- Despite Massive Liquidity Injection, Chinese Stocks, Commodities Head For Worst Week Of Year
The PBOC stepped up cash injections this week, suggesting authorities are trying to shore up financial markets as a selloff in bonds spreads to equities… but it is not working!
As Bloomberg reports, the central bank has already added a net 510 billion yuan ($77 billion) via open-market operations into the financial system this week, matching the third biggest weekly injection this year.
But, it is not enough…
While bonds did stabilize – managing to avoid closing beyind the crucial 4.00% level…
Stocks did not…
As they head of the worst week in 7 months…
And commodities are getting clobbered…
“The increase in cash additions will help soothe market sentiment,” said Qin Han, chief fixed-income analyst at Guotai Junan Securities Co. “But the decline will not be reversed, as the market’s biggest concern is not tight liquidity but tougher financial regulation.”
- Pepe Escobar Live From Baghdad: The Secret Of Iraq's Renaissance
BAGHDAD – On a sandstorm-swept morning in Baghdad earlier last week, Abu Mahdi al-Mohandes, the legendary deputy leader of Hashd al-Shaabi, a.k.a. People Mobilization Units (PMUs) and the actual mastermind of numerous ground battles against ISIS/Daesh, met a small number of independent foreign journalists and analysts.
This was a game-changing moment in more ways than one. It was the first detailed interview granted by Mohandes since the fatwa issued by Grand Ayatollah Sistani – the immensely respected marja (source of emulation) and top clerical authority in Iraq – in June 2014, when Daesh stormed across the border from Syria. The fatwa, loosely translated, reads, “It is upon every Iraqi capable of carrying guns to volunteer with the Iraqi Armed Forces to defend the sanctities of the nation.”
Mohandes took time out of the battlefield especially for the meeting, and then left straight for al-Qaim. He was sure “al-Qaim will be taken in a matter of days” – a reference to the crucial Daesh-held Iraqi border town connecting to Daesh stronghold Abu Kamal in Syria.
That’s exactly what happened only four days later; Iraqi forces immediately started a mop up operation and prepared to meet advancing Syrian forces at the border – yet more evidence that the recomposition of the territorial integrity of both Iraq and Syria is a (fast) work in progress.
The meeting with Mohandes was held in a compound inside the massively fortified Green Zone – an American-concocted bubble kept totally insulated from ultra-volatile red zone Baghdad with multiple checkpoints and sniffer dogs manned by US contractors.
Adding to the drama, the US State Department describes Mohandes as a “terrorist”. That amounts in practice to criminalizing the Iraqi government in Baghdad – which duly released an official statement furiously refuting the characterization.
The PMUs are an official body with tens of thousands of volunteers linked to the office of the Commander in Chief of the Iraqi Armed Forces. The Iraqi Parliament fully legalized the PMUs in November 2016 via resolution 91 (item number 4, for instance, states that “the PMU and its affiliates are subject to military regulations that are enforced from all angles.”)
Its 25 combat brigades – comprising Shi’ites, Sunnis, Christians, Yazidis, Turkmen, Shabak and Kurds – have been absolutely crucial in the fight against Daesh in Samarra, Amerli, Jalawla, Balad, Salahuddin, Fallujah (35 different battles), Shirqat and Mosul (especially over the western axis from Qayarah base to the Iraq-Syrian border, cutting off supply chains and sealing Mosul from an attempted Daesh escape to Syria).
Retaking Kirkuk “in a matter of hours”
Mohandes describes the PMUs as “an official military force” which plays a “complementary role” to the Iraqi Army. The initial plan was for the PMUs to become a national guard – which in fact they are now; “We have recon drones and engineering units that the Army does not have. We don’t mind if we are called gendarmes.” He’s proud the PMUs are fighting an “unconventional war”, holding the high ground “militarily and morally” with “victories achieved in record time”. And “contrary to Syria”, with no direct Russian support.
Mohandes is clear that Iran was the only nation supporting Iraq’s fight against Daesh. Iraq reciprocated by helping Syria, “facilitating over flights by Iranian planes.” With no Status of Forces Agreement (SOFA) between Washington and Baghdad, “the Americans withdrew companies that maintain Abrams tanks.” In 2014 “we didn’t even have AK-47s. Iran gave them to us. The US embassy had 12 Apache helicopters ready to transport diplomats if Baghdad fell to Daesh”.
One year later, “Baghdad would have been occupied” were not for the PMUs; “It’s like you’re in a hospital and you need blood. The Americans would show up with the transfusion when it was too late.”
He is adamant “the US did not provide a single bullet” in the overall fight against Daesh. And yet, Mohandes clarifies that the “US may stay in Iraq should the Iraqi government decide it. My personal opinion is well known.”
Mohandes considers the [Western] “media war waged against Hashd al-Shaabi” as “normal from the beginning”; “Countries that supported terrorism would not perceive that a popular force would emerge, and did not recognize the new political system in Iraq.” On that note, he added ruefully, “you can smell petrol”.
Mohandes was personally wounded in Halabja and also in Anfal – Saddam Hussein’s anti-Kurdish operations. He was “pleased to see Kurdistan saved after 1991”; stresses “we had martyrs who fell in Kurdistan defending them”; and considers himself a friend of the Kurds, keeping good relations with their leaders. Iranian advisors, alongside the Iraqi Army and the PMUs, also “prevented Daesh from conquering Erbil.”
Yet after a “unilateral referendum, Iraq had to assert the authority of the state”. Retaking Kirkuk – largely a PMU operation – was “a matter of hours”; the PMUs “avoided fighting and stayed only in the outskirts of Kirkuk”. Mohandes previously discussed operational details with the Peshmerga, and there was full coordination with both Iran and Turkey; “It’s a misconception that Kurdish leaders could rely on Turkey.”
Fallujah, finally secured
The PMUs absolutely insist on their protection of ethnic minorities, referring to thousands of Sabak, Yazidi and Turkmen – among at least 120,000 families – forced by Daesh rule into becoming IDPs. After liberation battles were won, the PMUs provided these families with food, clothing, toys, generators and fuel. I confirmed that many of these donations came from families of PMU fighters all across the country. PMU priorities include combat engineering teams bringing families back to their areas after clearing mines and explosives, and then reopening hospitals and schools. For instance, 67,000 families were resettled into their homes in Salahuddin and 35,000 families in Diyala.
Mohandes stresses that, “in the fight against Daesh in Salahuddin and Hawija, the brigade commanders were Sunnis”. The PMUs feature a Christian Babylon brigade, a Yazidi brigade, and a Turkmen brigade; “When Yazidis were under siege in Sinjar we freed at least 300,000 people.”
Overall, the PMUs include over 20,000 Sunni fighters. Compare it with the fact that 50 per cent of Daesh’s suicide bombers in Iraq have been Saudi nationals. I confirmed with Sheikh Muhammad al-Nouri, leader of the Sunni scholars in Fallujah, “this is an ideological battle against Wahhabi ideology. We need to get away from the Wahhabi school and redirect our knowledge to other Sunni schools.” He explained how that worked on the ground in Haditha (“we were able to control mosques”) and motivated people in Fallujah, 30 minutes away; “Fallujah is an Iraqi city. We believe in coexistence.”
After 14 years in which Fallujah was not secure, and with the Haditha experience fast expanding, Sheikh Muhammad is convinced “Iraq will declare a different war on terror.”
The inclusive approach was also confirmed by Yezen Meshaan al-Jebouri, the head of the Salahuddin PMU brigade. This is crucial because he’s a member of the very prominent Sunni Jebouri family, which was historically inimical to Saddam Hussein; his father is the current governor of Tikrit. Al-Jebouri decries “the state corruption in Sunni regions”, an “impression of injustice” and the fact that for Daesh, “Sunnis who did not follow them should also be killed.” He’s worried about “the Saudi accumulation of developed weapons. Who guarantees these won’t be used against the region?” And he refuses the notion that “we are looked upon by the West as part of the Iranian project.”
Military victory meets political victory
Far from the stereotyped “terrorist”, Mohandes is disarmingly smart, witty and candid. And a full-blooded Iraqi patriot; “Iraq now reinstates its position because of the blood of its sons. We needed to have a military force capable of fighting an internal threat. We are accomplishing a religious national and humanitarian duty.”
Soldiers apart, thousands of extra PMU volunteers do not receive salaries. Members of Parliament and even Ministers were active in the battlefield. Mohandes is proud that “we have a chain of command just like the army”; that the PMUs harbor “thousands of people with college degrees”; that they run “dozens of field hospitals, intensive care units” and have “the strongest intel body in Iraq.”
In Baghdad, I personally confirmed the narrative accusing the PMUs of being Prime Minister Nouri al-Maliki’s private army is nonsense. If that was the case, Grand Ayatollah Sistani should take the blame, as he conceptually is the father of the PMUs. Hadi al-Amiri, the secretary-general of the powerful Badr organization, also extremely active in the fight against Daesh, stressed to me the PMUs are “part of the security system, integrated with the Ministry of Defense”. But now “we need universities and emphasis on education.”
Pakistani Prof. Hassan Abbas, from the College of International Security Affairs at the National Defense University in Washington, went even further, as we extensively discussed not only Iraq and Syria but also Afghanistan and Pakistan; “Iraq is now in a unique position heading towards a democratic, pluralistic society”, proving that “the best answer to sectarianism is religious harmony.” This “inclusiveness against Takfirism” must now connect in the streets “with the rule of law and a fair justice system”. Abbas points out that the base for Iraq to build up is law enforcement via scientific investigation; “Policing is the first line of defense”.
Baghdad has been able, almost simultaneously, to pull off two major game-changers; a military victory in Mosul and a political victory in Kirkuk. If Iraq stabilizes, erasing the Daesh death cult, so will Syria. As al-Jebouri notes, “now every community must have a cut of the cake.” At least 7 million jobs and pensions are paid by Baghdad. People want the return of regularly paid salaries. That starts with decent security all over the country. Mohandes was the engineer – his actual profession – of key battles against Daesh. There’s a wide consensus in Baghdad that without him Daesh would be firmly installed in the Green Zone.
Hashd al-Shaabi is already an Iraqi pop phenomenon, reflected in this huge hit by superstar Ali al-Delfi. From pop to politics is another matter entirely. Mohandes is adamant the PMUs won’t get involved in politics, “and directly won’t contest elections. If someone does, and many individuals are now very popular, they have to leave Hashd.”
From hybrid warfare to national renewal
After days talking to Hashd al-Shaabi personnel and observing how they operate a complex hybrid warfare battlefield coupled with an active recruitment process and heavy presence in social media, it’s clear the PMUs are now firmly established as a backbone underpinning Iraqi state security, an array of stabilization programs – including much needed medical services – and most of all, introducing a measure of efficiency Iraq was totally unfamiliar for almost three decades.
It’s a sort of state-building mechanism springing out of a resistance ethic. As if the ominous Daesh threat, which may have led to as many as 3.1 million IDPs, shook up the collective Iraqi subconscious, awakened the Iraqi Shi’ite proletariat/disenfranchised masses, and accelerated cultural decolonization. And this complex development couldn’t be further from religious bigotry.
Amid Wilsonian eulogies and references to the Marshall Plan, Foreign Minister Ebrahim al-Jaafari is also a staunch defender of the PMUs, stressing it as “an experiment to be studied”, a “new phenomenon with a humane basis operating on a legal framework”, and “able to break the siege of solitude Iraq has suffered for years.”
Referring to the Daesh offensive, Jaafari insisted “Iraq did not commit a crime” in the first place, but hopefully there’s “a new generation of youth capable of reinforcing the experiment”.
The emphasis now, following reconciliation, is on “an era of national participation”. He’s adamant that “families of Daesh members should not pay for their mistakes.” Daesh informers will be duly put on trial.
I asked the Foreign Minister if Baghdad did not fear being caught in a lethal crossfire between Washington and Tehran. His response was carefully measured. He said he had enough experience of dealing with “radical” neocons in D.C. And at the same time he was fully aware of the role of the PMUs as well as Iran in Iraq’s reassertion of sovereignty. His warm smile highlighted the conviction that out of the ashes of a cultish black death, the Iraqi renaissance was fully in effect.
- Abu Dhabi Businessman Pays $2.9 Million For 19-Year-Old Model's Virginity
Another young millennial has reportedly sold her virginity for millions on the famed site Cinderella Escorts.
Back in April, a Hong Kong businessman paid $2.5 million for an 18-year-old Romanian model’s virginity. Just yesterday, we outlined that millions of millennials in the United States could be trading sex for their next debt servicing payment on a website called SeekingArrangement.com. As what we believe, the trend is clear and millennials are resorting to sex for a real simple get-out-of debt option or the chance for a better life, as their future economic prospects are quite dim.
The latest demand for virgins is coming from a businessman in Abu Dhabi who has agreed to pay $2.9 million (€ 2.5million) for the virginity of a 19-year-old part time student and model living in California. The model named Giselle,19, is astounded by the overall outcome of the auction and says a Hollywood Actor and Russian Politician were also in the running. She says this is “a dream told true” and plans to use the money for — you guessed it— tuition fees and travel. Perhaps, she’ll be one of the few millennials enjoying avocado and toast for breakfast for the rest of her life.
Giselle’s 30 second elevator-pitch of why she wants to sell her virginity…
According to the Daily Mail,
The model said: ‘I am happy to have decided to sell my virginity through Cinderella Escorts.
‘I would never have dreamt that the bid would rise so high and we would have reached 2.5million Euros. This is a dream come true.’
Giselle said she was ‘shocked’ by the outrage against women selling her virginity, describing it as a ‘form of emancipation.’
‘If I want to spend my first time with someone who is not my first love, that’s my decision,’ she said.
‘The fact that women can do what they want with their bodies and have the courage to live their sexuality free against the critics sets a sign for emancipation’.
She added: ‘In retrospect, how many would probably give up their first time if they could have 2.5million Euros instead?’
The man behind Cinderella Escorts, Jan Zakobielski, 27, who runs the business from Dortmund, Germany, and as the Daily Mail put it, “likens a woman’s virginity to a very old wine or a luxury car”.
Cinderella Escort’s fees are twenty percent of each transaction, which is a sizable payout for Zakobielski.
A spokesman for Cinderella Escorts said: ‘On our website you will find a video where girls from all over the world talk about the reasons to sell their virginity.
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As the geopolitical tensions in the Middle East spiral out of control and a military conflict looms, it seems as one lucky Abu Dhabi businessman has found a novel way of funneling hot money out of the region before a conflict with Saudi Arabia and Lebanon breaks-out.
For Giselle, if the transaction goes through her avocado and toast days are just ahead while blowing all her money on tuition, but for the greater scope of the millennial generation, it’s a bleak future with many hardships of debt servicing encompassed in a stagnate wage growth environment unless you sell your virginity.
We imagine this trend is only getting started…
- Satellite Images Reveal North Korea "Aggressively" Working On Ballistic Missile Submarine
According to the latest analysis of satellite imagery taken at North Korea’s Sinpo South Shipyard on November 5 conducted by the 38 North website, Pyongyang is pursuing an “aggressive schedule” to build its first operational ballistic missile submarine.
Continued movement of parts and components into and out of the parts yards adjacent to the construction halls indicates an ongoing shipbuilding program, the analysts concluded. “The presence of what appear to be sections of a submarine’s pressure hull in the yards suggests construction of a new submarine, possibly the SINPO-C ballistic missile submarine (SSB)- the follow-on to the current SINPO-class experimental ballistic missile submarine,” 38 North said in the report published today.
Additionally, Imagery from November 5 shows two larger circular objects that may be sections of a submarine’s pressure hull: “The diameter of the first object was approximately 7.1 meters, while the diameter of the second starts at approximately 7.1 meters and reduces to approximately 6.1 meters. The larger object has what appears to be two internal cross members that could be used to support decks or internal equipment.”
If correct, that would imply that the shipbuilding program is for a submarine with a beam broader (in width) than the ROMEO-class attack submarine (6.7 meters)—meaning it is potentially a SINPO-C SSB, the reported follow-on to the SINPO-class SSBA.
Separately, at the test stand, imagery from November 5 shows an object visible at the top of the service tower that appears to be either a launch canister support or launch canister.
This object does not appear in previous satellite or ground images of the test stand. While there is no additional activity of note in the immediate area, the service tower remains in place. During the earlier development of the Pukguksong-1/KN-11, it was removed after testing campaigns. Therefore, the continued presence of this object suggests ongoing SLBM ejection tests. If correct, this is likely a continuation of the ejection test campaign reported during July of this year. Regardless, additional ejection tests should be expected in the future for further development of the Pukguksong-1, a potential Pukguksong-3, or other future SLBMs.
Such a test would also be valuable for validating missile launch systems for a new class of SSBs.
And while images of a test stand indicated continued experimenting with a mechanism for ejection launch of missiles from a submarine, so far, the report said, no activity could be seen suggesting preparations for a new test of a submarine-launched missile.
Last month, The Diplomat magazine quoted a U.S. government source as saying U.S. military intelligence had detected a new diesel-electric submarine under construction at Sinpo and dubbed it the Sinpo-C. It said the submarine was likely a larger successor to North Korea’s single experimental ballistic missile submarine.
Another article in The Diplomat last month quoted a U.S. government source as saying that North Korea had tested a new solid fuel engine sometime between Oct. 15 and Oct. 21. U.S. intelligence officials have declined to comment on this.
- Tesla Unveils Its "Mind-Blowing" Semi And New Roadster, The "Fastest Production Car Ever Made"
Update 2: there were some rumors of a surprise during tonight's presentation, and Musk did not disappoint when just as the semi-introduction was ending, Tesla also unveiled a new Roadster, the new version of its original sports car. According to Musk, It’s the fastest production car ever made, with speeds of just 1.9 seconds for 0 to 60 and 4.2 seconds for 0 to 100. It can handle a quarter mile in 8.9 seconds.
“This is the base model,” Musk said, then went on to mention that its top speed is above 250 mph. and it has a 200 kWh battery pack that offers 630 miles of highway driving range.
— Lance Ulanoff (@LanceUlanoff) November 17, 2017
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Update 1: this is what the new Semi truck, which Tesla will give a 1 million mile guarantee for, looks like:
— Madi ?????? (@Phalanxia) November 17, 2017
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Tonight's the night!! In what has been promised to "blow your mind," Elon Musk will unveil an all-electric Class 8 semi truck.
In the works for two years, it’s a project that’s aimed squarely at cleaning up the freight industry, which accounts for one-fifth of global oil demand… and which Goldman Sachs has warned will cost 300,000 jobs per year.
As Bloomberg notes, Chief Executive Officer Elon Musk has promised a truck that will “out-torque any diesel semi” and drive “like a sports car.” Seeing what an all-electric semi is capable of may be the most entertaining part of the night, even if it’s not a key metric for Tesla’s trucking customers.
It can transform into a robot, fight aliens and make one hell of a latte pic.twitter.com/8h9vvWu4f5
— Elon Musk (@elonmusk) November 15, 2017
“If you had a tug-of-war competition,” Musk bragged at a Ted Talk in April, “the Tesla Semi will tug the diesel semi uphill.”
The show is due to start at 8pmPT, 11pmET.
If the transmission is interrupted, readers can go to Tesla’s website by clicking the image below…
Here's what to watch for – including some potential wild cards (via Bloomberg)
1. How Long Is Long Range?
The range of any electric vehicle is the critical metric—it defines how the vehicle can be used and the size of its potential market. Five years ago, few would have thought that a long-range heavy duty-truck was even possible. That’s changing fast. Daimler, the leader in Class 8 diesel trucks, recently unveiled a 220-mile range electric big rig, establishing a new bar for the industry. Long-range hauling across vast stretches of the U.S. would likely require more than 500 miles of range.
2. At What Cost?
Batteries are the single most expensive component of any electric truck, and the battery of a cross-country hauler could cost $100,000 even before you build the truck around it. The sticker price, regardless of size, is going to be higher than its diesel equivalent because of those pricey batteries.
Can Tesla keep the upfront price low enough to be offset by cheaper operating costs from fuel savings and simpler maintenance? Tesla may provide such figures, though many fleet operators will want to put them to the test with hundreds of thousands of road miles before they’ll be convinced.
Source: Bloomberg analysis
3. Platooning on Autopilot
Will the truck, expected to roll out by 2020, come with some level of autonomous driving? Tesla has been in talks with California and Nevada regulators about testing semis that can automatically follow a lead vehicle, a technique known as “platooning.” Platooning cuts fuel costs by reducing wind drag. And if the autonomous driving system is good enough to run without a driver, it could also dramatically cut labor expenses.
A teaser animation released by Tesla on Wednesday suggests the realization of one of Musk’s design aspirations: cameras instead of side door mirrors.
— Tesla (@Tesla) November 15, 2017
4. Who Are the First Customers?
The biggest players in freight are good at keeping their trucks in top driving condition and averse to messing with the supply chain. Convincing companies like Swift, Ryder, and Wal-Mart Stores Inc. to bring an electric drivetrain into their fleets will be a tough sell. Musk says Tesla has been gathering feedback from trucking companies throughout the development process (at least one, Ryder, confirmed it), so it would be a good sign if Tesla comes out of the gate with some early partnerships.
It could be that Musk’s own empire will be the first demonstration customer of the big rig. Tesla’s automotive reach is growing, and its SolarCity arm is the biggest rooftop solar installer in the U.S. Musk's SpaceX could potentially use the vehicles to transport rockets, satellites, capsules, and equipment.
During earlier unveilings of Tesla’s passenger cars—the Models S, X and 3—the company started taking paid reservations immediately, at least 18 months before the first deliveries. Is that a strategy that can work with commercial trucks? How long until the first rigs hit the road?
A new 40-stall Supercharger station and customer lounge opens in Kettleman, California.
5. Infrastructure Solutions
A lot of infrastructure goes into servicing big rigs. Truck stops line the world’s highways, and fleet operators stand by with mountains of replacement parts ready to fix anything that might go wrong. How does Tesla plan to deal with these hurdles? Will they introduce a whole new type of charging system, with ultrafast chargers or a robot that swaps out used batteries for fresh ones? Who will build out and operate the charging network? Who handles maintenance and roadside assistance?
6. Location, Location, Location
Tesla’s car factory in Fremont, California, is running out of room. Musk wants to build 500,000 electric passenger cars there next year, and even if he misses that goal by half, it’s very unlikely Tesla would be able to squeeze in a big rig assembly line. Tesla’s massive battery factory near Reno, Nevada, which is still under construction, seems like a more natural fit. That factory is also where Tesla makes electric motors and drivetrains—primary components for an electric semi.
7. “Driver Comfort Features”
In a profile in this week’s Rolling Stone, Musk hinted at an unspecified “driver comfort feature” that he’s fond of. “Probably no one will buy it because of this,” he said, “but if you’re going to make a product, make it beautiful.” One possibility? A sweet coffee maker. In a Twitter post on Wednesday, Musk joked that the truck “can transform into a robot, fight aliens and make one hell of a latte.”
The Model 3 motor sits in line with the wheel axle. The semi will use multiple Model 3 engines in tandem to power the big rig semi trucks.
8. Shared Parts
Perhaps Tesla’s biggest advantage over other truck makers is that its Semi will share some core parts with its first mass-market car, the Model 3. Musk disclosed during an earnings call in May that the Semi uses “a bunch” of Model 3 motors, which sit in line with the truck’s axles. These relatively cheap electric motors will give the Semi unparalleled electric torque for getting quickly up to speed with a heavy load.
Tesla’s foray into commercial trucking is coming at an impossibly tough time for the company. The Model 3 is already months behind schedule, and Tesla is spending $1 billion a quarter to get things cranking.
But if Musk can get Model 3 production lines up to their promised rates, and the motors and battery cells are truly interchangeable between the Semi and the new passenger car, the scale of those operations would be profound. While traditional diesel truck makers are testing truck-suitable electric motors by the hundreds, Tesla could be making them by the hundreds of thousands—even before its first big rig hits the road.
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Tesla shares have been on the downtrend since mid-September…
So this event could be just what Musk needs to turn things around and distract investors from the massive cash burn the company is suffering while hand-making Model 3s…
- After Slamming Bitcoin As A Money Laundering Tool, JPMorgan Busted For Money Laundering
Score one for the poetic irony pages.
Two months after JPMorgan CEO Jamie Dimon lashed out at bitcoin, calling it a “fraud” which is “worse than tulip bulbs, warning it won’t end well”, will “blow up” and “someone is going to get killed” and threatened that “any trader trading bitcoin” will be “fired for being stupid” as it was merely a tool for money-laundering, today Swiss daily Handelszeitung reported that the Swiss subsidiary of JPMorgan was sanctioned by the Swiss regulator, FINMA, over money laundering and “seriously violating supervision laws.”
As the newspaper adds, the Swiss sanctions relate to breaches of due diligence in connection with money laundering standards. In other words, JPMorgan was actively aiding and abeting criminal money laundering.
The report further notes, the Finma decision was issued on June 30 and should have been published the following week but JPMorganm tried to prevent the publication of the judgment. More recently, the Federal Administrative Court dismissed the appeal.
In response to money-laundering violation, JPM said that in support of safety and soundness of global monetary system, “we have made and continue to make significant enhancements to the firm’s AML program to ensure we are meeting regulatory expectations,” according to an emailed statement sent to Bloomberg.
Unfortunately, JPMorgan also said that it can’t, or rather won’t, provide further details since the Finma resolution from June 2017 isn’t public.
This means that anyone wondering if Jamie Dimon’s bank was using (and thus trading) bitcoin to circumvent Swiss anti-money laundering regulations, will just have to ask Jamie Dimon in person during his next public appearance.
- Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash
Saudi Arabia just introduced a 70% wealth tax. It did so in a most original way…
As we noted shortly after the Crown Prince’s purge of potential rivals within Saudi Arabia’s sprawling ruling family, while the dozens of arrests were made under the pretext of an "anti-corruption crackdown", Mohammed bin Salman’s ulterior motive was something else entirely: Replenishing the Kingdom’s depleted foreign reserves, which have been hammered for the past three years by low oil prices, with some estimating that the current purge could potentially bring in up to $800 billion in proceeds.
Furthermore, the geopolitical turmoil unleashed by the unprecedented crackdown helped push oil prices higher, creating an ancillary benefit for both the kingdom’s rulers and the upcoming IPO of Aramco.
Saudi Crown Prince Mohammed bin Salman
And, in the latest confirmation that the crackdown was all about cash, the Financial Times reports today that the Saudi government has offered the new occupants of the Riyadh Ritz-Carlton a way out…. and it’s going to cost them: In some cases, as much as 70% of their net worth.
Saudi authorities are negotiating settlements with princes and businessmen held over allegations of corruption, offering deals for the detainees to pay for their freedom, people briefed on the discussions say.
In some cases the government is seeking to appropriate as much as 70 per cent of suspects’ wealth, two of the people said, in a bid to channel hundreds of billions of dollars into depleted state coffers.
The arrangements, which have already seen some assets and funds handed over to the state, provide an insight into the strategy behind Crown Prince Mohammed bin Salman’s dramatic corruption purge.
The crackdown has led to the detention of hundreds of royals, ministers, officals and the country’s richest oligarchs including Prince Alwaleed bin Talal, the billionaire, Waleed al-Ibrahim, the founder of Middle East Broadcasting Center, which owns Al Arabiya, the Saudi satellite television channel, and Bakr bin Laden, chairman of the Saudi Binladin construction group and brother of Osama bin Laden.
Additionally, as we reported, the crackdown sent members of the country’s wealthy upper crust scrambling to liquidate their holdings and move their cash offshore, where they might have a better chance of keeping it away from the Saudi government.
Unsurprisingly, the Saudi "offer" is working.
Some of the suspects, most of whom have been rounded up at the Ritz-Carlton hotel in Riyadh since last week, are keen to secure their release by signing over cash and corporate assets, the FT's sources say.
“They are making settlements with most of those in the Ritz,” said one adviser. “Cough up the cash and you will go home."
One multi-billionaire businessman held at the Ritz-Carlton has been told to hand over 70% of his wealth to the state as a punishment for decades of involvement in allegedly corrupt business transactions. He wants to pay, but has yet to work out the details of transferring those assets to the Saudi state.
Settlements for royals will also include pledges of loyalty as MbS prepares himself to take the Saudi throne, though his father, King Salman, has vigorously denied these rumors.
One detainee told his staff that the authorities may be looking to take ownership of his main business. Families of detained suspects have started to hire consultants to assist efforts to secure their relatives’ release and to ring fence the damage to their business interests.
“They are looking for ways to isolate the tainted shareholder and keep the business going,” said the adviser.
The settlements aim to recover billions of dollars allegedly earned through “corruption” at a time when the government is grappling with a recession triggered by prolonged low oil prices and a budget deficit that widened to $79 billion last year.
The country’s attorney-general has said he is investigating allegations of corruption amounting to at least $100 billion – though the total value of assets seized could be as high as $800 billion. Though the Financial Times puts the high-end figure at a relatively modest $300 billion; to make up for the delta, more arrests are still expected.
Regular Saudis, who’ve seen their benefits cut and some of their jobs taken away, support MbS’s decision. “Why should the poor take all the pain of austerity,” said one Saudi academic. “The rich need to pay their way too.”
In Saudi Arabia, they are about to do just that.
- An Unexplained Light Flash Over Phoenix Was Captured On Security Cameras
A bright flash ripped across Phoenix, Arizona’s night sky last night, terrifying residents.
The mysterious flash was caught on security cameras as concerned onlookers watched.
The remarkable bright object was spotted by numerous people in the area, with reports streaming in from Arizona and the surrounding states, including California, Nevada, Utah, and New Mexico.
“Subtle” would be far from the correct way to describe that bright flash of light streaking downward. But, based on the fact that it is “falling” from the sky, scientists say that it was more than likely nothing more than a big hunk of space junk burning up in the atmosphere.
But that didn’t stop people from taking to social media to share their experiences with the world. “Something BRILLIANT just flew across the Phoenix sky around 8:30 this evening!” the City of Phoenix, AZ tweeted last night.” Check out what our Phoenix City Cam Captured! Look to the right of this screen.”
Something BRILLIANT just flew across the Phoenix sky around 8:30 this evening! Check out what our Phoenix City Cam captured! Look to the right of this screen……#Meteor #Citycam #PHX pic.twitter.com/T3Zys30gXR
— City of Phoenix, AZ (@CityofPhoenixAZ) November 15, 2017
According to the American Meteor Society, this week alone has several sources of meteoric activity, leading to fireball sightings all around the world. In the span of just ten hours between November 14 and 15, there were four major sightings, with events in France and Germany, and two parts of the US. Some have suggested that the Taurid meteor shower, which peaked last weekend, may be to blame. But, as for the Arizona flash, the experts say this is not the case.
“The first analysis conducted by former IMO president Dr. Juergen Rendtel of the Leibniz-Institut für Astrophysik Potsdam from the raw data shows that the events that occurred over Arizona and France cannot be linked to the Taurids: the Arizona event was moving from North-West to South-East while the French event was moving from North-East to South-West.”
Instead, the Arizona fireball may have come from one of the other many meteor sources. The Leonid meteor shower, for example, is set to peak this weekend and has been active since the beginning of the month.
November is going to be an interesting month for those interested in celestial events. Go here for a rundown of what to expect in the second half of the month.
- Rickards On Gold, Interest Rates, & Super-Cycles
When the Fed raised interest rates last December, many believed gold would plunge. But it didn’t happen.
Gold bottomed the day after the rate hike, but then started moving higher again.
Incidentally, the same thing happened after the Fed tightened in December 2015. Gold had one of its best quarters in 20 years in the first quarter of 2016. So it was very interesting to see gold going up despite headwinds from the Fed.
Meanwhile, gold has more than held its own this year.
Normally when rates go up, the dollar strengthens and gold weakens. They usually move in opposite directions. So how could gold have gone up when the Fed was tightening and the dollar was strong?
That tells me that there’s more to the story, that there’s more going on behind the scenes that’s been driving the gold price higher.
It means you can’t just look at the dollar. The dollar’s an important driver of the gold price, no doubt. But so are basic fundamentals like supply and demand in the physical gold market.
I travel constantly, and I was in Shanghai meeting with the largest gold dealers in China. I was also in Switzerland not too long ago, meeting with gold refiners and gold dealers.
I’ve heard the same stories from Switzerland to Shanghai and everywhere in between, that there are physical gold shortages popping up, and that refiners are having trouble sourcing gold. Refiners have waiting lists of buyers, and they can’t find the gold they need to maintain their refining operations.
And new gold discoveries are few and far between, so demand is outstripping supply. That’s why some of the opportunities we’ve uncovered in gold miners are so attractive right now. One good find can make investors fortunes.
My point is that physical shortages have become an issue. That is an important driver of gold prices.
There’s another reason to believe that gold could be in a long-term trend right now.
To understand why, let’s first look at the long decline in gold prices from 2011 to 2015. The best explanation I’ve heard came from legendary commodities investor Jim Rogers.
He personally believes that gold will end up in the $10,000 per ounce range, which I have also predicted.
But Rogers makes the point that no commodity ever goes from a secular bottom to top without a 50% retracement along the way.
This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead.
Gold bottomed at $255 per ounce in August 1999. From there, it turned decisively higher and rose 650% until it peaked near $1,900 in September 2011.
So gold rose $1,643 per ounce from August 1999 to September 2011.
A 50% retracement of that rally would take $821 per ounce off the price, putting gold at $1,077 when the retracement finished. That’s almost exactly where gold ended up on Nov. 27, 2015 ($1,058 per ounce).
This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead.
Why should investors believe gold won’t just get slammed again?
The answer is that there’s an important distinction between the 2011–15 price action and what’s going on now.
The four-year decline exhibited a pattern called “lower highs and lower lows.” While gold rallied and fell back, each peak was lower than the one before and each valley was lower than the one before also.
Since December 2016, it appears that this bear market pattern has reversed. We now see “higher highs and higher lows” as part of an overall uptrend.
The Feb. 24, 2017, high of $1,256 per ounce was higher than the prior Jan. 23, 2017, high of $1,217 per ounce.
The May 10 low of $1,218 per ounce was higher than the prior March 14 low of $1,198 per ounce.
The Sept. 7 high of $1,353 was higher than the June 6 high of $1,296. And the Oct. 5 low of $1,271 was higher than the July 7 low of $1,212.
Of course, this new trend is less than a year old and is not deterministic. Still, it is an encouraging sign when considered alongside other bullish factors for gold.
But more importantly, gold has held its own despite higher interest rates and threats of more.
That tells me we’re seeing a flight to quality, meaning people are losing confidence in central banks all over the world. They realize the banks are out of bullets. They’ve been printing money for eight years and keeping rates close to zero or negative. But it still hasn’t worked to stimulate the economy the way they want.
So gold has been moving up in what I would consider a challenging environment of higher rates.
The question is, where does gold go from here?
The market is currently giving close to 100% odds that the Fed will raise rates next month.
I disagree. I’m skeptical of that because of the weak inflation data. There will be one more PCE core data release before the Dec. 13 meeting. That release is due out on Nov. 30.
If the number is hot, say, 1.6% or higher, that will validate Yellen’s view that the inflation weakness was “transitory” and will justify the Fed in raising rates in December.
On the other hand, if that number is weak, say, 1.3% or less, there’s a good chance the Fed will not raise rates in December. In that case, investors should expect a swift and violent reversal of recent trends.
Markets have priced a strong dollar and weaker gold and bond prices based on the expectation of a rate hike in December. If that rate hike doesn’t happen because of weak inflation data, look for sharp rallies in bonds and gold.
Now, the last time gold sold off dramatically was on election night, when Stan Druckenmiller, a famous gold investor, sold all his gold. It’s only natural that when someone dumps the amount of gold he deals in, the price will go down.
That move reflected a change in sentiment.
What Stan said at the time was very interesting. He said, “All the reasons that I own gold in the first place have gone away because Trump was elected president.”
In other words, he was buying into the story that Hillary Clinton would be bad for the economy but Donald Trump’s policies would be beneficial. If we were going to have strong economic growth with a Trump presidency, maybe you didn’t need gold for protection. So he sold his gold and bought stocks on the assumption that the economy would grow under Trump.
But earlier this year, Stan has said he’s buying gold again. What that means is that people are finally reconsidering the reflation trade. Tax reform is still a big question mark. And when’s the last time you heard a word about infrastructure spending?
Investors will once again flock into gold once reality sets in. Mix in rising geopolitical tensions in Asia and the Middle East, and gold’s future looks bright.
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