Dollar Jumps After New US, China Tariffs Kick In As Jackson Hole Looms

One day after the the S&P500 bull market set a new duration record, at exactly 0.01 Washington Time on Thursday, the U.S. imposed tariffs of 25% on $16 billion worth of imports from China. At the same time, China said it opposes the latest U.S. tariffs and will retaliate tit-for-tat; and would also complain to the WTO. China targeted items include coal, medical instruments, cars and buses. Meanwhile, low-level trade talks held Wednesday are scheduled to continue Thursday with very modest hopes of resolving the trade tensions.

The renewed trade escalation, coupled with upbeat FOMC minutes which guaranteed a September rate hike (while warning on growing trade tensions), sent the dollar higher against all its G10 peers for the first day in six as investors awaited a meeting of global central bankers after the Federal Reserve signaled no change to its pace of monetary policy tightening.

UBS Wealth Management deputy UK CIO Caroline Simmons cited trade concerns as the reason for paring back an overweight on global equities to a very small position. “We’ve got trade conflicts, and sanctions, in Turkey and Russia, so there are a few things going on that we were a little nervous about,” Simmons said.

World stocks came under pressure on Thursday as new tariffs took effect in the U.S./China trade war and markets speculated about U.S. President Donald Trump’s position following legal rulings against two former advisers. US equity futures were flat and US Treasuries were generally unchanged as European stocks gained and Asian shares fell. The MSCI world equity index was 0.1% lower in early trading, while a rise across defensive sectors helped Europe’s Stoxx Europe 600 Index eek out modest gains while futures for the S&P 500 Index were little changed as investors continued to weigh Trump’s legal woes.

Cohen’s plea deal does not mean the president has been implicated in anything, press secretary Sarah Sanders said at a White House briefing, but the market was not convinced: “While the (legal issues) shouldn’t substantially alter the stock market landscape, money managers and analysts say the developments raise the likelihood of further turbulence ahead for Mr. Trump heading into the mid-term elections,” said James McGlew, Perth-based analyst at stockbroking firm Argonaut.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%. Hong Kong’s Hang Seng index stumbled 0.5 percent while Korean and Chinese stocks gained. The Chinese currency resumed its slump, with the offshore yuan falling to 6.88 around 6am EDT.

Central banks will again be in the spotlight as investors await comments from Fed chairman Jerome Powell later this week when he speaks at the meeting of policy makers in Jackson Hole, Wyoming. Familiar tensions remain in the background, however. Alongside Trump’s legal woes, traders must also digest the imposition of fresh tariffs between the U.S. and China in the midst of talks aimed at averting the worsening trade conflict.

“With economic data mostly cooperating with the Fed’s base message of continued rate increases driven by tight labor markets, above trend growth and bubbling inflation, it is unlikely that Powell will drastically stray from this message,” BNY Mellon strategists said in a note, adding that Powell may provide more details on the neutral rate, curve inversion and balance sheet process.

In currency markets, the euro briefly pared some losses after manufacturing and services data showed the region’s economy is still strong, but soon retraced the move. According to Markit, the Flash Eurozone PMI Composite Output Index rose modestly in August to 54.4 (from 54.3 in July) a 2-month high, however optimism about the future hit a two-year low among trade war uncertainty.

Commenting on the recent euro moves, Aviva Investors said that the common currency’s selloff now looks overdone, and the euro may recover on the prospect of stronger growth and reduced political risks in the region.

Elsewhere in FX, among the biggest currency losers were the South Africa’s rand, which slumped after a tweet from U.S. President Donald Trump fueled speculation of possible sanctions against the country…

… and the Australian dollar, which is under pressure as Prime Minister Malcolm Turnbull fights to keep his leadership. Australian shares also slipped 0.3% after several senior ministers tendered their resignations on Thursday and demanded a second vote on Prime Minister Malcolm Turnbull’s leadership. “The Aussie will weaken against the U.S. dollar and the pound because investors are underpricing rising domestic political risks as PM Turnbull’s challenger gains support”, Morgan Stanley analysts including Hans Redeker write in a note.

The Russian ruble initially gapped weaker after yesterday’s warning of outflows from Russian Economy Minister, before snapping higher after the Russian Central Bank canceled FX buying until end-Sept to “reduce volatility in financial markets.”

In rates, the US Treasury curve flattens led by the belly, while bunds edged lower after French and German PMI prints; interesting options activity observed by Bloomberg included a large buyer of deep OTM calls in OATs and BTPs.

Commodities were under pressure due to the rebound in the dollar, with gold also slumping on the outlook for higher American interest rates. Oil edged lower after surging on a U.S. government report that showed the biggest decline in crude inventories since late July.

Expected data today include jobless claims, PMIs, and home sales. Alibaba, Hormel, Autodesk, Gap, Intuit, and VMware are among companies reporting earnings.

Market Snapshot

  • S&P 500 futures little changed at 2,861.75
  • STOXX Europe 600 up 0.2% to 384.69
  • MXAP down 0.3% to 163.60
  • MXAPJ down 0.2% to 530.59
  • Nikkei up 0.2% to 22,410.82
  • Topix down 0.01% to 1,698.22
  • Hang Seng Index down 0.5% to 27,790.46
  • Shanghai Composite up 0.4% to 2,724.63
  • Sensex up 0.1% to 38,328.35
  • Australia S&P/ASX 200 down 0.3% to 6,244.37
  • Kospi up 0.4% to 2,282.60
  • German 10Y yield unchanged at 0.344%
  • Euro down 0.4% to $1.1554
  • Italian 10Y yield rose 7.2 bps to 2.789%
  • Spanish 10Y yield fell 1.8 bps to 1.363%
  • Brent futures down 0.5% to $74.41/bbl
  • Gold spot down 0.7% to $1,187.34
  • U.S. Dollar Index up 0.3% to 95.42

Top Overnight News from Bloomberg

  • U.S. central bankers are ready to raise interest rates again so long as the economy stays healthy, according to a record of the Federal Reserve’s most recent policy meeting
  • Australia’s Prime Minister Malcolm Turnbull said he would only step aside if his rivals gather enough signatures to show he no longer has control of the party. Turnbull declined to comment when asked who he would support if Dutton manages to force a leadership vote. Treasurer Scott Morrison — a Turnbull ally — is preparing to contest the ballot, Sky News reported
  • U.S. tariffs of 25% on $16 billion worth of imports from China come into effect at 00:01 Washington time, according to a statement in the Federal Register. China opposes the latest U.S. tariffs and is forced to retaliate, commerce ministry says in a statement. Mid-level trade talks held Wednesday are scheduled to continue Thursday
  • President Donald Trump denied using campaign funds as hush money for women who alleged past affairs with him, a day after federal prosecutors claimed some campaign officials were aware of the payments
  • President Donald Trump’s plans to punish carmakers who produce vehicles outside the U.S. and sell them to Americans are hindering his administration’s efforts to close the deal on a new Nafta this month
  • The U.K. government will publish the first in a series of no-deal Brexit notices on Thursday, advising business and consumers on how to cope should U.K. leaves the EU without an agreement. A second batch will be published in September. Most of the British public believes the U.K. will leave the European Union without a deal, with many planning to cut costs on everything from clothes to home extensions, a survey finds
  • Michael Cohen’s mea culpa was notable partly because he fingered a host of executives and companies who he says also participated in the scheme. That signals that there’s a roster of people who could emerge as potential witnesses or targets in any ongoing investigation into campaign finance violations; Cohen’s payments are not illegal, Trump’s lawyer Rudy Giuliani says in a tweet
  • ECB Governing Council member Jens Weidmann says in Berlin that it’s “time to begin exiting the very expansionary monetary policy and the non-standard measures, especially considering their possible side effects”
  • Goldman Sachs Group Inc. is shutting two hedge funds run by people based in Asia, according to people with knowledge of the matter
  • Foreign buyers led by Hong Kong billionaires and Korean securities firms spent more on the U.K. capital’s offices in the first half than in central Paris, Manhattan, Munich and Frankfurt combined. The weak pound is making London a bargain compared with cities in Europe, many of which have undergone their own property booms

Asia-Pac stock markets traded subdued with the region cautious amid political turmoil in Australia and as the 2nd round of Trump tariffs on China took effect. ASX 200 (-0.3%) was negative as a mega-storm brewed on the political front with PM Turnbull’s future in office highly doubtful after 3 cabinet members resigned including Finance Minister Cormann who advised the PM he no longer has party support, although losses in the index have been stemmed as participants reacted to a slew of earnings and with miners underpinned by recent strength in commodities. Elsewhere, Nikkei 225 (+0.2%) remained afloat on the back of a weaker JPY, while Shanghai Comp. (-0.3%) and Hang Seng (-0.8%) were jittery as the 2nd round of US tariffs on China took effect today and after the PBoC refrained from liquidity operations again. Finally, 10yr JGBs were relatively unchanged with only minimal gains seen from the cautious risk tone in the region and with demand also subdued amid weaker results at the enhanced liquidity auction for longer-dated bonds.

Top Asian News

  • Xiaomi’s Rally Fizzles as Ebbing Margins Outweigh Solid Growth
  • San Miguel Seeks $2.67 Billion in Sale of Food-Unit Shares
  • Japan’s Auto Stocks Drop Before Next Round of U.S.-China Tariffs
  • Indonesia Wants Foreigners to Own Less of Its Bonds in Long Run
  • Women, Notably Non-Moms, Need Not Apply in Hong Kong: Job Study

European equities are largely mixed and trading without direction amidst the fresh US-China tariff action. The IT sector is mimicking the outperformance seen on Wall Street and is currently the leading sector. Ryanair (+6.6%) is currently leading the gains in the Stoxx 600 (alongside Sunrise amid an upgrade in EBITDA guidance) as the co. reached an agreement with the Irish pilots union after 22 hours of deliberation. Individual equity losses in Europe are driven by the general weakness in the EM scope, which is weighing on companies with exposure to the affected countries, such as Deutsche Bank (-2.3%) and Raiffeisen Bank (-3.05%), while Continental (-2.7%) fails to recover from yesterday’s losses.

Top European News

  • Euro-Area Growth Stays Strong as ECB Plans to Ease Stimulus
  • Ryanair Reaches Deal With Irish Pilots, Sending Stock Higher
  • U.K.’s Raab Wants Business as Usual After a ‘No Deal’ Brexit
  • Brexit-Bound London Beats Global Rivals to Real Estate Cash

In FX, FOMC minutes have given the flagging DXY a fillip, along with indirect props from rival currencies that are succumbing to more selling pressure due to specific/independent bearish factors. Thus, the index and Dollar overall have rebounded, with the former reclaiming 95.000+ status and almost up to 95.500 again. AUD – No respite for the Aud that is back on the rack after a fleeting rebound to around 0.7350 vs its US counterpart and sub-0.7300 on the latest political machinations down under. Indeed, the Aud is also extending losses relative to the NZD, with the cross down towards 1.0900 even though the Kiwi is back below 0.6700 vs the USD. EM – The usual suspects are being flogged again, but with the Rub and Zar really seeing the brunt of investor angst on US sanctions – Rouble and Rand both around 1% or more weaker vs the Greenback. Elsewhere, Usd/Cnh firmer after reports of Chinese banks selling Yuan vs Dollars on a forward basis and an uptick in the Cny fix after some retracement of late from the PBoC.

Commodities are pressured amid the recent dollar strength after the FOMC minutes cemented rate hike expectations. WTI and Brent Oct’ 18 futures trade lower by 0.2% and 0.4% respectively after the US benchmark rose over 3% yesterday. News flow has been light for the complex thus far, however, it is worth noting the ongoing trade disputes may potentially dampen global demand. Meanwhile, sources initially reported the Saudi Aramco IPO listing has been halted, but Saudi Energy Minister later denied these reports. Elsewhere, precious and base metals also feel the effect of the aforementioned dollar strength with gold below USD 1190/oz.

Looking at the day ahead, we’ll get the latest set of PMI data in the US, as well as the June FHFA house price index, 2Q house price purchase index, July new home sales and August Kansas City Fed manufacturing activity index. Away from data, Intuit, HP and Alibaba will reports their earnings.

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 215,000, prior 212,000; Continuing Claims, est. 1.73m, prior 1.72m
  • 9am: FHFA House Price Index MoM, est. 0.3%, prior 0.2%; House Price Purchase Index QoQ, prior 1.7%
  • 9:45am: Bloomberg Consumer Comfort, prior 58.9
  • 9:45am: Markit US Manufacturing PMI, est. 55, prior 55.3;
    • Markit US Services PMI, est. 55.8, prior 56
    • Markit US Composite PMI, prior 55.7
  • 10am: New Home Sales, est. 645,000, prior 631,000; New Home Sales MoM, est. 2.22%, prior -5.3%
  • 11am: Kansas City Fed Manf. Activity, est. 22.5, prior 23
  • 8pm: Fed Hosts Annual Jackson Hole Central Banking Symposium

DB’s Jim Reid concludes the overnight wrap

The interesting thing about markets over the last 24 hours is that, despite all the furore surrounding the legal dramas in Washington – with markets and news outlets across the board now speculating about how close this gets to the Presidency – markets and especially risk assets have shrugged their collective shoulders for now. Plenty of discussion but no conviction yet as to what this means. Indeed it’s not clear whether further legal problems for the administration would distract from or increase focus on fighting a trade war.

Indeed an early -0.24% intraday decline was as bad as it got for the S&P 500 yesterday, and the index retraced its losses to close only -0.04% lower by the end of play with even the Fed minutes barely creating much impact. The Dow  and Nasdaq finished -0.34% and +0.38% while in Europe, markets were largely flat to slightly higher. The VIX also fell back into the low 12s, closing at 12.25 (-0.61 on the day) while 10y Treasury yields finished 1.1bps lower and traded in  a fairly unexciting 2.9bps range throughout the day. The USD was a bit more volatile but to be fair this is all relative. The Dollar index ended -0.12% – the sixth decline in a row – but with a range (-0.47%) which was still well below the average YTD (0.60%).

Commodity markets rallied, with Brent crude oil advancing +3.07% yesterday and the energy sector leading the S&P 500 with a +1.20% gain – its strongest move in over a month. Oil prices have been boosted by the dollar’s recent softness, with the DXY index down 1.70% over the last two weeks, but also by supportive data from the US yesterday. US crude inventories fell by 5.8 million barrels last week, almost completely retracing the previous week’s surprise inventory build.

Back to markets and despite the political headwinds, with the US economy still firing on all cylinders and earnings season breaking records, it’s clear that US markets are choosing to focus more on the strong fundamentals rather than the political and macro risks. Target and Lowes announced better-than-expected results yesterday, boosting the S&P 500 retail subsector to a fresh all-time high. Over 81% of companies have beaten earnings estimates this season, which is  the highest percentage based on data we have back to 1998. So an impressive season and a theme that keeps on rising to the surface above the more negative noise elsewhere.

Staying with the US, the FOMC minutes last night broadly met expectations. They did not move markets and supported the existing policy path of raising rates steadily. The discussion of the economic outlook was slightly more balanced than previously, as downside risks from trade, housing, and emerging markets have intensified somewhat. FOMC members seem to broadly agree that another interest rate hike will be warranted soon paving the way for a September hike (Bloomberg implied odds at 92%). The committee debated some other potentially relevant topics – e.g. the yield curve, balance sheet policy, the counter-cyclical buffer, and slow wage growth – but the minutes did not reveal any consensus conclusions. These topics are nevertheless likely to resurface later this year.

Yesterday’s economic calendar was light, but the US data may have underlined the FOMC’s concern around the housing sector’s outlook. Existing home sales declined to 5.34 million in July, its slowest pace since February 2016. Mortgage applications rose a robust 4.2%, but our US economists continue to expect the housing sector to weigh slightly on growth over the next few quarters. In Europe, markets traded sideways amid very low liquidity. Benchmark indexes in Germany, France, and the UK experienced trading volumes 21.7%, 19.2%, and 22.2% lower than the 100-day average, respectively. Italy saw even thinner activity, with volumes 36.1% lower than average, and was the only major Eurozone country to post a selloff (-0.40%) yesterday. Italian 10-year bond yields rose 7.4 bps, underperforming Germany and the rest of peripheral Europe.

In Asia this morning, sentiment is a bit mixed with the Nikkei up +0.17% as the Yen weakens, while the Kospi (-0.04%), Hang Seng (-0.72%) and Shanghai Comp. (-0.34%) are down as we type. Meanwhile the US dollar index has nudged up for the first time in seven days (+0.3%) with gains against most currencies while futures on the S&P are pointing to a softer start.

It’s hard to see politics dissipating from our screens today with the US and China now imposing the latest tit-for-tat protectionist measures, specifically tariffs of 25% on $16bn of imports from both sides. Meetings between the two sides seemingly failed to yield tangible improvements yesterday, but remember that discussions are still ongoing about potential tariffs by the US on as much as $200bn of Chinese imports from as soon as September 6th. Meanwhile the  latest on NAFTA appears that the US and Mexico are close to a deal, with the Mexican Chief negotiator Mr Seade indicating that “we might close this, not in a matter of hours, but these days. We still have next week”. Elsewhere the US Commerce Secretary Ross also said “…I think a deal is very likely within reach in the very, very near future”.

Today we’ve also got some important economic data with the global flash August PMIs due out. Early this morning we already received Japan’s manufacturing reading which edged up 0.2pt from last month to 52.5. Over the next couple of hours we’ll get manufacturing, services and composite prints in core Europe and then the same for the US this  afternoon. In Europe the consensus is for a small 0.2pt rise in the composite to 54.5 led by both the manufacturing and services sectors. In the US the market is however expecting a modest 0.3pt decline in the manufacturing print (to 55.0) and 0.2pt fall for the services print to 55.8.

Away from the PMIs and looking at the day ahead. In Europe, we will get the latest ECB monetary policy minutes, August business and manufacturing confidence and production outlook for France along with the survey of industrial investment for France and advance August consumer confidence for the euro area. In the US, we get the June FHFA house price index, 2Q house price purchase index, July new home sales and August Kansas City Fed manufacturing  activity index. Away from data, Intuit, HP and Alibaba will reports their earnings.

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Author: Tyler Durden

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Turkey Prepares For First Batch Of Russian S-400 Air Defense Missiles

Rosoboronexport’s Director General Alexander Mikheev said that the defense company would begin implementing a contract for the supply of its advanced S-400 missile defense systems to Turkey in 2019, the RIA Novosti reported.

“The contract [on the S-400 supplies to Turkey] will be implemented within the agreed time limits. In 2019 we will start implementing the contract,” the company’s director general and CEO Aleksandr Mikheev told reporters on Tuesday.

Washington has expressed great concern that NATO member Turkey’s upcoming deployment of the Russian S-400s could pose a serious security risk for U.S.-made weapons used by Turkey, including the Lockheed Martin F-35 Lightning II, a fifth-generation combat aircraft.

Rosoboronexport told Turkey it would switch to the Lira, instead of using the dollar to complete the transaction, the RIA news agency reported.

In April, Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin had agreed to expedite the delivery of the missile systems for 2019.

The S-400 system also called the Triumph Mobile Multiple Anti-Aircraft Missile System (AAMS), is an advanced Russian missile system designed to detect, track, and destroy aircraft, drones, missiles as far as 402 kilometers (250 miles) away. Moscow had previously sold the missile systems to China and India. The Economist described the S-400 in 2017 as “one of the best air-defense systems currently made.”

Ankara’s decision to acquire the missile systems stems from last year after Moscow and Turkey signed a $2.5-billion deal for the transfer of the technology.

Washington immediately threatened to halt delivery of the F-35 stealth jets if Ankara finalized the agreement with Russia. With the recent passage of the 2019 National Defense Authorization Act (passed by the Senate earlier this month), it warned about the US supplying fifth-generation fighters to Turkey amid declining diplomatic relations.

President Erdogan told Washington that it did not want to depend on Western technology, which is why the country had been turning towards Russia.

“We will not just buy the S-400s and place them in a storehouse. We will use them if need be,” Erdogan said in June.

President Trump’s response was to sign a Pentagon bill into law restricting the delivery of F-35 jets. The bill also called for the US Secretary of Defense to submit a report within three months addressing the impacts of Turkey’s purchase of S-400s on US-made weapon systems in the region.

Both NATO allies have discussed various ways on how to resolve this dispute but it seems that has failed with Turkey migrating towards Russia.

Diplomatic ties between Turkey and the US have plummeted in the last month over the detention of US evangelical pastor Andrew Brunson, which could likely be a front for a much larger issue: Washington wants to destroy the Eurasia integration via economic warfare.

The first victim? Well, of course, it was Turkey, as President Trump launched economic and political sanctions on the country, which collapsed the Turkish Lira against the US dollar.

As to why Turkey is buying the world’s most advanced missile system, well, it is preparing for military conflict.

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Author: Tyler Durden

Paul Craig Roberts Reflects On “The Genocide Of The Greek Nation”

Authored by Paul Craig Roberts,

The political and media coverup of the genocide of the Greek Nation began yesterday (August 20) with European Union and other political statements announcing that the Greek Crisis is over. What they mean is that Greece is over, dead, and done with. It has been exploited to the limit, and the carcas has been thrown to the dogs.

350,000 Greeks, mainly the young and professionals, have fled dead Greece. The birth rate is far below the rate necessary to sustain the remaining population. The austerity imposed on the Greek people by the EU, the IMF, and the Greek government has resulted in the contraction of the Greek economy by 25%. The decline is the equivalent of America’s Great Depression, but in Greece the effects were worst. President Franklin D. Roosevelt softened the impact of massive unemployment with the Social Security Act other elements of a social safety net such as deposit insurance, and public works programs, whereas the Greek government following the orders from the IMF and EU worsened the impact of massive unemployment by stripping away the social safety net.

Traditionally, when a sovereign country, whether by corruption, mismanagement, bad luck, or unexpected events, found itself unable to repay its debts, the country’s creditors wrote down the debts to the level that the indebted country could service.

With Greece there was a game change. The European Central Bank, led by Jean-Claude Trichet, and the International Monetary Fund ruled that Greece had to pay the full amount of interest and principal on its government bonds held by German, Dutch, French, and Italian banks.

How was this to be achieved?

In two ways, both of which greatly worsened the crisis, leaving Greece today in a far worst position that it was in at the beginning of the crisis almost a decade ago.

At the beginning of the “crisis,” which would have easily been resolved by writing down part of the debt, the Greek debt was 129% of Greek Gross Domestic Product. Today Greek debt is 180% of GDP.

Why?

Greece was lent more money to pay interest to Greece’s creditors, so that they would not have to lose one cent. The additonal lending, called a “bailout” by the presstitute financial media, was not a bailout of Greece. It was a bailout of Greece’s creditors.

The Obama regime encouraged this bailout, because the American banks, expecting a bailout, had sold credit default swaps on Greek debt. Without a bailout the US banks would have lost their bet and paid default insurance on Greek Bonds.

Additionally, Greece was required to sell its public assets to foreigners and to decimate the Greek social safety net, reducing pensions, for example, to below subsistance incomes and so radically reducing medical care that people die before they can get treatment.

If memory serves, China bought the Greek seaports. Germay bought the airport. Various German and European entities bought the Greek municipal water companies. Real estate speculators bought protected Greek Islands for real estate development.

This plunder of Greek public property did not go toward reducing the debt that Greek owed. It went, along with the new loans, to paying the interest.

The debt, larger than ever still stands. The economy is smaller than ever as is the Greek population that bears the debt.

The declaration that the Greek crisis is over is merely a statement that there is nothing left to extract from the Greek people for the interest of the foreign banks. Greece is sinking fast. All of the income associated with sea ports, airport, municipal utilities, and the rest of public property that was forcibly privatized now belongs to foreigners who take the money out of the country, thus further driving down the Greek economy.

The Greeks have not only had their economic future stolen from them. They have also lost their sovereignty. Greece is not a sovereign nation. It is ruled by the EU and the IMF. In my 2013 book, The Failure of Laissez Faire Capitalism, in Part III, “The End of Sovereignty,” I described clearly how this was done.

The Greek people were betrayed by the Tsipras government. They had the option of revolting and using violence to overthrow the government that sold them out to international bankers. Instead, the Greeks accepted their own destruction and did nothing. Essentially, the Greek population committed mass suicide.

The world financial crisis of 2008 is not over. It has been swept under the rug of massive money creation by the US, EU, UK, and Japanese central banks. The creation of money has far outpaced the growth of real output and has driven up values of financial assets beyond what can be supported by “conditions on the ground.”

How this crisis plays out remains to be seen. It could result in the destruction of Western civilization. Will Dog eat dog? After Greece, will it be Italy, Spain, Portugal, France, Belgium, Australia, Canada, until none are left?

The entirety of the Western World lives in lies fomented by powerful economic interest groups to serve their interests. There is no independent media except online, and those elements are being demonized and denied access. Peoples who live in a world of controlled information have no idea of what is happening to them. Therefore, they cannot act in their interest.

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Author: Tyler Durden

72% Of Spaniards Support Government Interference With Business

Countries are divided by the role government plays in regulating businesses.

As Statista’s Sarah Feldman notes, Western Europe, as a region, falls more in favor of governments regulating businesses for the good of society, while the American public is divided on whether government regulation is beneficial for society at large.

Infographic: Countries Split Over Business Regulations | Statista

You will find more infographics at Statista

Small business owners in America cite government regulations as the single biggest issue facing their businesses 14 percent of the time, with quality of labor and taxes preceding it.

Governments’ role in business is a major rallying point for the two main political parties in America, both historically and contemporarily.

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Author: Tyler Durden

Russia, Central Africa Sign New Military Cooperation Agreement

Authored by Alex Gorka via The Strategic Culture Foundation,

Russia and the Central African Republic (CAR) signed a military cooperation agreement on August 21. Russian Defense Minister Sergey Shoygu and his CAR counterpart Marie-Noelle Koyara met on the sidelines of the Army 2018 defense expo outside of Moscow to finalize that agreement. According to the Russian defense chief, Central Africa “is a promising partner on the African continent.” The document covers arms shipments and personnel training. Central African officers will undergo training courses at Russian military academies and colleges. This year, Russia has already sent light arms, rocket launchers, and anti-aircraft guns for two battalions. It has 175 military and civilian instructors deployed in that country to train the personnel.

In mid-December, the United Nations granted Russia an exemption to the arms embargo on the CAR, paving the way for deliveries of weapons to that war-torn country that is still immersed in an internal conflict. The embargo is effective until Jan. 31, 2019.

The UN ranks the CAR as the least-developed country in the world despite its minerals reserves. Fourteen thousand UN peacekeepers are stationed within its borders, but the government, led by President Faustin-Archange Touadera, believes that that operation is ineffective. He has relied more on Russia’s help.

This agreement is part of that trend. Russia’s regional influence is increasing. The Democratic Republic of Congo has recently decided to revive its 1999 agreement on military cooperation with Russia. In April, Mozambique agreed to open its ports to Russian naval vessels. It was recently reported that Niger is interested in purchasing Russian helicopters and firearms, including grenade launchers. Russia and Guinea are working on a military agreement, which would include free access for Russian military ships to the country’s ports, training, and other security-related issues. Russia exports Mil Mi-8/17 and Mi-24/35 helicopters to Angola, Mali, Nigeria, Sudan, Uganda, and Rwanda.

The Russian Federation has military partnerships with Cameroon, the Democratic Republic of Congo (DRC), Nigeria, Kenya, Burkina Faso, Uganda, South Sudan, Mozambique, and Angola. In 2017, Sudan’s President Omar al-Bashir asked Russia to protect his country “from the aggressive acts of the United States.” All in all, Russia is responsible for 30% of all arms supplies to the region.

The military cooperation goes hand-in-hand with progress in other areas. In March, Russian Foreign Minister Sergey Lavrov went on a five-day African tour to visit Namibia, Zimbabwe, Angola, Mozambique, and Ethiopia. He signed trade agreements with Angola and Mozambique and also strengthened diplomatic ties with Zimbabwe’s new government.

Russian companies are exploring the Darwendale platinum deposit, one of the largest in the world. Russia’s Alrosa is present in Angola, a country rich in diamonds. Moscow and Luanda are engaged in talks over cooperation in hydrocarbon production. Last October, Russia signeda $20 billion agreement to construct two nuclear power plants in Nigeria.It recently established a special relationship with Rwanda toreconnect Russia with the East African community.

Benin, Ethiopia, Guinea, Mozambique, Tanzania, and Zambia, among others, have all been recipients of Russian debt relief over the past decade. Russia is working with Zimbabwe’s and Guinea’s mining industries and also cooperates on nuclear power with Sudan.

Russia and the African Union (AU) are currently in the process of drafting a conceptual framework cooperation agreement. Moscow can offer its growingability to support peacekeeping operations and training for the African Union personnel, as well as the sharing of intelligence data about foreign terrorists with the African International data bank. The Russian Federation contributes to the UN peacekeeping operations in Western Sahara, the Democratic Republic of Congo, Cote d’Ivoire, Ethiopia, Eritrea, Liberia, Sudan, and South Sudan.

Russiashowcased African business at the 2018 St. Petersburg International Economic Forum. It is set to host a Russian-African Union forum in 2019. According to Foreign Affairs Minister Sergey Lavrov, the forum will roll out a comprehensive, strategic road map for more economic cooperation and a wide range of investment possibilities, plus effective ways of addressing regional security issues and improving public diplomacy in Africa.

Russia’s relationship with the Southern African Development Community is also on the rise.

The states of the region are seeking to diversify their foreign relationships. Moscow is helping them to achieve this goal, as it enjoys a reputation as a reliable and pragmatic partner that is able to weigh in on regional matters both diplomatically and militarily. It maintains good relations with everyone in the region, making Russia the right choice when seeking a partner for a peacekeeping operation. Russia’s burgeoning influence in sub-Saharan Africa is a part of broader picture, as its clout has grown immensely in the Middle East and North Africa.

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Author: Tyler Durden

Corporation Building Spy-Grid In China Also Creating Drivers Licenses In The US

Authored by Daniel Taylor via ActivistPost.com,

Company that helps manufacture U.S. citizens drivers licenses brags of “building and managing databases of entire populations” across the globe.

Big Tech has gathered unprecedented amounts of personal data from millions of people. At the same time, a system of total surveillance has been constructed: Facial recognition, biometric scanning, cell phone surveillance and more have amassed a huge amount of information.

We see the stories about the growing surveillance state, but we don’t hear about the gigantic multinational corporation that is helping to build the physical infrastructure supporting it.

Idemia (formerly Morpho), is a billion dollar multinational corporation. It is responsible for building a significant portion of the world’s biometric surveillance and security systems, operating in about 70 countries. Some American clients of the company include the Department of Defense, Homeland Security, and the FBI.

The company website says that Morpho has been “…building and managing databases of entire populations…” for many years.

From the company site:

Morpho has been building and managing databases of entire populations for governments, law enforcement agencies and other government bodies around the world, whether for national ID, health cards, bank cards or even driver license programs.

In the United States, Idemia is involved in the making of state issued drivers licenses in 42 states.

The company is now pushing digital license trials in the U.S. Delaware and Iowa are among five states involved in the trials this year. With the mobile license, law enforcement will be able to wirelessly “ping” a drivers smartphone for their license. The move is part of a wider trend toward cashless payment.

Idemia is assisting China and India with building surveillance and ID systems, trafficking in huge amounts of biometric data across the world.

In China, Idemia has helped build the massive biometric scanning and surveillance system that is used to keep Chinese citizens under a tyrannical boot.

The company has provided biometric payment and authentication systems to the country.

The company website says:

“With a sales office in Hong Kong, Morpho offers services and solutions in the field of digital identity and smart transactions. The world leader in multibiometric identification technologies, Morpho supplies biometric identification systems to Chinese police forces and government immigration agencies.

Morpho has also provided facial recognition systems to police agencies in Shanghai, Tianjin, Heilongjiang, Jilin, Jiangxi, Guangzhou and Wenzhou.”

In India, the controversial Aadhaar national ID card system is also enjoying the support of Idemia through Safran Identity & Security, now part of Idemia. The company states that it is “in charge of all technological aspects of Aadhaar”.

Morpho is one of the companies chosen to take part in an unprecedented program called Aadhaar to count everyone residing in India and then assign each person a unique identification number. Morpho is in charge of all technological aspects of Aadhaar.

Several court cases have gone to India’s supreme court on grounds of privacy violations from Aadhaar. The ID system has had serious security breaches, with access to a billion identities being sold for less than $10 through WhatsApp.

The social credit trap

One of the court filings (Mathew Thomas vs Union of India) details the rise of China’s social credit system, comparing the Indian Aadhaar initiative to the Chinese program.

The Chinese government initially permitted corporations to aggregate personal data of their customers and built algorithms that could then rate the worth of these customers. As such applications began to get integrated and large technology companies began to dominate every aspect of citizen lives, the ‘Social Credit Rating Systems’ that these companies ran became all the more pervasive.

Once this system had taken hold of the entire country, the State Council of the Central Government in China released an Outline of the Social Credit System Construction Plan(2014-2020), which specifies that such Social Credit Rating Systems would be integrated into their governance by 2020. This represents the integration of such infrastructure into the central architecture of the State, and would ensure a devastating amount of State control over its citizens.

A disturbingly similar pattern is being followed in the United States. Big Tech (Google, Apple, Facebook) has already gathered most of our personal data. It has also absorbed around 90% of Internet traffic, and is now openly allying with communist Chinese policies.

Facebook has begun rating users “trustworthiness” on the platform. At the same time, other major tech companies like Apple are removing content at the request of the Chinese government.

Between Idemia issuing digital drivers licenses to U.S. citizens and Big Tech’s data collection, we are inches away from a fully integrated national ID system and an accompanying social credit score.

At the moment, the United States does not have a government-backed program like the Chinese. However, if gone unchecked, a de facto social credit system could still take hold due to the pervasiveness of big tech influence.

Idemia is building the infrastructure of the massive world-wide biometric surveillance grid. Demand for “convenience” with wireless, cardless, cashless payment and shopping is driving us right into their hands.

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Author: Tyler Durden

“It Was Stupid Of Me” – ‘Mrs.Watanabe’ Battered By Turkey’s Meltdown

It was not just Barclays bankers that took on the chin from Turkey’s turmoil, Japan’s infamous ‘mom-and-pop’ investors who snapped up high-yielding lira-denominated bonds “because of the yield” have been destroyed.

Thanks to the ever-present foot of the Bank of Japan on the throat of yields in Japan, small investors “reached for yield” around the world in an effort to ‘safely’ invest their hard-earned yen for a ‘decent’ return.

As The Wall Street Journal reports, Individuals have snapped up so-called Uridashi, high-yielding bonds marketed to households that are frequently denominated in foreign currencies like the lira, Brazilian real and South African rand. These aren’t highly leveraged instruments, but usually regular bonds. However, they offer juicy returns thanks to elevated interest rates in emerging markets.

The appeal is obvious after years of rock-bottom rates. A recent online offer from Rakuten Securities touted a 23.1% yield on lira debt issued by the European Investment Bank. That echoes the 10-year yield on Turkish government bonds of 20.9%, and is far above the yields available on benchmark Japanese government debt.

That army of punters often dubbed “Mrs. Watanabe,” after the stereotypical Japanese homemaker, piled $7.6 billion worth into Turkey… and that has become a bloodbath of paper (or realized losses) for those JPY-based investors as bond prices collapsed along with the Lira relative to the yen…

Retail traders using margin made roughly 1.45 trillion yen ($13.1 billion) of Turkish lira-yen trades in July, according to Financial Futures Association of Japan data. That sum is less than 1% of yen-dollar trading volumes, but has more than tripled in a year. But as The Wall Street Journal reports, many of those involved in these lucrative-for-your-broker trades, have lost fortunes.

Yasuyuki Tokue, a 49-year-old legal professional who lives near Osaka, said he bought lira bonds with a face value of 7.5 million yen ($67,500) between 2015 and 2017.

“I was attracted by the high interest rate,” Mr. Tokue said. However, he said he ended up losing 1.2 million yen when he sold some bonds back to his broker in April, and his outstanding holdings have fallen in value.

”I made a mistake,” in failing to hedge currency risk, Mr. Tokue said.

We suspect few of them realized (or cared) that there is no market for trading Uridashi, brokers can buy them back at face value in the local currency for a fee, and sell them back to the underwriter or to another investor. In Mr. Tokue’s case, he said he paid fees equal to between 3.2% and 8% of the total on the different bonds he sold.

Another investor in Yokohama said he had lost about 300,000 yen on lira bonds bought in 2012, or about 65% of his original outlay including commissions.

“I’ve learned a lesson,” said this investor, who declined to be named. “It was stupid of me to invest in a single emerging-market bond.”

Of course, when all else is lost, there’s always hope… Mr. Tokue said the damage to his overall portfolio wasn’t that serious and his remaining position could regain some value.

“You never know – the lira may not be that cheap in the distant future,” he said.

We wonder if Mr.Tokue would be interested in some Tesla bonds, we here they are offering great yield advantage and upside potential.

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Author: Tyler Durden

How A Free Market Inevitably Produces Dictatorship

Authored by Eric Zuesse via The Strategic Culture Foundation,

Who rules the land?

A deeper and truer version of this question is: What rules the land? Is it the money (the aristocracy), or is it the people (the public, the residents on that land)? (For the interest of paleoconservatives, the issue of residents’ citizenship will come later here, as “immigrants” instead of as “citizenship”; but our basic focus is not ethnicity/nationality; it’s class: the money, versus the voters; not the natives, versus the foreigners.)

In a democracy, the public rule — the people do — and it’s on authentically a one-person-one-vote basis, and anyone who is a resident in that land can easily vote, just like anyone else who lives there, because only the residents there, during the specific time-period of the voting, are the ultimate decision-makers, over that land, and over its laws. This is what a democracy is: it’s one-person-one-vote, and, in the political sense, it’s total equality-of-rights and total equality-of-obligations — real and total equality-by-law: equal rights, and equal obligations, for all residents. A democracy applies the same requirements to everyone.

This does not mean that individuals are equal in their abilities and in their needs, and so it’s not a statement about the economy; it is purely a statement about the government — a political question. The economy is a separate matter, though it’s highly dependent upon the government — the laws that are in place and enforced. Many people confuse these two fields, and mistakenly think that the economy is basic to the government.

So: the economy is dependent upon the government; the government determines the economy, which, in any land, is highly dependent upon the laws that are in place and that are enforced — the government.

That’s only “natural persons” who control a democracy — no collectives of any type, corporate or otherwise, can vote, because, if it were otherwise, it would be an easy way to establish a dictatorship there: persons with the financial means could create any number of “artificial persons” who could vote, or could buy votes (such as by purchasing news-media to slant ‘reality’ selling politicians and political positions to the voters), and this money could produce a country controlled more by dollars, than by owners (i.e., than by actual persons, voters — not by artificial “persons” such as the wealth-collections that are known as corporations). If wealth-collections could vote, that would invite control over the land to be by wealth (the number of dollars) instead of by actual residents (the number of persons). It could even produce control by foreign wealth. Foreigners could end up controlling the country if the number of dollars is a bigger determinant of who rules than is the number of voters.

Obviously, no democracy will allow foreigners to control the land. Imperialism is inconsistent with democracy; any empire is dictatorial, by its very nature. It entails dictatorship over the residents in its colonies, even if not necessarily over the residents in the imperial land that had conquered the colonial area.

Empire is consistent with a free market, but it is inconsistent with democracy. No empire is democratic, because each colony is ruled by non-residents. (If the colony were ruled by its residents, it wouldn’t be a colony, and there wouldn’t be an empire.)

A federation is not an empire. The difference between them is that, whereas in a federation, the right of self-determination of peoples takes precedence over the federation’s interest in maintaining the status-quo; in an empire, there is no such right — an empire is a dictatorship.

The propaganda for a free market is funded very heavily by billionaires such as the Koch brothers and George Soros, because control over countries naturally devolves into control by wealth, instead of into control by people (and certainly not by residents), if a free-market economy exists there. Billionaires do whatever increases their power; and, beyond around $100,000-per-year of income, any additional wealth buys no additional happiness or satisfaction, but only additional status, which, for individuals who are in such brackets, is derived from increases in their power, because, at that stage of wealth, money itself is no longer an object, only status is, and additional status can be derived only from additional power. All of the empirical findings in the social sciences are consistent with this; and, whereas the income-point in most of those studies, beyond which additional dollars produce no additional happiness for the owner, has been $75,000 per year, there has been inflation since those studies were performed, and one might more accurately say today that $100,000-per-year is the income-point beyond which only status is increased by additional income; happiness or satisfaction is not increased by income above that point. This is a statement about nature; it is the reality in which any market — free or otherwise — exists. It is “human nature,” and that’s basic to all of the social sciences which pertain to humans, including political science, and economics.

In economic theory, the phrase that has been traditionally used to refer to this reality, even before recent empirical studies showed the reality to be this way, was “the declining marginal utility of money.” Beyond around $100,000/year, additional “bucks” are for status, not for happiness. Anyone who has no addiction to status, doesn’t care about having more money coming in beyond that amount. Beyond that amount, the additional marginal utility of each dollar received is actually zero. The wealth-addict might cravemore, but it won’t do him-or-her any actual good; it won’t make the person happier. That’s the reality, now proven in numerous empirical studies. 

This reality has major political consequences. One is that a country with highly concentrated wealth (the bottom 50% own almost nothing) is serving the addictions of a few, not the needs of the many — and therefore concentrated wealth cannot be sustained in a democracy, but only in a dictatorship: a dictatorship of wealth, where what determines power isn’t the voters but the dollars.

An important philosophical champion of free markets is the libertarian philosopher Hans-Hermann Hoppe. In 2001, Hoppe published his DEMOCRACY: The God that Failed, which was considered a libertarian masterpiece. Hoppe unapologetically argued there that libertarianism and conservatism are one and the same — and that he wanted it, passionately: he hated democracy. Unlike many libertarians, who falsely allege that democracy is impossible without there first being libertarianism (a free market), Hoppe acknowledged and argued for the mutual inconsistency between libertarianism and democracy. Although I don’t share his preference for a rule by the wealth instead of a rule by the residents, and thus he is an ideological opponent — the opposite of a supporter of my own position, as it’s being set forth here (and far more briefly than his tome) — I consider him to be the fullest and most internally consistent libertarian philosopher, and perhaps the most significant libertarian political philosopher in this Century, thus far. Whereas lots of people call themselves “libertarian,” he actually is — fully — that. Of course, some libertarians don’t agree with Hoppe’s view; but, on 30 August 2011, Michael Lind at salon.com headlined “Why Libertarians Apologize for Autocracy: The experience of every democratic nation-state proves that libertarianism is incompatible with democracy,” and he empirically found that Hoppe was correct about this incompatibility.

Hoppe argues not only for an aristocracy, but for a hereditary one, and he even opposes immigration; so, if he were a democrat, at all, then he’d be excluding immigrants from voting. But he’s not even that much of a democrat. And he especially approves of hereditary monarchy. His reason for that preference is traditional libertarianism, which favors the private over the public: “Hereditary monarchies represent the historical example of privately owned governments, and democratic republics that of publicly owned governments.” Libertarianism opposes public ownership, favors private.

Like any philosopher, Hoppe has ignored crucial issues in order to sell his case (after all, it’s a philosophical, not a scientific, case; it is ideological propaganda alleging that libertarianism is good — instead of being anything scientific); and the most interesting thing that he has avoided discussing in it is anti-trust, anti-monopoly, anti-oligopoly — the issues about concentration of power. He ignores those issues. For example, whenever he uses the term “monopoly,” he is referring solely to “government,” never to the economy (he assumes that in a free market there can’t be any oligopolies or monopolies). He is, after all, a crank (a free-market political theorist and therefore someone who implicitly denies that government is basic to an economy, and who assumes the converse, that the government is instead built upon the economy), though he’s an erudite one and thus acceptable to his fellow-scholars. Erudition doesn’t mean, nor necessarily include, being scientific. And the scientific reality is that the political issue isn’t ‘the government’s monopoly on power’, but instead it’s simply any concentrations of power — both monopolies and oligopolies — which unequalize both rights and obligations in the society, such that whereas a few people (the aristocracy) have many rights and few (if any) obligations, most people (the public) have few rights and many obligations. The latter type of society is called a “dictatorship.” The more that it exists, the more that it comes to exist — and, consequently, the less that there can exist democracy.

The basic issue in political science is not “freedom” versus “slavery” (two concepts in economics); it is “democracy” versus “dictatorship” (two concepts in politics).

Power precedes the economy; it directs the economy, if and where an economy even exists.

Democracy is natural where wealth is nearly-evenly distributed. Dictatorship is natural where wealth is extremely-unevenly distributed. The latter is true because no nation can maintain a democracy if the wealth is highly unequal. If the wealth is highly equal, then the possibility for democracy to emerge is substantial. But if the wealth is highly unequal, then the possibility for democracy even to exist to any extent, is low. All of the extremely wealthy people would have to be honest in order for them to tolerate rule by the majority. Otherwise, they’d simply be using their news-media to deceive instead of to inform the public: that’s what the ‘news’-people would be paid to do, cover-up real problems, and manufacture ‘reality’ — manipulate the public, instead of inform the public. If the distribution of wealth is highly unequal, the ‘news’people will be paid to deceive the public, instead of to inform the public. This (and it includes the ‘charitable’ foundations) is why the majority of the public have come to believe the profoudly false assertion that “having a rich class is a benefit” to the public. They’ve been deceived.

Most of the world is dictatorial. That’s because, almost everywhere, wealth, and even income, is extremely unevenly distributed. The laws and their enforcement determine the distribution of wealth and of income. The natural tendency is toward dictatorship, because a free market produces increased economic concentration. Democracy is not natural. Dictatorship is natural. What’s natural for a body-politic is to fulfill addictions, not to fulfill needs. 

As inequality of wealth increases, corruption also increases. Empirical studies find that successful people tend to be bad: it’s natural for the scum and not the cream to rise to the top in organizations. So, the wealthier a person is, the worse the person tends to be. And it’s not just that, but success itself tends to make a person worse than the person was before the success. So, it’s natural that at the very top, tend to be the very worst people. Good government is not natural; bad government is natural. Good government is unnatural.

Corruption is rule by deceit. An example of how that works at the federal-government level is here. An example of that in more detail is here. Another such detailed example, but at the state-or-local government level, is here. And an example of it within academia, and at the federal regulatory agencies, is here. So, in a country that has extreme wealth-inequality, the way in which the public’s ‘consent’, to the billionaires’ rule, is manufactured, is by means of deceit — a rot that’s throughout the entire body-politic and society. This is how an extreme inequality of wealth is produced. It cannot be done honestly. Transparency International has reported that corruption and “social exclusion” or bigotry tend to go together, but has ignored the possible relationship between corruption and the economic distribution of either wealth or income. Perhaps the billionaires who fund TI don’t want such correlations to be pointed out, if they exist; so TI doesn’t investigate this. 

The reason why a free market inevitably increases dictatorship, is that dictatorship is natural, just as a free market itself is natural, and power pre-exists everywhere to upset and overturn any equality that might exist in either sphere. Power is natural. No economy exists but that power pre-exists. The political sphere pre-exists the economic sphere. The basic reality, in any society, is power.

Thus, the question has always been: What rules? Is it the wealth? Or is it the people? The natural condition is for wealth to rule, because money (especially all excess money, all income above $100,000 per year, and certainly all income above $1,000,000 per year — what can truthfully be called 100% political money, because it can be ‘given away’ with no real loss to the current owner) is power. Although wealth isn’t the only source of power, it is a major source of power. (It can even be the major source of power.) And power rules everywhere. By definition, power rules in politics; and, by nature, the wealthy tend to rule not only in the economy, but also in the government. 

That’s what’s natural. Democracy isn’t natural, but a free market, and an aristocratic government, are both natural. And the political reality determines the economic reality.

PS: You have just read here an online book. This article, including all of its sources that are linked to, and the sources that are linked to in those sources, constitute more than an ordinary book. The complete case and its documentation are fully presented in it. To anyone who finds this book valuable, I would recommend, as follow-up, a book of the traditional sort: Marjorie Kelly’s masterpiece, The Divine Right of Capital.

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Author: Tyler Durden

Rand Slumps As Trump Questions “South Africa Land Expropriations” From White Farmers

Just days after the first ‘Zimbabwe-fication’ actions of South African President Ramaphosa’s plan to confiscate white farmers’ land with no compensation and hand them to the black population begins, President Trump – seemingly following a story by Fox News’ Tucker Carlson – has asked Secretary of State Mike Pompeo “to closely study the South Africa land and farm seizures and expropriations” raising concerns that the U.S. might target South Africa with possible sanctions next.

The reaction was swift in the Rand…

Here is the Tucker Carlson segment that appears to have triggered President Trump.

*  *  *

By way of background, we have written extensively on South Africa’s ‘Zimbabwe-fication’ plans, most recently here.

South Africa’s white farmers have been desperately trying to sell their lands at record pace ahead of planned government land seizures, according to a local farmer’s union. However, there are no buyers.

As Ryan Martinez writes for PlanertFreeWill.com, tensions among the country’s white farming community have been rising since the election of Cyril Ramaphosa who assumed office earlier this year and committed his African National Congress (ANC) to land expropriation.

ANC chairman Gwede Mantashe sparked panic last week when he said:

“You shouldn’t own more than 25,000 acres of land. Therefore, if you own more it should be taken without compensation.”

“People who are privileged never give away privilege as a matter of a gift,” he continued.  “And that is why we say, to give you the tools, revisit the constitution so that you have a legal tool to do it.”

Mantashe comments were condemned by both white and black farmers, with unions predicting such a move would lead to job losses and a situation in which South Africa may no longer be able to feed itself.

Omri van Zyl, head of the Agri SA union, which represents mainly white commercial farmers, said:

“The mood among our members is very solemn. They are confused about the lack of any apparent strategy from the government and many are panicking.

So many farms are up for sale, more than we’ve ever had, but no one is buying.”

“Why would you buy a farm to know the government’s going to take it?”

The National African Farmers’ Union (Nafu), which represents the country’s black farmers, said the scheme would lead to job losses.

Nafu president Motsepe Matlala said:

“From a practical and economical point of view it will not work.”

“Land will be a central issue in the looming 2019 election year, and rhetoric is always easier than transformative action.”

AfriForum, an influential lobby group, recently warned the government its plans would be “catastrophic”.  Ian Cameron, the group’s spokesman, said: “We’re really heading for a state of anarchy if something doesn’t change drastically.”

Local newspaper City Press is reporting that two game farms in the northern province of Limpopo were the first to be targeted for unilateral seizure after negotiations with the owners to purchase the properties stalled.

Analysts warn the move could undermine property rights and deter investment.

In Zimbabwe, violent land seizures which were authorized by Robert Mugabe in the 1990s which sent the country into a spiral of decline from which it has never recovered.

“Markets are sensitive to anything perceived to be ‘Zimbabwe-fication’ on the land-reform front,” market analyst Henrik Gullberg noted.

Agri SA states 20% of South Africa’s farms produce 80% of the food that feeds millions of people in southern Africa, and many of those properties would be affected by a 25,000-acre cap.

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Author: Tyler Durden

Are ‘Petroyuan’ Futures Still A “High-Risk Endeavor”?

Authored by Irina Slav via Oilprice.com,

When the long-awaited yuan-denominated oil futures launched earlier this year, opinions were split: one camp argued with passion that the days of the petrodollar were numbered, its demise a certainty. The other camp argued with just as much passion the yuan has yet to catch up with the dollar as an international currency, and the Chinese futures had basically as much of a chance as a snowflake in Hell.

Now, six months later, opinions remain split, but now the two camps have some facts and figures in their arsenal. For example, a figure for the pro-petroyuan camp was the record surge in trading volume in June, to 137.5 million tons of crude for delivery in September. This translates into 137,503 lots, compared to a combined 2.6 million lots for Brent and WTI together, though, so the yuan contract still has a way to go to catch up.

[ZH: the following chart shows absolute contract volume diff – not straight comparison of actual crude volume]

The anti-petroyuan camp, however, seems to have a bit more going for it after six months of trade. Bloomberg cites traders as saying that the exchange rate of the yuan coupled with storage costs make the Chinese oil contract still a high-risk endeavor.

The yuan has been falling in recent months on the back of slowing economic growth and the tariff spat with the United States. There is a lot of space for surprises, however, and unpredictability is not something low-risk traders like, so exchange rates are one thing that could put them off the yuan contract.

Storage costs in China are another problem. They are much higher than elsewhere: US$0.95 per barrel per month in the Shanghai International Energy Exchange compared with US$0.05 per barrel per month at the Louisiana Offshore Oil Port, Bloomberg reports. The reason for the higher cost is limited storage capacity availability and the requirement that the cargo be stored at a specific storage facility rather than at any available.

So, in light of these unpleasant facts, what does the yuan-denominated futures contract have going for them?

Well, apparently, they could make sellers richer than if they choose to trade Middle East grades. The yuan contract last week traded at a considerable premium to all other oil futures, with the premium to the Middle East benchmark at US$3.35 per barrel.

That makes a profit of US$6.7 million for a cargo, according to Bloomberg calculations – certainly not a small sum. But is it worth all the risks?

Perhaps it is and perhaps it isn’t, but it looks like it is still too early to say. The seriousness of the risks, after all, is relative. This was evidenced in the record-high trading interest in yuan futures in early June that some observers, quoted by S&P Global Platts, attributed to the heightened price volatility in the Brent and WTI benchmarks. On the other hand, storage costs are a fixed problem that is not about to go away. It’s a risk that traders have probably already learned to factor into their calculations. Exchange rates are another cesspool of volatility, but volatility is a double-edged sword. Economic data from China may still surprise positively as it has before, despite the tariffs.

Ultimately, however, the question of whether the petrodollar will be replaced by the petroyuan is moot. The reason for this is simple: the dollar is the international reserve currency because most oil is traded in dollars, says international relations professor and China expert Douglas Bulloch. It is the international reserve currency because of the size and nature of the U.S. economy. Therefore, the only way for China to succeed in having its currency stand a fighting chance against the greenback is to continue opening up its economy. Oil trading is only part of that.

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Author: Tyler Durden