and managing director at State Street Global Markets, told Bloomberg Television, perhaps explaining why good trade news are bullish while bad trade news are ignored. “Looking at the fundamentals alone, it’s not a bad environment for global markets, it’s just getting pushed from one side to the next by headlines and politics and volatility right now.”
Traders are also looking ahead to the G-7 (or rather G-6 +1) meeting later this week for further developments in the trade story.

In macro, the dollar fell against most of its peers ahead of U.S. economic data, and as Treasury yields snapped as high as 2.96% the day after Gartman closed his TSY short. Government bonds across the euro zone fell, led by the slide in Italian securities.

The euro climbed on ECB news and the pound was helped by the weaker dollar and the U.K. opposition party’s softening Brexit stance. Australia’s dollar strengthened against all its 31 major peers after first-quarter economic growth beat forecasts. The yen weakened as gains in Asian stocks reduced demand for haven assets; USD/CHF edged higher even as Swiss inflation accelerated to the fastest since early 2011 in May. In Emerging Markets, investors will be closely watching Brazilian assets after the real closed at the lowest since 2016 following a failed attempt by the central bank to halt the currency’s slide.

In the latest Brexit news, UK opposition Labour party are reportedly going to announce a major shift towards a soft Brexit, in which party leader Corbyn will table “internal market” amendment to the withdrawal bill, customs bill and trade bill.  UK Brexit Secretary David Davis is “not backing down” in dislike of elements of the backstop plan, according to The Times.

In commodities, oil prices were mixed as prices come off recent highs after nursing recent losses with overnight gains post-API, which showed a larger than expected draw in crude stockpiles. Nonetheless, the inventory report pressured RBOB after a significant build in gasoline stockpiles, although this was then gradually pared throughout the session. Overnight Russia’s Energy Minister Novak reiterated OPEC+ countries should consider a possible easing of oil output restrictions depending on demand conditions.

In metals, gold is trading marginally lower albeit still rangebound and currently testing USD 1295/oz to the downside. Meanwhile, Chinese iron ore futures rose to 2-week highs amid an explosion on Tuesday at an iron ore mine in China’s north-eastern province of Liaoning.

Today’s calendar includes MBA mortgage applications and the trade balance. Brown-Forman, Five Below, Thor Industries and Okta are among companies reporting earnings

Bulletin Headline Summary from RanSquawk

• Slew of ECB speakers emerged following source reports yesterday
• RBI hiked interest rate and reverse repo rate in a surprise move
• Looking ahead, highlights include DoEs, and BoE’s McCafferty

Market Snapshot

• S&P 500 futures up 0.2% to 2,756.75
• STOXX Europe 600 up 0.08% to 387.21
• MXAP up 0.4% to 175.23
• MXAPJ up 0.6% to 576.55
• Nikkei up 0.4% to 22,625.73
• Topix up 0.2% to 1,777.59
• Hang Seng Index up 0.5% to 31,259.10
• Shanghai Composite up 0.03% to 3,115.18
• Sensex up 0.7% to 35,147.54
• Australia S&P/ASX 200 up 0.5% to 6,025.11
• Kospi up 0.3% to 2,453.76
• Brent futures up 0.3% to $75.64/bbl
• Gold spot little changed at $1,295.44
• U.S. Dollar Index down 0.2% to 93.72
• German 10Y yield rose 5.3 bps to 0.422%
• Euro up 0.3% to $1.1753
• Italian 10Y yield rose 24.8 bps to 2.521%
• Spanish 10Y yield rose 7.9 bps to 1.475%

Top Overnight News

• Bunds fell and the euro climbed as European Central Bank chief economist Peter Praet confirmed that next week’s policy meeting will be pivotal for reaching a decision on when to end the institution’s bond-buying program
• China has offered to boost purchases of American goods by about $25 billion this year to fulfill President Donald Trump’s desire to shrink the U.S. trade deficit with the world’s second-largest economy, according to two people familiar with the matter
• The White House wants North Korean leader Kim Jong Un to commit to a timetable to surrender his country’s nuclear arsenal when he meets President Donald Trump next week in Singapore, a high-stakes summit that could last as long as two days — or just minutes
• Treasury Secretary Steven Mnuchin asked President Trump on Tuesday to exempt Canada from steel and aluminum tariffs, ABC News reports, citing unidentified administration official. Mnuchin said to favor less-sweeping investment limits for China
• Italian Prime Minister Giuseppe Conte passed his first parliamentary hurdle, but alarmed markets with a maiden speech pledging a raft of populist measures from boosting spending on the poor and the jobless to sweeping tax cuts
• The pound climbed on news that the U.K.’s main opposition party proposed a plan to effectively stay in the European Union’s single market, a move that could nudge the country toward keeping closer to the bloc after Brexit
• China’s central bank stepped up injections of cash to the financial system, as lenders face a seasonal liquidity squeeze complicated by an oncoming U.S. Federal Reserve rate hike.
• The U.S. and China continued to haggle over the shape of a deal to fend off an impending trade war, with China offering to boost purchases of American goods and the U.S. finalizing a deal to allow China’s ZTE Corp. to resume purchases from American suppliers
• The hedge fund managed by billionaire Alan Howard gained about 36 percent in May, according to a person with knowledge of the matter, burnishing a trading image dulled in recent years by poor returns at his investment firm
• India’s central bank raised its benchmark interest rate for the first time since 2014 and retained its neutral policy stance, leading sovereign bonds to slip and the rupee to advance

Asian equity markets traded somewhat mixed after a similar performance on Wall St, where tech extended on gains and the Nasdaq edged fresh records highs, although the DJIA underperformed amid weakness in energy and financials. ASX 200 (+0.5%) was positive with gains led by miners after recent upside in metal prices and with BHP also higher due to interest in its US shale assets, while better than expected GDP data also contributed to the upbeat tone. Elsewhere, Nikkei 225 (+0.4%) eked modest gains amid a weaker currency but with upside capped as wage data added to the recent slew of disappointing releases from Japan, while Shanghai Comp. (flat) and Hang Seng (+0.5%) were mixed as trade uncertainty lingered. Furthermore, the PBoC refrained from reverse repo operations and instead opted to inject via its Medium-term Lending Facility, while there was also speculation PBoC is likely to lift rates on its lending facilities and reverse repos should the Fed hike as expected next week. Finally, 10yr JGBs were subdued amid weakness in USTs and modest gains in Tokyo stocks, while the BoJ Riban announcement was largely ignored as the central bank kept purchase amounts unchanged in 1yr-10yr maturities. China may reduce RRR and increase yields on MLF and reverse repos.

Top Asian News

• Malaysia’s 1MDB Scandal Takes Down Its Central Bank Governor
• Lira Fate Hangs in Balance as Turkey Rate Decision Splits Street
• India Joins Emerging Market Central Banks by Raising Key Rate
• Tencent’s Ma Unveils WeChat Travel Plan for China, H.K. Bay Area
• Indonesia Central Bank Governor Flags More Rate Hikes If Needed

European equities are mixed (Euro stoxx 50 flat) with the energy and material sector outperforming following higher commodity prices. FTSE 100 (+0.26%) is the leading bourse being supported by energy and material names. FTSE MIB (-1.0%) currently underperforming bourse and being weighed on by Italian banks (-1.6%) following Conte setting Italy on a collision course with the EU Tuesday. In individual stock news Schindler Holding (+5.6%) is seeing positivity following an upgrade to buy at Goldman Sachs. WH Smith (+5.67%) is also up on the day following positive earnings results. RBS (-0.75%) is down on the day following the announcement that the UK government may further divest from the co. in September of this year.

Top European News

• Barclays Hires Morgan Stanley Distressed-Debt Trader Rachidi
• Italian Bonds Slide for Second Day as Fiscal Plans Rattle Market
• Repsol Shows Faith in Oil’s Rally With Dividend, Spending Boost
• Smurfit Gains Despite International Paper Throwing In the Towel

In FX, EUR was the biggest mover as the single currency has extended gains made late yesterday on the back of hawkish ECB sourced reports about a live policy meeting next Thursday, as no less than 3 GC members essentially confirm that the next stage of the exit strategy will be on the agenda. Eur/Usd has tripped stops at 1.1755 to trade just short of 1.1770, but may be hampered by decent option expiry interest between 1.1750-60 (1 bn) and almost double that amount at the 1.1800 strike (1.8 bn). AUD: Off overnight peaks vs its US counterpart, but firmly back above 0.7600 after Tuesday’s sharp pull-back (on a gaping Aussie current account deficit and still neutral RBA) as Q1 GDP surpassed expectations and broad risk sentiment improves on latest global trade reports (including China offering to buy around Usd70 bn worth of US goods). CAD: Another relative reprieve for the Loonie after NAFTA and data disappointment amidst reports that US Treasury Sectretary Mnuchin attempted to persuade President Trump to give Canada a steel and aluminium pardon. Usd/Cad has retreated to the mid 1.2900 area from around 1.3065 at one stage yesterday ahead of several releases slated for today, like trade, building permits and the Ivey PMI. CHF/JPY: The Franc is holding off recent lows vs the Usd with some support gleaned from firmer than forecast Swiss CPI, but Usd/Jpy has climbed above 110.00 in wake of yet more disappointing Japanese data that will keep the BoJ in full QQE mode. DXY: Given all the above, 94.000+ status has been relinquished again and the index is only just keeping its head above 93.500.

In Rates, ECB officials, including the more pragmatic Praet, plus hawkish Hansson, Weidmann and Knot seem to be confirming source suggestions that next Thursday could well be another crucial policy convene in terms of conveying to markets the next phase of policy normalisation. Hence, Bunds have come under renewed pressure after a fleeting rebound to a fresh Eurex peak at 161.32, which could have been BTP-related or on more June-September rolls, and have now extended losses to 93 ticks at 160.52, while Euribor futures are as much as 4.5 ticks in the red. Elsewhere, and in the absence of anything major on the UK front ahead of a 2023 Gilt tap and BoE commentary, the 10 year Liffe benchmark and Short Sterling contracts are largely following suit with the former flitting between 122.25-68 vs yesterday’s 122.84 settlement price and the 3 month strip down 4 ticks at worst. Back to supply, German Bobls drew better demand than the 5yr DMO tap (see headline feed for further details), but cored debt futures knee-jerked to fresh intra-day lows amidst hedge unwinds, at 131.30 on Eurex and 122.21 on Liffe.

Commodities are mixed with Brent (+USD 0.4) and WTI (-USD 0.2) as prices come off recent highs after nursing recent losses with overnight gains post-API, which showed a larger than expected draw in crude stockpiles. Nonetheless, the inventory report pressured RBOB after a significant build in gasoline stockpiles, although this was then gradually pared throughout the session. Overnight Russia’s Energy Minister Novak reiterated OPEC+ countries should consider a possible easing of oil output restrictions depending on demand conditions. Elsewhere, gold is trading marginally lower albeit still rangebound and currently testing USD 1295/oz to the downside. Meanwhile, Chinese iron ore futures rose to 2-week highs amid an explosion on Tuesday at an iron ore mine in China’s north-eastern province of Liaoning. LME base metals are performing well with LME 3-month copper rising as much as 0.8%, its highest since late February, while LME aluminium climbed to its highest since May 10th earlier in the session.

Looking at the day ahead now where it’s a very quiet one for data with Q1 nonfarm productivity and unit labour costs (final revisions) and the April trade balance in the US the only releases of note. Elsewhere, the ECB’s Praet, Knot, Hakkarainen and Angeloni as well as BoE’s McCafferty are due to speak at various stages through the day. Meanwhile, the EU banking authority Chairman Enria and Bank of Portugal Vice Governor Ferreira will also speak at a conference on supervision and regulation of the financial industry.

US Event Calendar

• 7am: MBA Mortgage Applications, prior -2.9%
• 8:30am: Revisions: Trade Balance
• 8:30am: Nonfarm Productivity, est. 0.6%, prior 0.7%
• 8:30am: Unit Labor Costs, est. 2.8%, prior 2.7%
• 8:30am: Trade Balance, est. $49.0b deficit, prior $49.0b deficit

DB’s Jim Reid concludes the overnight wrap

It might be the hangover effect from last week or a bit of a lull in the calendar ahead of the Fed and ECB next week but whatever the reason, markets haven’t really got going this week. A combination of NAFTA headlines, the speech from new Italian Prime Minister Giuseppe Conte and some pressure on Oil prices meant markets stalled a bit yesterday but it was hardly a run for the hills situation as the S&P 500 did still manage to bat on to a small +0.07% gain after European bourses had faded from early highs. The Dow finished -0.06% lower although the Nasdaq (+0.41%) and Russell 2000 (+0.68%) bourses continue to shrug off any attempts to slow them down by climbing to yet another all-time high.

Just on those NAFTA headlines, what got a bit of airtime yesterday was White House economic advisor Larry Kudlow’s comments in an interview with Fox News saying that President Trump’s preference was to “actually negotiate with Mexico and Canada separately”. The read through being that the US was therefore seeking bilateral NAFTA talks which in theory would mean leaving NAFTA. Although Kudlow was also quick to point out that the President doesn’t plan to quit the Agreement. As DB’s Alan Ruskin noted yesterday the issue here is the disruptive back and forth rather than the negotiating position itself. This also means trade uncertainties have the potential to linger for a while longer if  Trump chooses to go country to country.

As for Italy and the new Prime Minister’s speech, the BTP market was already pretty weak going into Conte’s speech but did then proceed to sell-off a little more after he spoke. By the closing bell 2y yields were +27.7bps higher and 10y yields +26.6bps higher. To be fair it’s getting harder to judge what a ‘big’ move is in the BTP market now given that the average daily change in basis points over the last 7 sessions for 2y BTPs has been 65bps. In contrast 10y Bund yields were -5.1bps lower yesterday (the spread to BTPs therefore widening 30bps and for the first time since last Tuesday). Treasuries ended -1.5bps lower at 2.929%.

In terms of the speech itself, to be honest it didn’t appear that Conte was overly controversial. Indeed there was talk of reducing the current huge public debt burden and also focusing on economic growth pursued within a framework of financial stability and market trust. There was no mention of the single currency or pension reform although the nervousness in the bond market was likely more a factor of calls for a citizen’s income for the poor and curbs on immigration which, while not new, attracted unsurprising headlines. So with bond markets hypersensitive at the moment that was probably enough for investors to take some profits on the recent BTP rally. The FTSE MIB also turned an early +0.83% gain into an -1.18% loss by the end of play, dragging the likes of the IBEX (-0.66%) lower while the DAX (+0.13%) also closed off its early highs. The Euro spent most the session lower but bounced back to a +0.16% gain in the evening following a Bloomberg headline suggesting that the ECB was viewing next Thursday’s monetary policy meeting as a “live” meeting for debating the end of QE. To be fair that didn’t feel like particularly new news.

As noted at the top weakness across the Oil complex was also a factor yesterday, notwithstanding a bit of a bounce back in the evening. Brent ended the session marginally up and just north of $75/bbl (+0.12%), although was down as  much as -1.97% at its lows intraday. This followed the news that the US government had supposedly asked OPEC to increase supply by 1 million barrels a day according to Bloomberg.

This morning in Asia, various trade related headlines are helping to support small gains across risk assets with the Nikkei (+0.23%), ASX (+0.45%) and Hang Seng (+0.37%) all up. Just on those headlines, the WSJ reported that China has offered to buy up to $70bn of US farming and energy related products if the US abandons its tariffs plans. Later on, unnamed sources clarified to Bloomberg that much of that represent imports China had already promised to buy, so the incremental amount is likely smaller at $25bn. Meanwhile, Reuters reported that Chinese telecoms company (ZTE) has signed an agreement in principle with the US that would lift the ban on buying from American suppliers. The fine is expected to be up to US$1.4bn on ZTE. Finally Treasury Secretary Steven Mnuchin has, according to ABC News, supposedly told President Trump to exempt Canada from tariffs on steel and aluminium. That’s helping the Canadian Dollar to rise slightly this morning while US equity futures are also up slightly.

Coming back to politics briefly, here in the UK Sky News reported yesterday that MPs are set to vote next Tuesday on the Lord amendments of the Brexit Withdrawal Bill. Our FX strategists’ view has been that the amendments fail and
the crunch point as one could call it happens later with the EU customs bill where there is greater agreement on staying in the customs union among MPs compared to the multiple amendments on the Withdrawal Bill. Next week’s vote is worth watching however. In the meantime Sterling benefited from a decent bid yesterday versus the Greenback (+0.60% to $1.339) after the May services PMI surprised to the upside at 54.0 (vs. 53.0 expected), which importantly meant it was up 1.2pts from April. That put the composite at 54.5 compared to 53.2 in April and so matching the high this year made back in February. So that should lend some comfort to the BoE following disappointing data of late.

As for the other PMIs, in Europe there were no real surprises in the final May services and composite revisions. The Eurozone services reading was confirmed at 53.8 (down 0.1pts from the flash) and the composite at 54.1 (unchanged versus the flash). Composite prints for Germany (53.4 versus 53.1 flash) and France (54.2 versus 54.5 flash) also saw slight revisions from the flash while as for the noncore, Spain’s composite print surprised slightly to the upside after rising 0.5pts to 55.9 (vs. 55.6 expected), while Italy more or less matched expectations at 52.9 but more importantly held steady versus April. Away from that we did get some softer April retail sales data for the Euro area after sales were reported as rising just +0.1% mom (vs. +0.5% expected), albeit offset by upward revisions to prior months.

Across the pond, in the US the services PMI was actually revised up a fairly robust 1.1pts to 56.8 which puts the composite at 56.6 compared to 54.9 in April and the highest in over 3 years. Backing the data up was the ISM non-manufacturing print for May which came in 2pts higher at 58.6 (vs. 57.6 expected). Notably prices paid rose to a very solid 64.3 from 61.8, meaning its edging closer to the 2017 seven-high of 65.9. Finally the April JOLTS data, while backward looking, still showed an increasingly tight labour market. The number of job openings rose to a fresh record high of 6.698m (vs. 6.350m expected) with vacancies outpacing the number of unemployed workers. Meanwhile the  quits rate remained at its cyclical high of 2.3%.

Looking at the day ahead now where it’s a very quiet one for data with Q1 nonfarm productivity and unit labour costs (final revisions) and the April trade balance in the US the only releases of note. Elsewhere, the ECB’s Praet, Knot, Hakkarainen and Angeloni as well as BoE’s McCafferty are due to speak at various stages through the day. Meanwhile, the EU banking authority Chairman Enria and Bank of Portugal Vice Governor Ferreira will also speak at a conference on supervision and regulation of the financial industry.

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Medicare’s trust fund has just eight more years of solvency until 2026, and Social Security will be exhausted in 2034, according to Thursday projections by the trustees for the government programs. 

While Social Security’s expected depletion is unchanged from last year’s projection, the date for Medicare’s demise was moved up three years. 

Social Security is made up of several funds; the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) are combined for the designation OASDI, while Medicare’s Hospital Insurance trust fund is designated HI. 

If allowed to expire, beneficiaries would face an immediate reduction of around 20% in benefits.

The costs of Medicare and Social Security will increase substantially as a percentage of GDP through 2035 due to a sharp rise in beneficiaries as baby-boomers retire, and lower birth rates that have persisted since the baby boom resulting in slower growth of the labor force and GDP. 

Social Security’s annual cost as a percentage of GDP is projected to increase from 4.9 percent in 2018 to about 6.1 percent by 2038, then decline to 5.9 percent by 2052 before generally rising to 6.1 percent of GDP by 2092. Under the intermediate assumptions, Medicare cost rises from 3.7 percent of GDP in 2018 to 5.6 percent of GDP by 2035 due mainly to the growth in the number of beneficiaries, and then increases further to 6.2 percent by 2092. The growth in health care cost per beneficiary becomes the larger factor later in the valuation period, particularly in Part D.

Over 62 million retirees, disabled workers, spouses and surviving children are tapping into Social Security benefits with an average monthly benefit of $1,294 for all beneficiaries. Medicare, meanwhile, provides health insurance to around 60 million people – most of whom are over the age of 65. 

The revised dates for Medicare’s demise raises the chances of a major fiscal battle facing Congress. 

The individual tax cuts implemented as part of the GOP tax overhaul are also set to expire at the end of 2025, meaning that lawmakers could have to navigate major changes in federal taxing and spending in short order, just as they did with the 2012 “fiscal cliff.”

Over a long time frame of 75 years, the hypothetical combined Social Security trust fund faces a shortfall of around $13.2 trillion, up from $12.5 trillion last year. –Washington Examiner

Closing the gap would require an immediate hike in the payroll tax of 2.78% to 15.18% or an immediate reduction in current benefits of 17%, according to the Trustees. 

If there’s a silver lining in the report, it’s that fewer people are applying for and receiving disability insurance through Social Security while the economy improves. Perhaps this will help the disability insurance fund last past its projected demise in 2032. 

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Facebook provided at least four Chinese electronics companies, including government-linked telecom giant Huawei, unrestricted access to user data, according to a person familiar with the matter but not authorized to speak on the record.

The relationships were part of a recently revealed data-sharing partnership program which included at least 60 major device manufacturers, including Apple, Amazon, Blackberry, Microsoft and Samsung – allowing the companies to integrate various Facebook features into their operating systems which gave them access to user data, and the data of users’ friends without consent.

Huawei in particular has stoked concerns over national security, as lawmakers in Congress and top intelligence officials have raised red flags over whether or not the Chinese government might be able to demand access to data stored on Huawei devices or servers. While Huawei has denied the claims, the Pentagon decided to ban the sales of Huawei smartphones on U.S. military bases. 

Facebook data was only ever stored on Huawei servers, only directly on devices, according to the Washington Post. 

A spokesman for Huawei did not immediately respond to a request for comment. Facebook late Tuesday confirmed that it had worked with Huawei, as well as three other Chinese firms, Lenovo, OPPO and TCL. Facebook said those arrangements were “controlled from the get go — and we approved the Facebook experiences these companies built.”

Facebook’s statement followed a day of silence about its relationships with Chinese firms, which drew a sharp rebuke from Sen. Mark R. Warner (D-Va). Warner said in a statement Tuesday that Facebook’s relationships with Huawei and TCL raise “legitimate concerns, and I look forward to learning more about how Facebook ensured that information about their users was not sent to Chinese servers.” –WaPo

Facebook says they will be winding down their relationship with Huawei by the end of the week.

The data-sharing agreement, reported Sunday evening by the New York Times, allowed manufacturers to access information on relationship status, calendar events, political affiliations and religion, among other things. An Apple spokesman, for example, said that the company relied on private access to Facebook data to allow users to post on the social network without opening the Facebook app, among other things.

What’s more, the manufacturers were able to access the data of users’ friends without their explicit consent, despite Facebook declaring they would not let outside companies access user data. The catch? The NYT explains.

Facebook’s view that the device makers are not outsiders lets the partners go even further, The Times found: They can obtain data about a user’s Facebook friends, even those who have denied Facebook permission to share information with any third parties.

In interviews, several former Facebook software engineers and security experts said they were surprised at the ability to override sharing restrictions. –NYT

Despite winding down the partnerships in April – including the posting capabilities used by Apple, Facebook has defended the data-sharing agreements, saying they comply with the company’s privacy policies and a 2011 consent decree issued by the FTC. Facebook officials say they don’t know of any cases where user information has been misused. 

“These partnerships work very differently from the way in which app developers use our platform,” said Ime Archibong, a Facebook vice president. Unlike developers that provide games and services to Facebook users, the device partners can use Facebook data only to provide versions of “the Facebook experience,” the officials said.

“These contracts and partnerships are entirely consistent with Facebook’s F.T.C. consent decree,” said Archibong.

Former FTC official Jessica Rich, however, disagreed with that assessment.

“Under Facebook’s interpretation, the exception swallows the rule,” said Ms. Rich, now employed by the Consumers Union. “They could argue that any sharing of data with third parties is part of the Facebook experience. And this is not at all how the public interpreted their 2014 announcement that they would limit third-party app access to friend data.”

And because Facebook does not consider the device makers to be outsiders, the data sharing partnerships go even further, The Times discovered, which is what allows the companies to access user data of a Facebook user’s friends – even if they’ve denied Facebook permission to share information with third parties. 

The discovery of the manufacturer data-sharing agreements comes on the heels of a massive data harvesting scandal in which the social media giant allowed third party apps to gather massive quantities of user information for various political and marketing purposes. In March, political consulting firm Cambridge Analytica was revealed to have misused the private information of tens of millions of Facebook users.  The Cambridge Analytica ordeal shed light on the pervasive collection of data which has come under growing scrutiny since the scandal began in March. 

Facebook’s partnerships with device manufacturers may prove to be a headache for the social media giant, as the Federal Trade Commission is already investigating the company for a string of privacy mishaps – which could at minimum result in siginiviant fines if the agency finds further violations of consumer privacy.

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Authored by Mike Shedlock via MishTalk,

A Spiegel editorial compares Italy with a moocher who fails to say thank you for a donation.

Eurointelligence notes that German politicians and media have embarked on a xenophobic anti-European rampage, reminiscent of the discourse of the 1930s.

The editorial by Jan Fleischbauer titled “the moochers of Rome” is seething with contempt. He wonders how to call those who finance their dolce far niente lifestyle with the money of others. No prizes for guessing whom he had in mind. And for good measure he writes that the beggar at least says thank you if you fill his bag. He concludes no respectable nation should asks for help if it can help itself. No respectable nation wants to be known as a moocher. Italians have long passed this stage he concludes.

The French magazine Marianne notes that the Spiegel cover displays arrogance, stereotypes and authoritarianism consistent with their coverage of the political crisis in Italy. It is not an example of solidarity.

After the injudicious comments by Günther Oettinger last week, other German politicians continued in a similar spirit. CDU MP Eckhardt Rehberg warned that Italy is playing with fire and putting the eurozone in danger. And Markus Ferber, a CSU MEP, told the ZDF that in the worst case scenario of insolvency the troika (IMF, ECB and Commission) should march towards Rome and take over control of the Italian finance ministry.

Andreas Kluth wrote in Handelsblatt that Germany represents the opposite of the ideas that unite the southern euro area. Kluth says these two sides cannot be reconciled in the long run, no matter how much Merkel fudges a solution in the short run. Instead the divide gives rise to cultural narratives that use the worst stereotypes. It is this chasm that dooms Emmanuel Macron’s eurozone reform proposals, which Kluth refers to as southern-flavoured. He calls for the proponents to accept a shrinking of the union rather than jeopardising the whole eurozone. Of course, there was no reflection at all about Germany’s own contribution to this crisis.

Lazy Italians and Ugly Germans

The Handelsblatt discusses ‘Lazy Italians’ and ‘ugly Germans’: How the euro sows discord

A common currency was supposed to unite Europeans. Instead, it increasingly divides them, as Italy showed again this week.

Listen to Matteo Salvini, leader of the right-wing League, one of the two populist parties that will form the next Italian government: “We have a basic principle,” he said. “Only Italians make decisions for Italy, not the Germans… A minister the Germans don’t like is exactly the right minister for us.” A colleague added that it was time “to free the country from the chains that Brussels and Berlin have put on our ankles.”

What, you might ask, did Germany even have to do with the events in Rome this week? Good question. Superficially, nothing.

Below the surface, however, Germany has a lot to do with Italy’s political crisis. That’s because Germany represents the opposite of the ideas that, more or less, unite the southern euro area, from Greece to France and Italy. Whereas the south demands “solidarity,” Germany fears a “transfer union,” in which northern money permanently subsidizes bad loans and fiscal licentiousness in the south. Where the south clamors for stimulus, Germany demands austerity. Where the south wants fiscal discretion, Germany insists on strict Ordoliberal rules.

North vs. South

As I have been discussing North vs South (Germany vs peripheral) for well over a decade. These are irreconcilable differences.

The structural flaws in the Euro itself are the root cause of much of the pain.

Structural Flaws

• The ECB runs policy as “one size fits Germany”. Yet, interest rates suitable for Germany are not suitable for other countries.

• Productivity and regulations vary widely from country to country. Greece is a basket case of rules and regulations. French work rules are insane. Despite alleged “freedom of movement”, try setting up a bake shop in Germany.

• Target2 is a structural payment flaw with no solution.

Target2 Imbalances​

​

Target2, which guarantees repayments, is out of balance by close to €trillion.

• Germany is owed €902.4 billion, mostly by Italy and Spain.
• Italy owes creditors €426.4 billion.
• Spain owes creditors €389.3 billion.

How the hell is this supposed to be paid back? The unadmitted answer is: It can’t and won’t unless the ECB steps in and bails Germany out.

The final structural flaw is it takes 100% agreement to change the treaty. This ensures that the Maastricht treaty which created the eurozone can never be revised in a meaningful way. The North-South divide is such there can never be changes.

Merkel compounded the problems with inept immigration policy.

Known Going In

The euro flaws were recognized going in. The bureaucrats insisted the Euro would bring nations together over time.

In good times, there was an illusion the idea worked.

A rise in populism everywhere, even in Germany, proves otherwise.

Lack of European Reform Will Break the Eurozone

Wolfgang Münchau, associate editor of the Financial Times, and founder of Eurointelligence says Lack of European reform, not Italy, will break the eurozone.

Once again, I agree with Münchau on what is happening but disagree about solutions.

Münchau proposes “Italy could use its weight in the upcoming appointments of the EU’s most important jobs: the presidents of the European Commission, the European Council and the ECB.”

He concludes “If you are really pro-euro, my advice is to stop treating the euro as an article of faith but fight for its sustainability. That fight cannot be won in Italy alone. It requires big policy shifts in Brussels too.”

Dream On

The structural flaws noted above show that a big shift in Brussels is impossible.

Moreover, Trump is widening the Eurozone split with his policies on Germany, Iran, and the Russia pipeline.

At least Münchau understands the need for Plan B (leaving). His plan A is structural Fantasyland.

Germany Will Pay

Germany will pay one way or another. Here are the possibilities.

1. Germany and the creditor nations forgive enough debt for Europe to grow. This is the transfer union solution.

2. Permanently high unemployment and slow growth in Spain, Greece, Italy, with stagnation elsewhere in Europe

3. Breakup of the eurozone

Those are the alternatives.

Germany will not allow number 1. It is unreasonable to expect number 2 to last forever. The only door left open is door number 3.

The best move would be for Germany to leave the eurozone. Germany is in the best shape to suffer the consequences.

Unfortunately, the most likely outcome is a destructive breakup of the eurozone, starting in Italy or Greece.

Meanwhile, covers accusing Italy of being ungrateful moochers cannot possibly help matters.

For further discussion of the alternatives please see my September 2016 articles:

1. Michael Pettis Calls Surplus Trade Statements by German Finance Minister “Utter Lunacy”
2. Germany’s Finance Minister Blames ECB For German Trade Surplus; Why the Eurozone Will Destruct

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As if the US hasn’t already done enough to exacerbate the humanitarian crisis raging in Yemen, the Wall Street Journal  reported Monday that the Trump Administration is considering a request by the United Arab Emirates for “direct US support” as a coalition of Sunni majority nations prepares to seize the country’s biggest port, known as Hodeidah.

According to WSJ, Secretary of State Mike Pompeo has requested an evaluation of the Sunni coalition’s plan to retake control of the port. And with good reason: That’s because some 90% of the imported goods including foodstuffs, medicine and other vital supplies flow into Yemen through the port. Already, the country is under an extreme humanitarian crisis, and cutting off the flow of supplies through the port could make it infinitely worse.

Secretary of State Mike Pompeo has asked for a quick assessment of the UAE’s plea for assistance such as surveillance drone flights to help a Saudi-led coalition retake Hodeidah, which currently serves as a vital lifeline for the country’s 29 million residents, U.S. officials said.

U.A.E. and Saudi Arabian officials have assured the U.S. that they won’t try to seize the Red Sea port until they get backing from Washington, American officials said. But there is growing concern in the Trump administration that fighting around the city could spiral out of control and force Washington’s hand. Yemeni fighters backed by the coalition are battling Houthis near the city.

“We continue to have a lot of concerns about a Hodeidah operation,” said one senior U.S. official. “We are not 100% comfortable that, even if the coalition did launch an attack, that they would be able to do it cleanly and avoid a catastrophic incident.”

Of course, the “catastrophic incident” that WSJ is referring to the possibility that a strike against the port would instigate a brutal, armed response as the two sides struggle to maintain access to the outside world. And while US officials have continued to hem and haw about the fighting…there’s been some debate over which groups on the agree to

U.A.E. and Saudi Arabian officials have assured the U.S. that they won’t try to seize the Red Sea port until they get backing from Washington, American officials said. But there is growing concern in the Trump administration that fighting around the city could spiral out of control and force Washington’s hand. Yemeni fighters backed by the coalition are battling Houthis near the city.

“We continue to have a lot of concerns about a Hodeidah operation,” said one senior U.S. official. “We are not 100% comfortable that, even if the coalition did launch an attack, that they would be able to do it cleanly and avoid a catastrophic incident.”

Still, the debate over increasing US military support to the UAE and KSA and Saudi Arabia is competing for the attention of top administration officials working furiously to prepare for the planned summit with North Korea in Singapore on June 12. But escalating military operations around the Yemeni port have triggered new urgency in Washington.

But even without direct action, US surveillance drone flights have helped the Saudi-led coalition in its battle to retake Hodeidah, which currently serves as a vital lifeline for the country’s 29 million residents,.

Indeed, as RT points out, the stakes are high. If the port is destroyed or damaged beyond operability, hundreds of thousands of people could die.

But regardless of whether the US explicitly condones the battle. Saudi Arabia wouldn’t be able to provide so much support for its Sunni allies in Yemen without the support of the US. Under President Obama, the US sold some $115 billion in arms to KSA until he put his foot down following the bombing of a funeral procession.

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Authored by Rob Slane via TheBlogMire.com,

In Part 1 of this series, I stated why I believe the official narrative on the Skripal case does not appear to hold water. Firstly, the nerve agent A-234 (Novichok) can and has been produced outside Russia, in a number of places, thus disproving the claim that it must have come from Russia. Secondly, the fact that the effects experienced by the Skripals — four hours of moving freely around Salisbury, followed by no irreparable damage — do not remotely fit what the scientific literature says about that substance — almost instantaneous death or a short life with irreparable damage to the central nervous system –, makes it highly unlikely that they were indeed poisoned by it. Indeed, the burden of proof is on those making the claims to show how and why the scientific literature was wrong.

Then in Part 2, I mentioned four aspects of the case, which are undoubtedly significant, but which seem to have been ignored or forgotten. I ended that piece by saying that I hoped to discuss what I consider to be an even bigger aspect of the case; something that may well begin to join some dots together.

And this is what I intend to do in this piece. However, before I do, I should start by saying that what I am about to say is speculative. That is not to say that it is not based on facts. It is. It is based on witness testimony that appeared very early on in the case — three days after the poisoning — and which I deem to be credible since it appeared before the case became completely politicised, which is sadly what subsequently happened. I am then using that testimony to construct what I consider to be the best explanation for what the witness described. And so it is very much a theory. One based on facts, but a theory nevertheless. As such it is of course open to challenge.

Let me begin by quoting a significant chunk of the particular witness testimony, which appeared in the Daily Mail on 7th March. I have highlighted what I consider to be the most revealing bits, and then at the end I will explain why I think they are important and what — in my opinion — they most likely imply:

“Sergei Skripal and his daughter Yulia, 33, left his neat, red brick £350,000 semi detached in Salisbury and made their way to Zizzi in the city centre, less than two miles away. The restaurant, in Castle Street, was busy when they arrived, but they declined the seats offered to them at the front, instead selecting ones at the back, close to the kitchen.

They began with a starter of garlic bread to share followed by two glasses of white wine. They ordered from the menu, choosing the 600 calorie risotto pesce with king prawns, mussels and squid rings in a tomato, chilli and white wine sauce.

But within minutes Mr Skripal had become angry, a witness said. ‘I think he was swearing in Russian,’ said the man, who did not want to be named. ‘She was just sitting there quietly, and didn’t really say anything. They were both smartly dressed, she was in a black coat. They were speaking to each other in Russian.’  He said Mr Skripal appeared annoyed that their main course had taken 20 minutes to arrive – and appeared in a hurry to leave.

‘He was going absolutely crazy, I didn’t understand it and I couldn’t understand him. They had not been seen for a little while by the front of house staff, but I think it was more than that. He just wanted his food and to go. He was just shouting and losing his temper. I would have asked him to leave. He just said “I want my food and my bill”.  ‘The waiter took him the bill at the same time as the main course, which was unusual. I don’t think they paid all of the bill. I think they were given a discount because he was so angry and agitated. He had to wait about 20 minutes for his main course. I think it was easier for the staff just to give him money to leave as he was so angry. They were sitting by themselves at the back of the restaurant but I think people were pleased when they left. They were only there for about 45 minutes. It was a quick lunch. He just wanted to get out of there. She was silent, perhaps embarrassed.’

He added: ‘He didn’t seem to have to wait long for his food. I noticed him first because they were sitting by themselves, and because he was an older man with a younger woman, and because he was losing his temper. ‘He didn’t seem ill physically, but perhaps mentally ill with the way he was shouting.’

The witness said other than appearing angry, there was no sign that either of them were ill.

‘They weren’t poisoned at Zizzi. I saw the chef prepare the food,’ he said. ‘No one could have sneaked in and added anything to his food there, the kitchen is open. The drinks are made at the bar which is by the door, but I think it is unlikely. No one could get to him.’”

So why is this all so significant?

There are a number of things:

In good health

In the first place, it shows that at the time they were in the restaurant, neither Mr Skripal or Yulia Skripal were displaying any signs of being physically unwell. On the contrary, the witness testifies to the fact that Mr Skripal did not seem at all physically ill, and he also stated that Yulia sat there calmly and quietly.

No signs of any poisoning

Secondly, it shows that at that time, neither of them appeared to be showing any symptoms whatsoever of having already been poisoned. On the contrary, the fact that they ordered and then ate their food is a very strong indication that they hadn’t. If Mr Skripal’s agitated state could be explained by a prior poisoning — by the deadliest nerve agent known to man remember — how likely would it be that he would have felt well enough to order and consume his dish of risotto pesce with king prawns, mussels and squid rings in a tomato, chilli and white wine sauce. Not the kind of food that someone feeling dodgy is likely to wolf down, as he appears to have done.

The agitation must therefore be explained by something else

Thirdly, the obvious conclusion suggested by the two points above is this: Mr Skripal’s agitation had nothing whatsoever to do with him feeling the effects of having already been poisoned. Rather, it was because of something else entirely.

Of course this leads to the question of what it was that caused his agitation. Here we must take the facts, and begin to make suppositions based on them.

The witness’s testimony of Mr Skripal’s behaviour makes it abundantly clear that he was very much in a hurry to leave. And as stated above, this agitation and hurry can have had nothing whatsoever to do with feeling physically unwell from the effects of poisoning, since he displayed no such signs and because he went ahead and ate his food – very quickly it would seem.

Now tell me: if you saw someone in a restaurant getting in a hissy fit over a relatively short wait for his food, angrily demanding that he be served, asking for the bill to be brought at the same time as the main course, wolfing the food down, and generally looking like he was in a hurry to leave, what would you conclude? My guess is that you would conclude that the person was in a hurry because they needed to get somewhere by a certain time. Seems obvious, doesn’t it?

And so it seems to me from Mr Skripal’s behaviour, plus the witness’s impression, that there is a startlingly simple and obvious explanation for what was going on at Zizzis that afternoon: Mr Skripal was in a hurry to eat and to leave, not because he was unwell, not because he was suffering any physical effects of being poisoned by A-234 some four hours previous, but because he needed to be  somewhere to meet with someone at a certain time. And where did he have to get to in such a hurry? Why, the park bench in The Maltings, sometime between 3:45 and 4:00pm.

I hear an objection. When I ran this supposition past a friend, they replied by saying that although it all sounds very plausible, how do we know that Mr Skripal was not just generally mentally ill? After all, the witness says that although Mr Skripal didn’t seem physically ill, he was “perhaps mentally ill with the way he was shouting.”

To this, I would respond as follows: firstly, it is well known that he was a frequent visitor to Zizzis, and had this been his normal sort of behaviour, it is likely that he would have exhibited it before and been prevented from entering. But secondly, and far more crucially, is the behaviour of his daughter. According to the witness, she just sat there and said nothing. She made no attempt to calm him down in front of the staff and other diners. Had he been mentally ill, it is likely that she would have made some attempt to explain his behaviour apologetically to the staff. Yet she does not, which suggests that she was well aware of the reason for his agitation, and – like him – just wanted to get out of there as quickly as possible.

And so I submit that the most plausible explanation for Mr Skripal’s agitation, and his seeming hurry to leave, was that he wanted to eat quickly, in order to get to The Maltings, where he had a pre-arranged rendezvous at the now infamous bench.

In the following part, I hope to join some more dots together, this time asking why he might have had a meeting at the bench.

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German Chancellor Angela Merkel removed one of the biggest barriers to the creation of a European Army on Tuesday when she told a German newspaper that she supported the idea “in principle,” according to RT.

“I am in favor of President Macron’s proposal for an intervention initiative,” the German chancellor told Frankfurter Allgemeine newspaper on Sunday.

The topic has been under discussion since September, when French President Emmanuel Macron laid out his vision for a pan-European “military intervention force” with a shared military budget funded by aggregated tax receipts and supervised by a single finance minister. Macron’s vision – which is central to his integrationist message – was similar to a proposal laid out during a speech last summer by European Commission President Jean-Claude Juncker, who declared at the time that “soft power alone is not powerful enough.”

In his speech, Macron described a European military that could protect the continent by deploying to hotspots around the globe, just like NATO does. But why can’t Europe just rely on NATO? Because, as Merkel has pointed out, NATO is de facto controlled by the US, and the US “can no longer be relied on to protect us.”

Whatever form it eventually takes, the European defense force must “fit into the structure of defense cooperation,” Merkel said.

“However, such an intervention force with a common military-strategic culture must fit into the structure of defense cooperation,” she said.

She added that the Bundeswehr “must, in principle, be part of such an initiative,” but that it “doesn’t mean that we are to be involved in every mission.”

“European defense cooperation is very important. Of the 180 weapon systems that currently co-exist in Europe, we must move to a situation like the United States, which has only about 30 weapons systems,” Merkel said.

Until now, talks about creating a defense force have been complicated by Berlin’s cautious approach to the initiative. EU leaders signed off on a scaled-down version of Macron’s EU Army in December when they signed the harmless-sounding Permanent Structured Cooperation – or PESCO – pact.

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Just a day after Czech Prime Minister Andrej Babis rejected Angela Merkel’s “flexible system” plan for migration, letting Frontex become a European border police force that can act independently, exclaiming that protecting frontiers should be up to individual countries.

“The idea that Frontex will guard everything by itself is not realistic in the long term,” Czech Prime Minister Andrej Babis told reporters when asked about her comments. “Individual states must guard that.”

As Reuters reports, the Czech Republic and other central and eastern EU members Hungary, Slovakia and Poland – known as the Visegrad group – have strongly opposed a quota system drawn up by the European Commission to redistribute asylum seekers around the bloc.

We are reminded of comments during a presentation earlier this year on the management of migration processes by António Guterres, the Secretary General of The United Nations, who proclaimed that UN member states should prepare for great migratory movements.

And this is not a joke: The UN, led by António Guterres, wants to manage and influence migration. All this, of course, is dressed up in pretty words about the need to provide humanitarian aid, and also justified by the benefits that resettlement of the population is to give to the economies of particular countries. However, in fact, this means only one thing: Europe and the entire Western World must prepare for the flood of Africans.

Currently, nearly 1.3 billion people live in Africa, and by the end of this century there will be 350% more, or 4.4 billion. It is obvious that the continent, whose inhabitants are not able to feed themselves, let alone achieve an adequate level of urbanization and industrialization, cannot cope with such a sharp demographic increase. The UN therefore came up with the idea of resettling Africans to Europe and highly developed countries on other continents.

At the end of 2016, just after his election as UN Secretary General, António Guterres said: 

“We must convince Europeans that migration is inevitable and that multiethnic and multireligious societies create wealth”.

It can be assumed here that the goal set by the former UN commissioner for refugees (A. Gutters served this function from June to December 2015), is to promote migration, give it a legal framework and manage it globally.

The first major step towards formalization of this phenomenon was the creation of the “Making Migration Work for All” report, which says in no uncertain terms that nation-states are to cease to exist. The document says that migration would be beneficial to everyone. And it is beneficial… to migrants alone (who apart from being accommodated in apartments live on undeserved entitlements) rather than to the average European who has to work to make a living for himself and his family, pay for his home and, additionally, provide for millions more newcomers.

The position expressed by Gutters during the presentation of this report makes our hair stand on end.3) The analysis of the speech of the UN secretary implies a simple conclusion: migration will still be bigger, we (UN) will manage it, and you (Western countries and societies) have to adapt:

„The fundamental challenge is to maximize the benefits of this orderly, productive form of migration while stamping out the abuses and prejudice that make life hell for a minority of migrants.”

and:

„States need to strengthen the rule of law underpinning how they manage and protect migrants — for the benefit of their economies, their societies and migrants themselves.”

The propaganda statement that migration brings social and economic benefits has become so deeply rooted in the media and political rhetoric that some people have begun to believe in it. It is a pity that theses statements are not supported by any calculations or analyses.

„Migration is a positive global phenomenon. It powers economic growth, reduces inequalities, connects diverse societies and helps us ride the demographic waves of population growth and decline.”

According to a research conducted by the Hungarian Századvég foundation, mass migration is perceived by the citizens of all 28 European Union countries as a threat to the EU economy, the heritage of the member states and the presence of Third World aliens is believed to undermine security.

The vast majority, as many as 68%, are afraid of the inflow of migrants from North Africa. For 70% of the inhabitants of the Old Continent, the growing number of Muslims is a serious threat, while only 8% say that this issue is not a problem. Citizens of European countries are afraid of increased crime and subsequent terrorist attacks. More than half of the pollees think that immigrants come to Europe mainly for economic reasons, that is, they are attracted by a high level of social benefits. 57% of respondents believe that the influx of immigrants from Africa and the Middle East will change the culture of their country, and 73% state that financial support for migrants will be a serious burden on state budgets. 61% believe that the influx of people from the Third World will weaken the EU economy.

Negative processes accompanying the resettlement of people were, however, completely ignored by the UN and transferred to countries which are not able to cope with this phenomenon:

„Migration (…), which powers economic growth, reduces inequalities, connects diverse societies (…) remains poorly managed.”

and:

„The best way to end the stigma of illegality and abuse around migrants is, in fact, for Governments to put in place more legal pathways for migration.”

The report completely distorts the nature of threats to Western civilization, and also underestimates the importance of homogeneity, rejecting entirely the advantage that national states offer. The United Nations points out that shrinking populations is a danger for Europe, and Antonio Guterres suggests that the demographic collapse can be remedied by resettling the population surplus from Africa. By the end of this century, the number of indigenous Europeans will amount to fewer than a quarter of a billion, whereas there will be almost 4.4 billion Africans. The host society, according to the UN Secretary General, has no right to think that migrations are a negative phenomenon:

„It can be seen, too, in the political impact of public perception that wrongly sees migration as out of control. The consequences include increased mistrust and policies aimed more at stopping than facilitating human movement.”

Also, the International Migration Organization, which participated in the work on this report, states on its Twitter account that „Migration is inevitable, desirable and necessary”. The question arises: who wants migration and who thinks it is necessary? Certainly not the inhabitants of the countries to which the alleged refugees are streaming.

The report states that:

• migration is inevitable, therefore it must be properly organized and the UN provides guidance on how to manage it;

• nation states must adapt to the admission of migrants in accordance with the guidelines;

• the societies of developed countries must become accustomed to having their countries flooded with masses of migrants.

The powers that be are trying to convince us of the alleged benefits of mass migration and the resettlement of Africans into Europe. Reality contradicts wishful thinking. Increasingly, citizens of host countries are afraid to leave their homes not to mention that an increased part of their earnings, is used to provide for the newcomers. We have also come to the point where negation of positive aspects of migration is regarded as racism and xenophobia, and to the fact that if someone wants to live in a one-nation state, he is labelled as a nationalist, with the word being unjustifiably negatively charged.

A mass inflow of the so-called “refugees” on the Old Continent is not perceived by its inhabitants as a phenomenon that  culturally enriches and will also have a positive impact on the economy. However, global organizations do not take this into account and enforce their own plan to create a nationally and religiously heterogeneous society, where tradition and cultural identity are not desirable.

António Guterres and the UN know better what is good for western nations, ignoring the data presented by many organizations, including the Gefira Foundation, which underline a number of negative phenomena caused by the mass flooding of Europe by Third World populations.

However, circling back to Czech PM Babis’ comments, he reminds the good UN SecGen that elections this weekend in Slovenia, won by an anti-immigration opposition party, and in Italy which yielded the EU’s first anti-establishment government, showed how the policy stance of Visegrad had spread.

“So, this opinion on migration will prevail in the whole of Europe, and we have to stop migration outside the European continent and help the people in Africa and Syria”, he said.

But then again – what does democracy matter anyway?

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A U.S. defense official Monday told CNN’s Washington bureau that two nuclear-capable U.S. Boeing B-52 Stratofortress bombers flew very close to the heavily contested and militarized Spratly Islands in the South China Sea.

The aggressive flybys come days after Secretary of Defense James Mattis warned of “consequences” if Beijing continues weaponizing the South China Sea, further accusing China of “intimidation and coercion” in the Indo-Pacific region, which he specifically made clear that Washington has zero plans on leaving the heavily disputed area.

His speech, well, it promoted an angry Chinese response during IISS Shangri-La Dialogue, a civilian and military defense summit in Singapore, where Lieutenant General He Lei told reporters, “Any irresponsible comments from other countries cannot be accepted.”

As we explained on Saturday during the IISS Shangri-La Dialogue,” The United States and China appear to be headed for a military collision in the Southeast Asia region.”

Beijing claims that most of the resource-rich sea, which overlaps claims from Brunei, Malaysia, the Philippines, Taiwan, and Vietnam, belongs to China. To reinforce such claims, Beijing quickly built artificial islands and erected military bases on Parcels and Spratly islands. Regarding trade, more than USD five trillion in shipping trade flows through the region per annum.

The U.S. defense official, who has classified knowledge of the B-52s original flight plan, said the operation called for two nuclear-capable U.S. Boeing B-52 Stratofortress bombers to fly roughly 20-miles from the militarized Spratly islands.

U.S. Air Force Captin Victoria Hight, a spokeswoman for U.S. Pacific Air Forces, told CNN that the bombers did not fly in the vicinity of the islands.

A Pentagon spokesperson said the Guam-based bombers were on “a routine training mission,” departing from Andersen Air Force Base “to the Navy Support Facility” at Diego Garcia Atoll, a British Indian Ocean Territory.

U.S. Lieutenant Colonel Chris Logan said the operation was part of U.S. Pacific Command’s “Continuous Bomber Presence” missions, which he explained are “intended to maintain the readiness of U.S. forces.”

“U.S. Pacific Command’s CBP missions, which have been routinely employed since March 2004, are flown in accordance with international law,” Logan added.

The B-52s operation to buzz China’s militarized islands came shortly after Mattis warned Beijing that “the placement of these weapons systems is tied directly to military use for the purposes of intimidation and coercion,” adding that “China’s militarization of the Spratlys is also in direct contradiction to President Xi Jinping’s 2015 public assurances in the White House Rose Garden that they would not do this.”

#SecDef Mattis discusses US leadership and #IndoPacific security challenges during the #ShangriLaDialogue June 2. The #ShangriLa Dialogue, held by the @IISS_org, is an inter-governmental security forum attended by defense ministers and delegates from more than 50 nations. #SLD18 pic.twitter.com/o1VK4UKiSE

— U.S. Dept of Defense (@DeptofDefense) June 2, 2018

Last week, the Pentagon increased its rhetoric about China’s militarization of islands in the South China Sea, even as the Trump administration asked Beijing for cooperation on North Korea. When questioned by a journalist about the ability of the Pentagon to “blow apart” China’s artificial islands, Lieutenant General Kenneth McKenzie, director of the Joint Staff, told reporters, “I would just tell you that the United States military has had a lot of experience in the Western Pacific taking down small islands.”

Meanwhile, Beijing reacted to the threat via Pentagon statements. On Thursday, Chinese Foreign Ministry spokeswoman Hua Chunying said the U.S. accusing China of militarizing the islands was, “like a thief crying, Stop thief!’”

“Why does the U.S. choose to sail every now and then close to Chinese South China Sea islands and reefs? What is the U.S. trying to do?” she said.

Last month, we reported that the U.S. Navy conducted its “freedom of navigation” patrols near the heavily disputed islands to demonstrate the right to sail through those international waters, which sparked outrage via Bejing.

From Mattis to Lt. General He militant jawboning this past weekend at the IISS Shangri-La Dialogue, to U.S. Naval warships and B-52s encircling the militarized islands, followed by China’s warning that any tariffs by Trump would kill a trade deal between the U.S. and China, it appears that Sino-American relations continue to plunge. It seems like the heavily disputed waters in the South China Sea could emerge as the next geopolitical and military flashpoint. Which, when one considers that according to the RAND Corp, and the IMF, China will surpass the U.S. as the world’s leading military superpower some time in the next 2 decades… As stated below, the trend is evident, Washington and Bejing are preparing for war.

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