May 13

Today’s News 13th May 2019

  • Kamikaze DroneBullet Knocks Enemy UAVs Out Of The Sky

    Just a few months back, we were one of the first to cover Kalashnikov’s high-precision suicide drone that delivers a small warhead to target coordinates.

    Then a month later in March, we discovered schematics for a drone with a shotgun embedded into its airframe on the Russian Federal Service’s website for Intellectual Property.

    The proliferation of small weaponized drone technology is inevitable, and from our past coverage, it seems that Russia is leading the charge.

    To be frank, there’s nothing that global governments can do to stop it. Armed drones operated by terrorist groups will be used for assassinations and terrorist attacks.

    Take, for example, Venezuelan President Nicolas Maduro, who narrowly escaped an assassination attempt by a weaponized drone back in August 2018.

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    At the begging of the year, Huthi rebels detonated a suicide drone over the Al Anad Air Base in Yemen during a military parade with Yemen’s top brass underneath.

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    Now imagine a suicide drone operated by terrorists, packed with C-4 explosives flying towards the White House, a major airport, an Ivy League University, shopping district, and or a sports arena. As shown in the videos above, there are very little defenses to protect a high-value asset from a small drone attack.

    Until now. AerialX, a Canadian-based company, has developed a solution called the DroneBullet, reported Digital Trends.

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    CEO of AerialX Noam Kenig describes the DroneBullet as a “hybrid between a missile and a quadcopter.” It’s basically a kamikaze drone which looks like a missile but has flight characteristics of a quadcopter.

    The drone can reach speeds in excessive of 200 mph in a dive attack. It’s designed to lock onto enemy drones with its camera and various neural net-based components, which allows it to knock the target out of the sky.

    “We started out developing our own drones,” Kenig said. “At a certain point, we realized that the industry had become crowded. We then started working on counter-drone technologies. One solution we started working on was the drone forensic toolkit, which lets people retrieve crashed drones and analyze their flight information. We’ve also worked on detection systems for drones. Finally, we started work on the DroneBullet.”

    The drone is launched from a ground base. The operator uses a laptop with the drone’s cameras to identify the target, once the target is confirmed, the DroneBullet will handle the rest.

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    “It can track objects autonomously and will even work out exactly where to hit its target, depending on its speed and whether [its target is] a quadcopter or fixed wing drone,” Kenig continued. “That could be from above, below, or from the side. It works out where the weak spot is and goes after it. If it sees a small drone like a Phantom, it will hit it full-force from below. If it’s a bigger target, it can change the attack mode and attack from above. That’s usually the most sensitive part for drones, where the GPS module and multiple exposed propellers are housed.”

    Unlike Kalashnikov’s drone, the DroneBullet doesn’t use C-4 but rather uses its kinetic energy for maximum destruction of the target.

    “It can operate in two types of scenario,” Kenig said. “It can be both a standalone system and also work with third-party detection systems. That means that it could be linked to radar or vision-based systems, and then deployed autonomously.”

    Kenig acknowledged that the Pentagon and law enforcement agencies across the country have purchased the DroneBullet.

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    The proliferation of drones is so dangerous that Congress last June, top homeland security officials called weaponized drones a “serious, looming threat” that the government is “currently unprepared to confront.”

    “It doesn’t take much training and affixing some kind of explosive to a drone to fashion a crude weapon,” RAND Corporation senior political scientist Colin Clarke said.

    Clarke said these drones are becoming more frequently deployed with terrorist groups.

    “This is the new world we’re living in. And we’ve got to adjust and I think we’ve got to come up with counter measures,” Clarke said.

    Watch the DroneBullet in action – successfully taking down a DJI Phantom with mortar rounds strapped underneath its belly. 

  • Ireland Declares Climate Emergency

    Authored by Irina Slav for Oilprice.com,

    Ireland has declared a climate emergency, with Climate Action Minister Richard Bruton calling climate change the greatest challenge mankind is facing.

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    ITV quoted the minister as saying,

    “We’re reaching a tipping point in respect of climate deterioration. Things will deteriorate very rapidly unless we move very swiftly and the window of opportunity to do that is fast closing.”

    The move, which followed cross-party support to amendments to a climate action report drafted by the country’s parliament, made Ireland the second country in the world to declare a climate emergency after the UK. In the latter, the declaration followed crippling environmentalist protests in London that paralyzed parts of the city.

    In its wake, an independent, government-appointed Committee on Climate Change recommended to the government such measures as reducing the consumption of meat and dairy products, changing the way farms do business, and making electric cars the only cars that people can buy starting in 2035. By 2050, according to the panel, the country should be greenhouse gas emission-free.

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    It looks like climate emergency declarations could become a trend: hours after media reported the Irish parliament’s vote for an emergency, the New Zealand Vegan Society issued a call for the government to declare a climate emergency.

    “New Zealand is woeful in its protection of the environment, with many rivers and waterways polluted, in part due to excess dairying in particular regions. It shows that we are simply not doing enough to protect our part of the world,” the call read.

    “It is the next biggest inconvenient truth… eating animals is causing habitat loss, driving climate change and the 6th mass extinction wave. What can we do? The answer is simple: go vegan and plant trees!” said a Vegan Society Aotearoa New Zealand representative, Claire Insley.

    It is likely that more activism will follow elsewhere, and if persistent enough it would lead to more climate emergency declarations. The question remains, however, whether declarations would spur enough effective-immediately legislation that could effect a comprehensive energy demand change in whole nations.

    Meanwhile, new renewable energy capacity additions have stalled, with growth in 2018 flat on the year, according to new figures from the International Energy Agency.

  • Russiagate Zealotry Continues To Endanger Western National Security

    Authored by Stephen Cohen via The Nation,

    If Venezuela becomes a Cuban Missile–like Crisis, will Trump be free to resolve it peacefully?

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    Now in its third year, Russiagate is the worst, most corrosive, and most fraudulent political scandal in modern American history. It rests on two related core allegations: that Russian President Vladimir Putin ordered an “attack on American democracy” during the 2016 presidential campaign in order to put Donald Trump in the White House, and that Trump and his associates willfully colluded, or conspired, in this Kremlin “attack.” As I have argued from the outset—see my regular commentaries posted at TheNation.com and my recent book War With Russia?—and as recently confirmed, explicitly and tacitly, by special prosecutor Robert Mueller’s report, there is no factual evidence for either allegation.

    Nonetheless, these Russiagate allegations, not “Putin’s Russia,” continue to inflict grave damage on fundamental institutions of American democracy. They impugn the integrity of the presidency and now the office of the attorney general. They degrade the many Democratic members of Congress who persist in clinging to the allegations and thus the Democratic Party and Congress. And they have enticed mainstream media into one of the worst episodes of journalistic malpractice in modern times.

    But equally alarming, Russiagate continues to endanger American national security by depriving a US president, for the first time in the nuclear age, of the diplomatic flexibility to deal with a Kremlin leader in times of crisis. We were given a vivid example in July 2018, when Trump held a summit with the current Kremlin occupant, as every president had done since Dwight Eisenhower. For that conventional, even necessary, act of diplomacy, Trump was widely accused of treasonous behavior, a charge that persists. Now we have another alarming example of this reckless disregard for US national security on the part of Russiagate zealots.

    On May 3, Trump called Putin. They discussed various issues, including the Mueller report. (As before, Putin had to know if Trump was free to implement any acts of security cooperation they might agree on. Indeed, the Russian policy elite openly debates this question, many of its members having decided that Trump cannot cooperate with Russia no matter his intentions.) A major subject of the conversation was unavoidably the growing conflict over Venezuela, where Washington and Moscow have long-standing economic and political interests. Trump administration spokespeople have warned Moscow against interfering in America’s neighborhood, ignoring, of course, Washington’s deep involvement for years in the former Soviet republics of Ukraine and Georgia. Kremlin representatives, on the other hand, have warned Washington against violating Venezuela’s sovereignty. Increasingly, there is talk, at least in Moscow policy circles, of a Cuban Missile–like crisis, the closest the United States and Russia (then Soviet Russia) ever came to nuclear war.

    To the extent, however remote, that Venezuela might grow into a Cuba-like US-Russian military confrontation, would Trump be sufficiently free of Russiagate allegations to resolve it peacefully, as President John Kennedy did in 1962? Judging by mainstream media commentary on the May 3 phone conversation, the answer seems to be no. Considering the mounting confrontation in Venezuela, Trump was right, even obligated, to call Putin, but he got no applause, only condemnation. To take some random examples:

    • Democratic Representative David Cicilline asked CNN’s Chris Cuomo rhetorically on May 3, “Why does the president give the benefit of doubt to a person who attacked our democracy?” while assailing Trump for not confronting Putin with the Mueller report.

    • The same evening, CNN’s Don Lemon editorialized on the phone call: “The president of the United States had just a normal old call with his pal Vladimir Putin. Didn’t tell him not to interfere in the election. Like he did in 2016, like he did in 2018, like we know he is planning to do again in 2020…. You just don’t seem to want us to know exactly what was said…. Nothing to see when the president talks for more than an hour with the leader of an enemy nation. One that has repeatedly attacked our democracy and will do so again.” (Lemon did not say on what he based the expanded, serial charges against Putin and thus against Trump or his allegation about the 2018 elections, which congressional Democrats mostly won, or his foreknowledge about 2020 or generally and with major ramifications why he branded Russia an “enemy nation.”)

    • We might expect something more exalted from James Risen, once a critical-minded investigative reporter, who found it suspicious that “Trump and Putin were both eager to put the Mueller report behind them,” even for the sake of needed diplomacy.

    • Senator Amy Klobuchar and Representative Eric Swalwell, both candidates for the 2020 Democratic presidential nomination, also expressed deep suspicion regarding the Trump-Putin phone talk. Swalwell was sure it meant that Trump “acts on their behalf,” that he “is putting the Russians’ interests ahead of the United States’ interests.” (Voters may wonder if these candidates and quite a few others who continue to promote extremist Russiagate allegations are emerging American statesmen.)

    • Not surprisingly, a Washington Post opinion writer argued that the phone call meant “Trump is counting on Russian help to get reelected.”

    None of these “opinion leaders” mentioned the danger of a US-Russian military confrontation over Venezuela or elsewhere on the several fraught fronts of the new Cold War. Indeed, retired admiral James Stavridis, once supreme allied commander of NATO forces and formerly associated with Hillary Clinton’s campaign, all but proposed war on Russia in retaliation for its “attack on our democracy,” including “unprecedented measures” such as cyberattacks.

    Russiagate’s unproven allegations are an aggressive malignancy spreading through America’s politics to the most vital areas of national security policy. A full nonpartisan investigation into their origins is urgently needed, but US intelligence agencies were almost certainly present at their creation, which is why I have long argued that Russiagate is actually Intelgate. If so, James Comey, then FBI director, was present at the creation, though initially in a lesser role than were President Barack Obama’s CIA Director John Brennan and intelligence overlord James Clapper.

    Comey recently deplored Attorney General William Barr’s declaration that US intelligence agencies resorted to “spying” on the Trump campaign. (In fact, Barr mischaracterized what happened: The agencies, first and foremost Brennan’s CIA, it seems, ran an entrapment operation against members of the campaign.) Comey warned Barr that he will discover that Trump “has eaten your soul.”

    It would be more accurate to say—and certainly more important—that baseless Russiagate allegations are eating America’s national security.

  • FBI: More Cops Died On Duty In 2018

    According to the FBI’s annual Law Enforcement Officers Killed and Assaulted, 2018 (LEOKA) report published Monday, more law enforcement officers died in the line of duty in 2018 than the previous year.

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    LEOKA shows 55 officers were “feloniously killed,” and 51 died accidentally, for a total of 106 killed in 2018, a 12% spike YoY. Of the 55, 23 died in tactical situations, traffic stops, investigating suspicious activities, attempting to arrest wanted persons, or trying to de-escalate a situation with a mentally unstable person.

    Eleven officers died in ambushes, and four died while investigating burglaries or a person with a firearm. The report said 93% of the (51/55) felonious deaths, the perpetrator used a handgun.

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    Twenty-six officers died in the southern states, that is twice as many than any other region in the country. Twelve officers died each in the Midwest and West, and four died in the Northeast. Twelve officers died in the Midwest, and 12 died in the West, and four died in the Mid-Atlantic and Northeast regions.

    Law Enforcement Officers Feloniously Killed Region, Geographical Division, and State, 2009-2018 

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    Law Enforcement Officers Accidentally Killed Region, Geographical Division, and State, 2009-2018 

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    Over half of the perpetrators had criminal arrests, and 20% were under judicial supervision at the time of the feloniously killing of an officer.

    Law Enforcement Officers Feloniously Killed Percent Distrubtion by Type of Weapon, 2009-2018

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    Motor vehicle deaths were the primary cause of accidental deaths with 34 officers dying in traffic accidents. Nine officers were struck by vehicles, three drowned, and two died of firearms-related charges.

    Of the officers who were feloniously killed in 2018:

    • The average age was 37.
    • The average tenure in law enforcement was 10 years.
    • Three were female and 52 were male.

    Of the officers who were accidentally killed last year:

    • The average age was 36.
    • The average tenure in law enforcement was 10 years.
    • Four were female and 47 were male.

    However, there is some improving news. LEOKA’ latest preliminary statistics (as of May 5) show that 15 officers were killed feloniously so far this year, down from 27 in 2018 in the same period.

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  • How Lies Become 'Facts' In US 'News'

    Authored by Eric Zuesse via Off-Guardian.org,

    On Fox News Channel’s May 2nd edition of “The Story with Martha MacCallum” was alleged, by the program host (at 2:45 in this video), that one reason we must invade Venezuela (if we will) is that “People have lost 24 pounds” there.

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    So (her point was), if we invade, that’s not evil, it’s no coup, but instead it’s humanitarian (presumably like it was in Iraq in 2003, when we invaded that country, which likewise had never invaded nor threatened to invade the United States — it was raw international aggression, by our country, against Iraq).

    Individuals who fall for a liar once, will typically fall for that liar again and again, without limit, because they are (for whatever reason) prejudiced to trust him. But is this attempt, at “regime change” in Venezuela, yet another example of that, or might it instead really be the case (this time) that (as this Fox host implies) to invade Venezuela will help the people there (gain back that lost weight, etc.), not kill many of them and destroy their nation even worse than it already was?

    So, I checked online, to find what the source was, if any, for this stunning allegation by the Fox News host. After all, such a steep a weight-loss for an entire nation would be shocking.

    If, indeed, the allegation has a scientifically trustworthy source, then there exists, somewhere, a rigorously done, statistically sound, empirical study of thousands of Venezuelans’ body-weights, in which each one of those individuals has been weighed, not only once, but twice, separated in time by two specific years, so that there exists a credible “before” weight, and “after” weight, to compare, in each one of these many individual cases, such that the study found that the average Venezuelan lost 24 pounds during that before-after time-period.

    The sample-size has to be large enough, and the sampling-method has to be randomized enough, so that the result will meet the standards of statistical reliability in order to be able to represent the entirety of the Venezuelan population. Many thousands of such scientific studies are, in fact, published each and every year, and it might have been done regarding the body-weights of Venezuelans. However, otherwise (that is, if this was not done regarding Venezuelans’ body-weights), then that Fox News host was either lying, or else deceived by other people, in order for her to have made this remarkable statement. One, or else the other, is the case, here — either such a study was done, or else it wasn’t — so: which of those two options occurred, in this particular instance? Let’s see:

    She might have received this ‘fact’ which she had stated, from any of many sources that are online:

    Just a few days prior to that show, National Review had headlined, on 30 April 2019, “The Economics of Tyranny in Venezuela”, and reported “The real-life consequences of Chavismo’s misguided policies are telling: Venezuelans lost an average of 24 pounds in the year 2017.”

    That linked to the 24 January 2019 Council on Foreign Relations article “Venezuela: The Rise and Fall of a Petrostate”, which said that Venezuela has “a devastating humanitarian crisis, with severe shortages of basic goods, such as food and medical supplies. In 2017, Venezuelans lost an average of twenty-four pounds in body weight.”

    That, in turn, linked to a 21 February 2018 Reuters article, “Venezuelans report big weight losses in 2017 as hunger hits”, which opened:

    Venezuelans reported losing on average 11 kilograms (24 lbs) in body weight last year and almost 90 percent now live in poverty, according to a new university study on the impact of a devastating economic crisis and food shortages.
    The annual survey, published on Wednesday by three universities, is one of the most closely-followed assessments of Venezuelans’ well being amid a government information vacuum and shows a steady rise in poverty and hunger in recent years.

    Over 60 percent of Venezuelans surveyed said that during the previous three months they had woken up hungry because they did not have enough money to buy food. About a quarter of the population was eating two or less meals a day, the study showed.

    Last year, the three universities found that Venezuelans said they had lost an average of 8 kilograms during 2016.

    This time, the study’s dozen investigators surveyed 6,168 Venezuelans between the ages of 20 and 65 across the country of 30 million people. …

    “Income is being pulverized,” Maria Ponce, one of the study’s investigators, told a news conference at the Andres Bello Catholic University. …

    She was the only cited source. So, on May 3rd, I googled “Maria Ponce” https://www.ucab.edu.ve/ “Universidad Católica Andrés Bello”, and found: https://ucab.academia.edu/MariaPonce

    That indicated she had done “11 papers” and the most promising to be the one was at the very top: https://www.academia.edu/38305342/Informe-PobrezaISBN-2017.pdf

    I did there a “Find” for the number alleged in the Reuters article to have been the sample-size, “6,168” because if this document does, in fact, report any such study, then that number would need to be shown somewhere in it. I got “0” finds. So, this paper can’t be the basis for the assertion.

    The only other promising prospect was this paper.

    That one too didn’t include “6,168”. However, it did give her full name: “María Gabriela Ponce Zubillaga” which I then googled. The only promising find I could see there was: this, and that too lacked “6,168”.

    Also, at the University itself, there is one paper shown from her, but it’s dated 2013.

    None of the works from her is actually dated after 2015, and so there is a mystery as to why the only “study” by her which contained such internationally influential ‘findings’ has not been included by her in what she has uploaded to the Web or has otherwise been made public (except as ‘summarized’ in that Reuters article).

    Also of interest is that a 2017 publication, which mentions her name, but which has no article from her, shows on its page 204, “Gráfica 14. Coeficiente de Gini. Venezuela. 2000-2015” or the year-by year economic-inequality coefficient (or “Gini”) for Venezuela, throughout the period 2000 to 2015, and this coefficient plunged during that period, to reach in 2015 “0.381” — which was one of the world’s lowest, which means that Venezuela had one of the world’s most equal distributions of incomes then — and this is an astounding performance, because in 2002 Venezuela’s was near the global average, 0.50.

    If that is true, then Venezuela’s Government has at least this important economic achievement to be proud of. (Hugo Chavez became President in 1999, and was replaced by Nicolas Maduro when Chavez died in 2013. The U.S. regime attempted many coups against both, but the present effort is the most serious one yet.)

    Furthermore, Ponce’s online-posted CV shows no publications from her after 2015.

    So, I contacted her at https://ucab.academia.edu/MariaPonce, and left her this message plus my email-address so that she could respond:

    Please email me the alleged February 2018 study

    https://www.reuters.com/article/us-venezuela-food/venezuelans-report-big-weight-losses-in-2017-as-hunger-hits-idUSKCN1G52HA

    documenting that Venezuelans lost an average of 24 pounds due to the economic troubles.

    Eric Zuesse

    It has been six days now with no response. If I ever hear back from her, or from anyone who is associated with that alleged ‘study’, then I shall do a follow-up news-report on the matter.

    America’s media-watchdog FAIR (Fairness and Accuracy in Reporting) headlined on 30 April 2019 “Zero Percent of Elite Commentators Oppose Regime Change in Venezuela”, and reported (and documented) that,

    Over a three-month period (1/15/19–4/15/19), zero opinion pieces in the New York Times and Washington Post took an anti–regime change or pro-Maduro/Chavista position. Not a single commentator on the big three Sunday morning talkshows or PBS NewsHour came out against President Nicolás Maduro stepping down from the Venezuelan government.”

    This lengthy study of hundreds of news-commentaries closed by saying:

    When it comes to advocating the overthrow of the US government’s foreign undesirables, you can always count on opinion pages to represent all sides of why it’s a good thing. And the millions of people who beg to differ? Well, they’re just out of the question.”

    So, though the present news-report is being distributed to all of America’s national news-media, for them to publish freely, they’ve already made clear that at least none of the ones that have large audiences will publish it. They know the truth, just as you do (now, at least), but they aren’t in the truth-business — they only pretend to be (just as they pretend to report ‘the news’, instead of the the carefully filtered propaganda).

    Polls show that Americans want bipartisan government. But both of the political parties are funded by billionaires, and all billionaires are neoconservatives — supporters of extending the U.S. empire — because it’s their empire, and because none of them is actually satisfied with how large it already is.

    So: they hire the writers for, and the candidates of, both political parties, to help them make it even bigger, ceaselessly. So, if you don’t see this article published in the pages of the New York Times, Washington Post, etc., you know why: they’re working to keep ‘fake news’ out, and to report only the real propaganda, the authorized propaganda — the propaganda that those billionaires want to be spread.

    And this also explains that interview on Fox News Channel’s May 2nd edition of “The Story with Martha MacCallum”. It also explains why Trump could say there (at 0:19) — and be unchallenged for saying — “It is, from a constitutional standpoint, it’s the way it’s supposed to be. He [Guaido] was elected,” though everything in that statement is absurdly false; and this is also the reason why, later (at 3:05), the host, MacCallum, seconded that lie, by asserting that the actually merely self-proclaimed ‘interim President of Venezuela’, Guaido, is what “the people of Venezuela, what they democratically voted for,” though the only voters who ever actually voted for him were the majority of voters in merely Vargas, which is one of Venezuela’s 23 states.

    Guaido has never been in any national Venezuelan election (but only that local one) — not against Maduro, not against anyone else. Yet, the U.S. regime is trying to impose him upon the entire Venezuelan people, and Trump even claims that Guaido had won a national election.

    Mr. Guaido in 2016 was elected by the residents of Vargas to become its Representative in the nation’s unicameral legislature, the National Assembly, and never yet has faced any national Venezuelan election, on anything. His record in national public office is therefore almost non-existent; but, within the National Assembly itself, he nonetheless rose (due to his long-time backing by the U.S. regime) immediately to become elected by its members, as the President of that body, the National Assembly.

    In other words, he was appointed, by the national legislature, immediately after having been elected solely by, and solely to represent, the residents of the state of Vargas. If he were to become installed as ‘interim President’ of the nation, it would be with no clear record on national issues. And it would be with no vote by the national electorate.

    Vargas, one of Venezuela’s poorest states, was predominantly socialist, so Guaido had pretended to be socialist; and he won that local office on that fraudulent basis; but, once in office, he became immediately fascist.

    He was behaving in accord with his being a perfect CIA asset, to take over a democratic socialist country that the dictatorial capitalist U.S. regime wants to control. He is acting as a traitor to Venezuela, and certainly outside of and violating Venezuela’s Constitution.

    So, if he were to become Venezuela’s leader, that would be only by appointment on the part of the legislators, and not by any democratic election by the Venezuelan people, and it would also be in violation of Venezuela’s Supreme Judicial Tribunal, which is the only body that possesses the Constitutional authority to authorize the National Assembly to consider the possibility of appointing an interim President. (It didn’t do that; so, no one can possibly be “the interim President of Venezuela.”) All of what the U.S. regime and its supporters are demanding, stands in direct violation of Venezuela’s Constitution.

    The United States and its allies nonetheless demand it, and the U.S. regime says that “All options are on the table,” up to and including a U.S. invasion of Venezuela, in order to achieve their drastic and blatantly unConstitutional change-of-Government in Venezuela. Violating international law isn’t enough; they demand to shred Venezuela’s Constitution, too.

    And the lie about “People have lost 24 pounds” can be understood only in this broader context of lies, and only by means of exposing and understanding the lies for what they are, instead of only by what they claim (which is what the liars and their press want the public to be fooled to believe).

  • Why One Bank Thinks That Much More Market Pain Will Be Needed To Close Any Trade Deal

    Futures are sharply lower again after the weekend failed to provide any substantive evidence that the “constructive” tone suggested by both Steven Mnuchin and Liu He on Friday was present, and in fact, soundbites from both president Trump and Chinese media indicated that the latest trade war escalation may last well into 2020 without a resolution, with China potentially waiting to see if Joe Biden is be elected president, helping to resolve the trade war.

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    Yet while we now know how and why the trade talks unraveled so fast thanks to a detailed expose by the WSJ, which reports that “U.S. and Chinese governments both sent signals ahead of their trade talks in Washington last week that a pact was so near they would discuss the logistics of a signing ceremony” but “in a matter of days, the dynamic shifted so markedly that the Chinese deliberated whether to even show up after President Trump ordered a last-minute increase in tariffs on Chinese imports because the U.S. viewed China as reneging on previous commitments”, the question remains what this means for markets.

    While there have been various “hot takes” on what the latest escalation means for risk assets, with many suggesting that a “no deal” outcome potentially triggering a plunge in the S&P below 2,600 and forcing the Fed to cut rates, one of the better assessments of the future state of capital markets as a function of the ongoing trade war, comes from Bank of America’s chief economist Ethan Harris, who in “Once more to the brink” writes that his “long-standing view on the trade war is that the Trump Administration wants deals and will compromise, but only after it extracts the maximum concessions.” To Harris, this is a pattern of big demands and moderate concessions that we have seen play out repeatedly. And this case is no different: both the US and China want a deal, “but motivating the inevitable compromise requires some combination of market, economic and political pain.“

    Specifically, we have seen this framework play out in the past year in two ways:

    • First, the trade war with China showed no sign of abating until the equity market correction in 4Q.
    • Second, tariffs on consumer products-including both the last tier of Chinese goods and autos-keeps getting postponed. It is much easier to impose indirect taxes on consumers by tariffing intermediate and producer goods than to directly tax consumer products.

    In this context, BofA claims that the Trump Administration’s recent decision to threaten and then deliver more tariffs should not come as a big surprise… although judging by last week’s S&P tumble, the worst weekly drop of the year, it did in fact come as a big surprise. Still, for those who were following the underlying facts instead of the sugar-coated narrative, last week’s events indeed should have been predictable, largely thanks to recent economic and market news which emboldened both sides to trying and get a better deal.

    Case in point: China’s equity market has improved dramatically and green shoots have appeared, greatly improving their perceived negotiating position. Meanwhile US markets have fully recovered from the trade war sell-off, the data point to a soft landing and the Fed has signaled that it will do what it takes to sustain a strong labor market and inflation pressure. Little wonder then, as Harris writes, that China is trying to back track and the Trump Administration is reacting strongly. Moreover, if Trump is looking for clues from the market, he is getting precisely what he would like to see: with the Shanghai Composite entering a correction from its April highs, and the S&P 500 down only 2.5% since the tariff tweet, “following through on the threat makes sense as well.”

    Yet while 20-20-hindsight is easy in a moment like this, what traders would like to know is what happens next, or as Bank of America puts it, pun not intended, “when put comes to shove.” It also explains why the US equity market has barely dropped from its recent all time highs:

    As Harris explains, a popular view is that markets won’t go down much because they believe there is a “Trump put.” And yet, this is only half correct. Yes, Harris admits, there is a put, but it is not zero: it only kicks in after the markets correct. Hence belief in the put tends to delay the correction, but ultimately continued brinkmanship will eventually cause the correction. There is another more pernicious side-effect of the market ignoring fundamental newsflow and trading on the assumption that Trump will eventually fold if stocks drop low enough: the longer it takes for that correction to happen the more likely some irreversible decisions that affect the efficiency of the global economy are taken on the corporate side.

    This then leaves both Bank of America, and investors, with three difficult and related questions.

    • First, how low is the put? Is it 5%, 10% or something worse? According to BofA’s estimates, trade war news accounted for about 4.1% of the S&P correction in 4Q and 1.4% of the recovery. The Fed also was an important factor in this down and up pattern.
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    • Second, how far apart are the two sides in the negotiations? It is hard to know as both sides were “spinning” that there was steady convergence and now both sides are “spinning” the opposite. This makes sense since they were at first trying to assure the markets and are now trying to play hard ball in getting a better final deal. We still assume the true divide is bridgeable.
    • Third, BofA contemplates the “World War I” scenario, namely could there be an accident where both sides miscalculate and stumble into a protracted war even though it is in neither side’s interest?” For now, BofA’s top economist still sees this as very much a tail risk as the market and political costs will escalate dramatically in a full-blown war that extends to all Chinese products, including many consumer products. Wars are popular during the departure parades, but not when the casualties mount. However, the longer both sides dig in without any material decline in the US stock market, the ultimate arbriter of any Trump decision, the harder it will be to prevent events to take on a deteriorating life of their own.

    For now, Harris assumes the escalation has a relatively small impact on the medium term outlook, because while it adds to the case for weak capital spending, it does not alter the bank’s global “soft landing” scenario. The risk, of course, is that markets take time to create enough pain and some persistent damage is made to the global economy. The subsequent upside would then be smaller.

    Meanwhile, as the bank concludes, “the next few weeks could be rocky.”

    Finally, for those looking for a more granular breakdown of how the S&P is affected by the three distinct scenarios of US-China trade negotiations, i.e., “benign”, “brinkmanship” and “no deal trade war“, BofA lists them out in the chart below.

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  • Here Are The States With Most Student Debt

    As stocks soar to all-time highs (ignoring fundamentals and a weak US macro outlook for 2H19), it’s worth noting that millions of underemployed and over-indebted Americans (mostly millennials) are currently holding a total of $1.5+ trillion in federal student loan debt.

    A total of 43 million Americans have student debt. The average household with student debt owes approximately $48,000 and more than 5 million borrowers are in default in 2019.

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    Millennials with no credit history and no guaranteed employment borrow tens of thousands of dollars through scheming loan programs by the US Department of Education.

    Zerohedge has spent almost a decade covering the student debt crisis and has shared numerous reports that explain how the crisis has materially worsened.

    A new study by LendEDU, revealed where Americans on a geological basis have the highest levels of student loan debt. Researchers examined data from 922 colleges and universities, including data from the graduating classes of 2007 through 2017.

    The study found Pennsylvania, from 2007 to 2017, had the highest debt per borrower of $35,988, a 51.26% increase over the ten years. Rhode Island was number two, with debt per borrower at $35,371, a 44.48% increase over the ten years. Delaware ranked third on the list, had $34,144 of debt per borrower, a 98.51% increase over the decade. Utah, Nevada, and Alaska had the lowest debt per borrower, at an average of about $20,687 over the ten years.

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    The table below represents the percent change over the period of how the average percentage of grads with student loan debt changed in all states and Washington D.C. The most significant percentage increase over the decade was in Delaware, Hawaii, and Tennessee. 

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    The study illustrates how the average student loan debt per borrower changed in each state from 2007 to 2017 according to the percent value on a detailed map. It appears that most of the country has deadbeat millennials with insurmountable debt loads. 

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    Another map shows the difference in the percentage of graduates with student loan debt has changed from 2007 to 2017. It seems that the Mid-Alantic and East Coast saw the largest increases in debt load size per borrower. 

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    Overall student debt carried by Americans is not limited to one geopgrahic area. The report shows the problem is widespread and the country as a whole is a deadbeat nation. 

  • Schiff: Biden Ukraine Scandal Should Be Off Limits

    House Intelligence Committee Chairman Adam Schiff (D-CA) said on Sunday that Joe Biden’s Ukraine corruption scandal should be off limits as the 2020 US election approaches, and that President Trump shouldn’t be allowed to investigate – or encourage Ukraine to investigate. 

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    Biden has come under fire for a March, 2016 incident in Kiev in which he threatened to withhold $1 billion in US loan guarantees to Ukraine unless President Petro Poroshenko fired his head prosecutor, General Viktor Shokin, who was leading a wide-ranging corruption investigation into natural gas firm Burisma Holdings. As it so happens, Joe’s son Hunter Biden sat on Burisma’s board, and waas indirectly paid as much as $50,000 per month. 

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    ‘I said, ‘You’re not getting the billion.’ I’m going to be leaving here in, I think it was about six hours. I looked at them and said: ‘I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money,’” bragged Biden, recalling the conversation with Poroshenko. 

    “Well, son of a bitch, he got fired,” Biden gloated. 

    Biden claims he didn’t know Hunter was on the Burisma board for an entire two years (Hunter reportedly joined in April 2014, two years before Biden’s threat), and that the effort to remove Shokin had nothing to do with the “

    “Shokin was fired because he attacked the reformers within the prosecutor general’s office,” 

    And this should be completely off limits to Trump, according to Adam Schiff 

    Schiff told ‘This Week’ that Congress should take up legislation banning political campaigns from working with foreign governments in an effort to influence US elections, responding to news that Trump’s attorney, Rudy Giuliani, had planned to travel to Ukraine to encourage them to further investigate the Biden matter. Giuliani has since canceled the trip. 

    “Going after his son is just a method of going after someone the president believes is his most formidable opponent,” Schiff told ABC’s ‘This Week.’ “So let the president go after him, but don’t seek the help of a foreign government in your election.” 

    In March, The Hill‘s John Solomon revealed that Ukraine’s Prosecutor General Yuriy Lutsenko has launched an investigation into the head of the Ukrainian National Anti-Corruption Bureau for allegedly attempting to help Hillary Clinton defeat Donald Trump during the 2016 US election by releasing damaging information about a “black ledger” of illegal business dealings by former Trump campaign chairman Paul Manafort.

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    Meanwhile, President Trump told Politico on Friday that it would be “appropriate” for him to ask Attorney General William Barr about launching an investigation into Biden, or his son Hunter. 

    “Certainly it would be an appropriate thing to speak to him about, but I have not done that as of yet. … It could be a very big situation,” said Trump during a 15-minute phone interview Friday afternoon. 

    The New York Times earlier this month reported on Giuliani’s efforts to investigate and publicize the issue.

    The president argued that the alleged conflict of interest, or appearance thereof, was not mushrooming into an all-out scandal because Biden is a Democrat.

    “Because he’s a Democrat,” Trump said, the report had about “one-hundredth” the impact as it would have if he “were a Republican.” Politico

    To recap; Biden didn’t know his son Hunter was on the board of a Ukrainian natural gas firm for a full two years, before threatening to withhold $1 billion in US loan guarantees if the President of Ukraine didn’t fire the guy investigating the Biden-linked Burisma, and Adam Schiff thinks that should be off limits to investigate, or for voters to consider, going into the 2020 election.

  • French Activists Successfully Block Saudi Ship From Loading Purchased Weapons 

    Authored by Andrea Germanos via Common Dreams

    A human rights organization called it a “victory for mobilized civil society” when a Saudi cargo ship left France on Friday without a planned batch of weapons.

    France, along with other Western countries including the U.S. and U.K., has been supplying arms to Saudi Arabia, which is leading the coalition bombing Yemen. In so doing, say human rights campaigners, they “risk complicity in committing grave violations of the laws of war.”

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    French campaigners prevented weapons shipment to Saudi Arabia. Image source: Reuters

    Leaked classified French military documents published last month showed that French weapons are being widely used in the coalition’s bombing campaign “including in civilian zones.” The conflict has already killed thousands of civilians. 

    Fearing that the new shipment of weapons could be used against the Yemeni civilian population, French rights group Christians for the Abolition of Torture (ACAT-France) filed a legal challenge Thursday to block a new batch of French weapons from being loaded onto the Saudi vessel the Bahri Yanbu at the French port city of Le Havre. The ship had been anchored 15 miles offshore since late Wednesday.

    The weapons, said ACAT, would violate one article of the U.N. Arms Trade Treaty.

    “The article says that one country cannot authorize the transfer of weapons, if at the time of the authorization, the country knew that weapons could be used to commit war crimes,” said lawyer Joseph Brehem, speaking on behalf of ACAT.

    While ACAT didn’t win their case, the ship nonetheless did not dock to pick up the shipment, but instead moved on to Spain.

    From Reuters:

    A French judge threw out that legal challenge but the Bahri-Yanbu set course for Santander shortly after minus the weapons, officials said and ship-tracking data showed.

    The saga is an embarrassment for [French] President Emmanuel Macron, who on Thursday defended arms sales to Saudi Arabia.

    ACAT-France praised the development, saying that it happened not as a result from a judge but because of an activated citizenry who sounded alarm about the weapons.

    It’s clear, said Bernadette Forhan, president of the organization, “that French civil society can constitute a real opposition force to international interests that undermine the fundamental rights of millions of people.”

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