Mar 22

Today’s News 22nd March 2018

  • US Threatens Sanctions For European Firms Participating In Russian Gas Pipeline Project

    As previewed overnight, the U.S. State Department is warning European corporations that they will likely face penalties if they participate in the construction of Russia’s Nord Stream 2 gas pipeline, on the grounds that “the project undermines energy security in Europe“, when in reality Russia has for decades been a quasi-monopolist on European energy supplies and thus has unprecedented leverage over European politics, at least behind the scenes.

    “As many people know, we oppose the Nord Stream 2 project, the US government does,” said State Department spokeswoman, Heather Nauert at a Tuesday press briefing. “We believe that the Nord Stream 2 project would undermine Europe’s overall energy security and stability. It would provide Russia [with] another tool to pressure European countries, especially countries such as Ukraine.”

    And speaking of Ukraine, recall that in 2014, shortly after the US State Department facilitated the presidential coup in Ukraine, Joe Biden’s son Hunter joined the board of directors of Burisma, Ukraine’s largest oil and gas company. Surely that was merely a coincidence.

    The project which began in 2015 is a joint venture between Russia’s Gazprom and European partners, including German Uniper, Austria’s OMV, France’s Engie, Wintershall and the British-Dutch multinational Royal Dutch Shell. The pipeline is set to run from Russia to Germany under the Baltic Sea – doubling the existing pipeline’s capacity of 55 cubic meters per year. 

    Nauert said that Washington may introduce punitive measures against participants in the pipeline project – which could be implemented using a provision in the Countering America’s Adversaries Through Sanctions Act (CAATSA).

    “At the State Department, we have spent a lot of time speaking with our partners and allies overseas to explain to them the ramifications of CAATSA and how an individual or a company or a country can run afoul against CAATSA and fall into sanctions,” Nauert said. “We don’t tend to comment on sanctions actions but we’ve been clear that firm steps against the Russian energy export pipeline sector could – if they engage in that kind of business – they could expose themselves to sanctions under CAATSA.” 

    Several EU nations, particularly Germany, have repeatedly expressed interest in participating in Nord Stream 2, however the pipeline has been opposed by several minor bloc nations, including Poland, Latvia, Lithuania, Romania and Hungary. Ukrainian authorities are also staunchly against the project, as it bypasses Ukraine and would impact them monetarily. 

    Of note, CAATSA – approved last Summer, was recently used by the U.S. Treasury Department to impose penalties against 19 Russian individuals and five Russian entities, including Russia’s Federal Security Service and the Main Intelligence Directorate (GRU) for their alleged interference in the 2016 U.S. presidential race. 

    ***

    As Alex Gorka of the Strategic Culture Foundation wrote, on March 15, a bipartisan group of 39 senators led by John Barrasso (R-WY) sent a letter to the Treasury Department. 

    They oppose NS2 and are calling on the administration to bury it. Why? They don’t want Russia to be in a position to influence Europe, which would be “detrimental,” as they put it. Their preferred tool to implement this obstructionist policy is the use of sanctions. Thirty-nine out of 100 is a number no president can ignore. Powerful pressure is being put on the administration. Even before the senators wrote their letter, Kurt Volker, the US envoy to Ukraine, had claimed that NS2 was a purely political, not commercial, project.

    No doubt other steps to ratchet up the pressure on Europe will follow.

  • RT Editor-In-Chief Explains "Why We Don't Respect The West Anymore"

    Authored by Margarita Simonyan, editor-in-chief of RT TV channel and MIA “Russia today” via RIA.ru,

    Translated by Scott via The Saker blog,

    Essentially, the West should be horrified not because 76% of Russians voted for Putin, but because this elections have demonstrated that 95% of Russia’s population supports conservative-patriotic, communist and nationalist ideas. That means that liberal ideas are barely surviving among measly 5% of population.

    And that’s your fault, my Western friends. It was you who pushed us into “Russians never surrender” mode.

    I’ve been telling you for a long time to find normal advisers on Russia.

    Sack all those parasites.

    With their short-sighted sanctions, heartless humiliation of our athletes (including athletes with disabilities ), with their “skripals” and ostentatious disregard of the most basic liberal values, like a presumption of innocence, that they manage to hypocritically combined with forcible imposition of ultra-liberal ideas in their own countries, their epileptic mass hysteria, causing in a healthy person a sigh of relief that he lives  in Russia, and not in Hollywood, with their post-electoral mess in the United States, in Germany, and in the Brexit-zone; with their attacks on RT, which they cannot forgive for taking advantage of the freedom of speech and showing to the world how to use it, and it turned out that the freedom of speech never was intended to be used for good, but was invented as an object of beauty, like some sort of crystal mop that shines from afar, but is not suitable to clean your stables, with all your injustice and cruelty, inquisitorial hypocrisy and lies you forced us to stop respecting you. You and your so called “values.”

    We don’t want to live like you live, anymore. For fifty years, secretly and openly, we wanted to live like you, but not any longer.

    We have no more respect for you, and for those amongst us that you support, and for all those people who support you.

    That’s how this 5% came to be.

    For that you only have yourself to blame. And also your Western politicians and analysts, newsmakers and scouts.

    Our people are capable to forgive a lot. But we don’t forgive arrogance, and no normal nation would.

    Your only remaining Empire would be wise to learn history of its allies, all of them are former empires. To learn the ways they lost  their empires. Only because of their arrogance.

    White man’s burden, my ass (in English in the original text – trans.)

    But the only Empire, you have left, ignores history, it doesn’t teach it and refuses to learn it,  meaning that it all will end the way it always does, in such cases.

    In meantime, you’ve pushed us to rally around your enemy. Immediately, after you declared him an enemy, we united around him.

    Before, he was just our President, who could be reelected. Now, he has become our Leader. We won’t let you change this.  And it was you, who created this situation.

    It was you who imposed an opposition between patriotism and liberalism. Although, they shouldn’t be mutually exclusive notions. This false dilemma, created by you, made us to chose patriotism.

    Even though, many of us are really liberals, myself included.

    Get cleaned up, now. You don’t have much time left.

  • "Can We Trust Facebook?" Mark Zuckerberg's Non-Answer Says It All

    CNN’s soft-ball-pitching, always-smiling, but-trying-ever-so-hard-to-seem-serious Laurie Segall sat across from Facebook CEO Mark Zuckerberg tonight as he broke his silence aboy just WTF happened with regard to the security of ‘our’ data, Cambridge Analytics’ data-mining, Russia, bad-actors, some more Russia, some more meddling, and, oh yeah, data breaches.

    The full interview is below but it was Zuckerberg’s response (or lack of it) to one question, that raises more questions than it answers…

    Segall asked:

    “Facebook has asked us to share our data, to share our lives on its platform and it has wanted us to be transparent, and people don’t feel like they’ve received that same amount of transparency. They’re wondering what’s happening to their data. Can they trust Facebook?”

    Zuckerberg replied, in the same manner as his non-apology statement earlier in the day, by waffling endlessly over his prescribed talking points and yet failing entirely to answer Segall’s simple question…

    “Yeah, so one of the most important things that I think we need to do here is make sure that we tell everyone whose data was affected by one of these rogue apps, right?” he said.

    “And we’re going to do that. We’re going to build a tool where anyone can go and see if their data was a part of this.”

    “So the 50 million people that were impacted, they will be able to tell if they were impacted by this?” Segall asked.

    “Yeah – we’re going to be even conservative on that. We may not have all of the data in our system today. So anyone whose data might have been affected by this, we’re going to make sure that we tell. And going forward, when we identify apps that are similarly doing sketchy things, we’re going to make sure that we tell people then too, right? That’s definitely something that looking back on this, you know, I regret that we didn’t do at the time, and I think we got that wrong, and we’re committed to getting that right going forward.”

    CNN’s Anderson Cooper describe Zuckerberg as “perhaps the most powerful man in the world,” noting that his platform is capable in influencing elections and perhaps even wars… little dramatic Anderson…

    Fwd to 1:15 for the question (and non-answer)…

    Any wiser? Can we trust Facebook?

    Perhaps this clip from 2009, when The BBC asked Mark Zuckerberg if Facebook would ever sell personal user data.

    His answer? “No! Of course not.”

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    Actions once again speaking louder than words.

    All of which perhaps explains the plunge in the odds of Zuckerberg running for President…

  • If US Plans A Terrorist False Flag Chemical Attack To Justify Bombing Syria, Russia Says It Will Respond

    Authored by Fedrico Pieraccini via The Strategic Culture Foundation,

    Events in Syria increasingly resemble a direct confrontation between major powers rather than a proxy war. Lavrov’s words, delivered a few days ago, reveal the critical phase of international relations the world is going through, with a potentially devastating conflict ready to ignite in the Middle East region.

    An alarming warning by Sergei Lavrov and Chief of the Russian General Staff, Valery Gerasimov, was announced via the RT broadcaster and several Russian media. The content is explosive and deserving of the widest possible dissemination. Gerasimov claimed that Moscow had “reliable information that fighters are preparing to stage the use by government troops of chemical weapons against the civilian population.” He alleged that the US intends to accuse Assad’s troops of using chemical weapons against civilians, and then “carry out a bombing attack” on Damascus.

    Gerasimov warned that Russia would “take retaliatory measures” if the US targeted areas where its military are located in the Syrian capital. “Russian military advisers, representatives of the Center for Reconciliation and members of military police” are currently in the Syrian capital, Gerasimov said, adding that in the event that the lives of Russian military personnel are placed in danger, the Russian Armed Forces will respond with certain measure to both “missiles” and their “launchers”. A few hours earlier, Lavrov responded, “criticizing the remarks by the US envoy to the UN, Nikki Haley, about Washington’s readiness to “bomb Damascus and even the presidential palace of Bashar Assad, regardless [of the] presence of the Russian representatives there.” “It is an absolutely irresponsible statement,” the Russian top diplomat added.

    The words of Gerasimov are even more dire, since he explains how the United States and its allies are preparing the ground to justify an attack on Syria. According to reports, terrorists stationed in Al-Tanf (an illegal US military base in Syria) received 20 tons of chlorine gas and detonators, disguised as cigarette packs, in order to attack in an area under the control of the terrorists that is densely inhabited by civilians. What would then happen is already obvious, with the White Helmets (AKA Al-Qaeda) and mainstream media ready to broadcast the images of the victims of the attack, tugging at the heartstrings of Western viewers otherwise unaware of the conspiracy being played out.

    Efforts to frame Russia have already reached the highest alert levels, with the false-flag poisoning of the Russian spy in the United Kingdom. It seems that there is a significant effort by the United States, the United Kingdom, France and Germany to provoke a military confrontation with Moscow.

    How else are we able to interpret threats from Macron to strike Damascus, together with his ominous advice to foreign journalists not to go to Damascus in the coming days and, for those already there, to leave the capital immediately? There has even been chatter within diplomatic circles that suggest that UN personnel are leaving Damascus. This could be psychological warfare, or it could be a prelude to war. With the stakes so high, we cannot afford to ignore any detail, even if it may be disinformation. The American attack seems imminent, with mounting signs of movements of American and Russian warships in the Mediterranean in attack formation.

    Russian military representatives have reiterated that in the event of an attack, they will respond by hitting both the missiles launched as well as the ships from which the missiles were launched. Things are getting pretty dicey, and the risk of a direct confrontation between the United States and the Russian Federation are rising with every passing hour. The transfer of numerous US aircraft from Incirlik, Turkey, to Al-Azrak, Jordan, is another indication of preparations for an attack, since the forces moved to Jordan are close to the Al-Tanf base. The proposed strategy could involve an assault on the city of Daraa, for the purposes of securing the borders between Syria and Jordan and Syria and Israel.

    The warnings raised by Lavrov and Gerasimov appear unprecedented, given that they detail a plan already set in course, evidently approved at the highest levels and aimed at provoking and justifying an attack on Syria; and attack that would encompass the Russian forces in Syria. Tensions continue to grow, following Russia’s shooting down of a drone by two surface-to-air missiles launched from its Hmeimim Air Base. Moscow has even deployed to the Mediterranean the Admiral Grigorovich-class frigate Admiral Essen and the Krivak II-class anti-submarine frigate Pytivyy. Both are prepared for anti-ship and anti-submarine operations. Sources claim that this deployment was planned some time ago and is part of a routine deployment of the Russian navy. But during such a delicate moment, it pays to focus on every detail. Without resorting to excessive alarmism, if Lavrov said that “the movements of the warships of the United States and its allies in the Mediterranean seem compatible with the strategy of using this chemical attack to justify an attack on the Syrian Arab army and government installations”, then it is reasonable to speculate on whether the Russian ships are moving in to the area to counter any provocations.

    There are two fundamental flaws in the reasoning of US policy-makers and the US military establishment. They are convinced that an American demonstration of strength (involving a large number of cruise missile launched against Syria through a significant involvement of aircraft carriers as well as bombers) would stun Russia into passivity. Furthermore, US military generals are convinced that Syria and Russia do not have the ability to defend themselves for an extended period of time. They seem to be fooling themselves with their own propaganda. As their Israeli colleagues have already learned, such an assumption is mistaken. While the idea that a high level of firepower would meet with some kind of success, the possibility of a response from Syrian and Russian forces remains. And this possibility seems not to have been given sufficient weight by the US and her allies.

    How would the American military and the Trump presidency react to a US warship being sunk by anti-ship missiles? It would only serve to demonstrate how vulnerable American naval forces are when confronted with such advanced weapons. It would represent a tremendous shock for the US military, possibly the biggest shock since the end of WWII. What would Trump and the generals in charge do? They would respond with further bombardment of Russian forces, leaving themselves open to a devastating Russian response. The conflict could escalate within the space of a few minutes, leading to a situation where there could be no possible winners.

    The normal reasoning I employ when considering total annihilation is placed to one side when US special forces deliver 20 tons of chlorine gas to Al Qaeda terrorists in Syria order to execute a false flag for the purposes of blaming Damascus and Moscow. If we connect this event to what is currently happening in the United Kingdom, and the hysteria in the United States surrounding alleged Russian hacking during the American elections, we can understand just how much international relations have deteriorated. This situation is reminiscent of Ukraine in 2015. Ukrainian forces suffered repeated defeats at the hands of the Donbass resistance, being contained in the thousands in different “cauldrons. Within NATO headquarters in Brussels during that time, there were open discussion over sending a contingent to support Ukrainian troops. The plan, however, was never realized, given the possibility of direct confrontation in Ukraine between the Russian Federation and NATO.

    In recent months, the possibility of a war on the Korean Peninsula has also been evoked and perhaps simultaneously averted by the unpredictable consequences for both Seoul and the American forces in the region.

    In Syria, the approach of Washington and its diplomatic and military emissaries seems more reckless and less tied to a chain of command where the buck stops at the American president. It seems that the US deep state in Syria has a greater and more hidden control over American forces, sabotaging every agreement made between Moscow and Washington. We saw this during the Obama presidency, where the US Air Force bombed government troops in Deir ez-Zor only a few hours after a ceasefire had been reached between Lavrov and Secretary of State Kerry.

    The grave circumstance about which we write seem to be without precedent, seeming as they do to lead towards a direct confrontation between nuclear-armed powers. Alas, in such circumstances, we can only hope for the best but prepare for the worst; we can only wait to read on the mainstream media notifications of the latest chemical attack in Syria. We can only hope that there is someone in Washington retaining enough sense to factor in the devastating consequences of an attack on Damascus and the Russian forces in the region.

    Never before has the region been on the verge of such an explosion as in the next few hours — as a result of the typically reckless actions of the United States.

  • Caught On Video: Houthi Rebels Shoot Down Another Saudi F-15 Fighter Over Yemen

    On March 21, the Houthi insurgency in Yemen, also known as the Houthi rebellion, reportedly shot down a Saudi Arabian McDonnell Douglas F-15 Eagle, in the northwestern region of war-torn Yemen, cited Sputnik.

    A source within the Yemeni air defenses told Saba News Agency that Houthi rebels launched a surface-to-air missile (SAM), and “managed to hit an F-15 aircraft belonging to the aggression [Saudi Arabia], carrying out criminal and hostile raids over the city of Saada.”

    The source confirmed to Saba that Houthi rebels carried out “monitoring and targeting of the aircraft [F-15] with the latest defense technology developed locally successfully.”

    This alleged footage had surfaced on social media of the moment when Houthi rebels launched a surface-to-air missile (SAM) — striking the F-15 fighter jet, which caused the warplane to erupt in flames at high altitudes.

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    Meanwhile, the spokesman of the Saudi Arabian-led coalition forces, Colonel Turki al-Maliki said the warplane was struck at 15:48 local time (1248 GMT) by a surface-to-air missile (SAM) launched from Saada airport camp in Yemen. Al-Maliki noted that the plane received minimal damage from the strike and managed to return to a Saudi Arabian airbase.

    Al-Maliki stressed that the surface-to-air missile (SAM) was “not included in the Yemeni government arms arsenal…and that this is another proof of Iranian weapons smuggling to the Shiite rebels in Yemen.”

    Three years into the 2015 Saudi-led invasion of Yemen, Iran has long denied smuggling weapons to the Yemeni rebels. According to SouthFront, their team of experts alleges the unidentified warplane was hit by “what appears to be a Soviet-made R-27T missile.”

    A video released by the Houthis media wing clearly showed an unidentified warplane being hit by what appears to be a Soviet made R-27T missile. The Saudi-led collation revealed last November that the he Houthis had managed to turn Soviet-made R-27T air-to-air missiles into ground-to-air missiles.

    The R-27T is guided by infrared homing, and has the “fire and forget” feature, which makes it easy to convert it into a ground-to-air missile. The R-27T’s range is 70km when it’s launched from air. Nonetheless, the missile will have a shorter range when the missile it is launched from the ground. The Saudi-led coalition has not commented on the incident yet, likely because the warplane managed to return to its home airbase or crashed in an area under the coalition control.

    So far in 2018, this is the second time the Houthi rebels have claimed they have struck an F-15 or Saudi Arabian-linked warplane over the skies of Yemen. On Janurary 08, Houthi rebels released dramatic footage of a surface-to-air missile (SAM) downing an F-15 fighter jet, though Saudi media denied the report and said it crashed due to technical problems…

    On Tuesday, President Donald Trump commended Saudi Arabia’s defense acquisitions as he met with Mohammed bin Salman (MbS), at the White House — and pushed for even more.

    “Saudi Arabia is a very wealthy nation, and they’re going to give the United States some of that wealth, hopefully, in the form of jobs, in the form of the purchase of the finest military equipment anywhere in the world,” Trump said.

    It has been increasingly evident that U.S. defense sales to Saudi Arabia are a dominant force in allowing the Saudi Arabian-led intervention in Yemen to flourish.

    As President Trump becomes the most excellent salesman the military-industrial complex has ever seen, perhaps the Saudis should reevaluate their F-15 purchases, as a rogue underfunded rebel group in Yemen has managed to damage two of their American made warplanes in less than three months.

    Interesting enough, as we described above, it is possible that a Russian manufactured missile struck an American made fighter jet over the skies of Yemen.

  • Army Major: "Unmitigated Failure" – Operation Iraqi Freedom, 15 Years Later

    Authored by Major Danny Sjursen via AntiWar.com,

    After waging an ill-advised war of choice in Iraq, the U.S. military remains ensnared in Greater Mesopotamia…

    We were always caught in the middle. We still are.

    As a young man, a new lieutenant, and a true believer, I once led a US Army scout platoon just south of Baghdad. It was autumn 2006, and my platoon patrolled – mainly aimlessly – through the streets and surrounding fields of Salman Pak. To our north lay the vast Shia heartland of East Baghdad, to our south and east, the disgruntled and recently disempowered Sunnis of the rural hinterlands. Both sides executed teenagers caught on the wrong side of town, leaving the bodies for us to find. Each side sought to win American favor; both tried to kill us.

    It was a battle of attrition; a war for land, yes, but more importantly a war for the mind. Each day, the platoon had the distinct honor to drive our HMMWVs past the impressive ruins of an ancient Persian (Iranian) empire – the Sassanid. Some 1500 years earlier, Salman Pak was known as Ctesiphon and was the populous capital of a powerful civilization. The Iraqi Shia were proud of this past; the local Sunnis were not. Sunni insurgents still called the Shia “Sassanids,” or “Persians,” and they meant it as a pejorative. History was present and alive in Iraq. Still, few of my young soldiers knew – or cared – about any of this. They merely sought survival.

    The Sunni fighters, once ascendant under Saddam Hussein’s regime, were backed by Saudi Arabia and other sympathetic Gulf states.

    In nighttime raids and daytime searches, we found Saudi “Wahhabi” Islamist propaganda on the floor of car bomb factories. Back then, the local Sunni insurgents called themselves TWJ (Tawhid al Jihad – Monotheism and Holy War). This group, a nonfactor at the time of the 9/11 attacks, would rebrand several times in the ensuing years: Al Qaeda in Iraq (AQI), the Islamic State of Iraq (ISI), and, finally, the Islamic State in Iraq and Syria (ISIS).

    The Shia militiamen, JAM (Jaysh al Mahdi – The Mahdi Army), were backed by another regional player: Iran. They utilized their demographic plurality and fought the Sunnis for power in the new, US-imposed Iraqi “democracy;” occasionally, they found time to shatter our HMMWVs (and our bodies) with Iranian supplied explosive penetrators. The US Army battled each side, and feared them both.

    Salman Pak, my own little war, was a microcosm of a failed policy. When the Bush-Cheney-Rumsfeld cabal of neoconservatives (along with a core of complicit “liberals” on Capitol Hill) collaborated to topple Saddam, the US became the proud owner of a fractured, ethno-sectarian basket case. The invasion and occupation of Iraq inserted the US military square in the middle of the ongoing regional proxy war between (Shia) Iran and (Sunni) Saudi Arabia.

    Decades earlier, the US had actually backed Saddam’s Iraq in its war with Iran (1980-88), utilizing Iraqi troops as a buffer between the Islamic Republic and the oilfields of Kuwait and Saudi Arabia. In March 2003, in the ever-so-euphemistically titled Operation IRAQI FREEDOM (OIF), a war which was never a vital national security interest, the US government placed America’s cherished servicemen squarely in the middle of two nefarious regional competitors.

    The story has been told so many times, that the tragedy doesn’t warrant a full recounting. Here’s the short version: poor intelligence and dubious evidence was used by gang of neocon ideologues to sell Americans on the need for regime change in Iraq (a country that had not been involved in the 9/11 attacks). Frightened, naïve, and ill-informed, the American people – and esteemed outlets like the New York Times – went along for the ride. We were told it’d be easy (a “cakewalk”) and self-financing. It was neither.

    A civil war broke out. Tens of thousands of civilians and thousands of US troopers died. By the time I arrived, in October 2006, the place was aflame. Fear not, we were told: Bush and his new, brainy general – some Petraeus guy – would “surge” troops and win the day after all. Violence did – briefly – decline; the Iraqi government, however, failed to garner legitimacy. Still, we were told we’d won. The last American soldiers marched out in December 2011. A day later, the Shia prime minister tried to arrest the Sunni vice president. Sectarian relations soured again until a new version of an old group – ISIS – preyed on Sunni resentment and conquered a third of Iraq in 2014. The war hawks – Dems and Republicans – on Capitol Hill squawked, and soon enough US planes, then boots, were back in Iraq.

    It has been 15 years since OIF, and there – in Iraq and Syria – US servicemen remain, wedged between Saudi-backed Sunni Islamists, and Iranian-backed Shia militiamen. Some 4500 American soldiers have already died, with upwards of 30,000 more wounded. And, like a bad sitcom, the US military stillspends most of its time fighting spin-off wars (Syria, Iraq 2.0, ISIS, Yemen) of the original Iraq disaster. That ill-fated farce of an invasion either created the conditions, or exacerbated the existing tensions, which inform today’s regional wars.

    If bin Laden himself had authored it, he could hardly have written a more dreadful quagmire for the US military. Osama, in fact, didn’t initially expect the Iraq invasion, though once it bogged the Americans down, he labeled that country “a point of attraction and the restorer of our energies.” Chalk up a big V for Al Qaeda. I’m convinced that’s part of the reason there remain so many 9/11 “truthers:” because the “storm” seems so “perfect.” If the goal of the neocons and military-industrial complex was – and I don’t personally subscribe to this – to engulf the US in self-perpetuating forever wars in the Mideast, they sure scripted it perfectly. This is the stuff which feeds conspiratorial thinking.

    The “war on terror” – particularly its crown jewel, IRAQI FREEDOM – was, and is, ultimately counterproductive. It makes enemies faster than even the world’s greatest military can kill them. It feeds itself; it morphs; it grows; it, in the prescient words of bin Laden, “restores” Islamist energies.

    America, the guileless behemoth, brimming with hubris, somehow cannot seeit. The sheer irrationality of the whole endeavor borders – 15 years later – on the absurd. The only real winners in Iraq have been a chauvinist brand Iranian Shi’ism, and the trademark Wahhabi Sunni Islamism of Saudi Arabia. Neither is a true friend to US interests or values. Neither cares whether US soldiers live or die. Each has its own agenda and plays US policymakers and generals like so many fiddles. The rational move for America is to opt out; do less; and walk away before sinking farther into the next quagmire. Unfortunately, compressed so narrowly between adversarial forces, and obtuse as ever, American “statesman” can’t see the way out.

    These wars won’t end well for the United States, just as matters didn’t end well for my platoon, wedged, as it was, between micro-factions of these same adversaries: Saudi Arabia and Iran.

    The Sunni precursors of ISIS shot Sergeant Ty Dejane through the spine – he’s still in a wheel chair. The Shia militiamen aligned with Iran exploded a massive bomb which unleashed shrapnel that tore apart three other young men. Sergeant “Ducks” Duzinskas lost most of an arm. Sergeant Alex Fuller and Specialist Mike Balsley lay dead. They never knew what hit them, just as our platoon never knew who, or what, exactly, we were fighting.

    My boys were sacrificed on the altar of American hubris. That’s the war I remember, and the one the US still fights – futilely – in the Fertile Crescent. Perhaps the citizenry should ponder that… before the next escalation in Iraq.

  • PBOC Raises Interest Rate On Open Market Operations

    Moments after the Fed did as expected when it raised rates by 25bps, we – along with most other central bank watchers – made a prediction: now it was China’s turn.

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    And since in recent years, the PBOC has not hiked the main benchmark rate but engaged in “targeted” tightening using the various reverse-repo facilities, we had to wait until today’s open market operation was unveiled.

    This was somewhat problematic as the PBOC only did a partial reverse repo, skipping the 14, 28 and 63-day operations, and only injecting liquidity – some 10BN yuan worth – via 7-Day reverse repos (in the process draining 150Bn yuan). Which meant that the only instrument that could see its rate changed today, was the 7-Day RR.

    And just like on December 13, hours after the last Fed rate hike, when it hiked the 7-Day reverse repo rate by 5bps from 2.45% to 2.50%, so moments ago the PBOC once again raised the 7-Day repo rate from 2.50% to 2.55%, continuing the tradition of raising reverse repo rates in response to Fed rate hikes.

    We expect proportional increases on the other reverse repo – 14, 28 and 63-day – tenors.

    Commenting on the move, the PBOC said the rate hike was in line with market expectations, adding that the open market rate hike will “help limit irrational financing and stabilize overall leverage ratio.”

    Curiously, even this modest increase came as a surprise to some watchers, who noted that the PBOC no longer needs to follow the Fed moves tick for tick as the recent strength of the yuan means there’s less need to protect the currency. That was the view of Haitong Securities, which ahead of today’s rate hike noted that even if the PBOC raises open market operation rates (which it did), “the scale will be limited and impact on market rates minor because they’ve been a lot higher than official rates.”

    Meanwhile, as discussed recently, total social financing growth  continues to decelerate…

    … and inflation remains under pressure. And speaking of China’s currency, following today’s dollar plunge, the PBOC predictably fixed the Yuan at 6.3167, some 0.4% stronger vs Wednesday’s 6.3396, the biggest move since February 27.

    Followign the rate hike, just like in the US, Chinese shares fell, with the Shanghai Composite falling -0.2%, wiping out an earlier 0.2% gain. If the SHCOMP closes red we wonder if Marko Kolanovic will blame the drop in Chinese stocks on a rogue snowstorm over the Gobi desert.

  • More California Cities Seek To Defy Sanctuary City Laws Los Alamitos Rebellion

    Several California cities are planning to defy Jerry Brown’s “Sanctuary City” laws, following Monday’s decision by the quiet Orange County town of Los Alamitos to disregard several state-wide statutes preventing, among other things, cooperation between local law enforcement and federal immigration authorities.  

    As reported previously, Los Alamitos’ city leadership passed an ordinance 4-1 on Monday, and instructed the city attorney to file an amicus brief in the DOJ lawsuit against California’s Immigrant Worker Protection Act (HB-450), the California Values Act (SB-54), and the Inspection and Review of Facilities Housing Federal Detainees Law (AB-103).

    Mayor Troy Edgar joined council members Richard Murphy and Shelly Hasselbrink in support of the new local law – noting that California’s sanctuary law puts them at odds with the U.S. constitution, while councilman Mark Chirco voted against it – suggesting it would lead to litigation.

    Following the Monday decision, the Orange County Register reports that several other cities – and in fact the entire county itself, may be on the verge of enacting similar laws to defy the state’s Sanctuary Laws. 

    The County of Orange and several cities in Southern California soon might join Los Alamitos in its bid to opt out of a controversial state law that limits cooperation with federal immigration officials.

    Officials with the county as well as leaders in Aliso Viejo and Buena Park said Tuesday they plan to push for various versions of the anti-sanctuary ordinance approved in Los Alamitos late Monday by a 4-1 vote of that city council.

    Immigration advocates said Los Alamitos and cities and counties that follow its opt-out ordinance will be violating state law and at risk of litigation.

    But Los Alamitos’ anti-sanctuary push also received wide attention in conservative media, and gained support from those who don’t agree with California’s protective stance on all immigrants, regardless of legal status.

    Of note, while California’s Bay Area and Los Angeles are notably quite liberal, there are conservative enclaves all over the state according to the California Secretary of State (via the Sacramento Bee). 

    Voters affiliated with conservative parties outnumber voters affiliated with liberal parties in about 70 of the state’s 200 largest cities and counties. Yorba Linda and Newport Beach are the state’s most conservative cities, with conservative-affiliated voters outnumbering liberal-affiliated voters by a 2-to-1 margin.

    Californians affiliated with conservative parties – Republicans, Libertarians and American Independents – today comprise about 25% of the state’s registered voters, according to new data from the California Secretary of State.

    State voters affiliated with liberal parties – Democrats, Greens and Peace and Freedom party members – make up about 45% of the electorate. Californians with no party preference comprise 25% of voters and third-party voters make up the other 5%.

  • Not The Fed's Fault: Kolanovic Blames Stock Sell Off On "Severe Snowstorm"

    When it comes to the Fed’s quarterly (and soon monthly) press conferences, it’s widely expected that the Fed chair will manipulate and goalseek the message to reach a desired market outcome. After all, if the past ten years have taught us something, it is that the Fed only cares about the market reaction and micromanaging equities. And to do that, the chair will do and say anything, obfuscating – in the best Alan Greenspan tradition, putting the audience to sleep – as only Janet Yellen can, and generally lying as much as needed to give traders the comfort that the Fed is “with them.”

    The problem is when research analysts start doing the same, and instead of at least pretending to be intellectually honest, they steamroll through the facts and create a fabricated version of reality, padded by hubris, meant to validated their version of the world, no matter how wrong.

    We are sad to note that JPM’s head quant Marko Kolanovic has done just that tonight, and in a note meant to validate his recent uber-bullish outlook, ‘explains’ that the stock reaction to the Fed is not what it should have been – even if that’s not the case for other asset classes, which slumped admirably, i.e. just as Kolanovic had expected, and suggest a “near-term goldilocks environment. As for equities, here Kolanovic finds offence because the “price action of the S&P 500 was not coherent”, i.e., they also went down: “first we saw a strong rally and reversal, then another (smaller) rally and reversal, with the market ending slightly down.”

    But if bonds and FX were right and stocks were wrong, and the Fed was dovish, something has to explain this divergence in reactions, right?

    Yup, and according to Kolanovic – the most respected quant at JPMorgan – the answer is…. snow.

    We are not joking: the man who for the past 3 years has been explaining how the market is almost entirely controlled by algos, latent positioning, and generally non-human reactions, stakes his reputation – to use a Gartman term – that it was the lack of carbon-based traders, that spoiled the market response Kolanovic had been hoping for.

    Here is his note.

    Bond yields went lower, USD weakened, and the yield curve steepened – all of which are positive (dovish) signals for US equities

    As we suggested in our previous note (here), fears of the Fed delivering a hawkish message did not materialize. 2018 dots were not revised higher, and the importance of the 2019/2020 dots was downplayed by Powell (realistically, no one can have visibility 2 years out). Bond yields went lower, USD weakened, and the yield curve steepened – all of which are positive (dovish) signals for US equities. Furthermore, there was no significant change in inflation expectations and the growth outlook, alleviating recent equity markets concerns. This outcome is a positive and indicates that equity investors could expect a near term goldilocks environment.

    In contrast to the Fed, price action of the S&P 500 was not coherent – first we saw a strong rally and reversal, then another (smaller) rally and reversal, with the market ending slightly down. We note that this happened on very low volumes (particularly in light of the importance and anticipation of the catalyst).

    This was likely the result of a severe snowstorm affecting the US northeast and incomplete market participation (e.g. it was one of the lowest futures contract volumes on any Fed announcement days). Market direction was further confused by the initial reaction of bonds and rotation out of tech and momentum stocks, inflows into small cap, value and high volatility stocks, and covering of high short interest stocks.

    Well, yeah, it’s always something else when the market doesn’t do as you had expected. And while by now it is all too clear that Marko got one or more taps on the shoulder to toe the JPM bullish line no questions asked, here it is once again.

    We maintain our positive near term view on US equities. Our view is that the path of recovery is likely to mimic the August 2015 selloff that was also driven by systematic selling (Figure below compares equity price action in the aftermath of August 2015 and February 2018), as market volatility subsides (prompting re-leveraging of systematic  strategies), continuation of strong buyback demand, and focus shifting to strong upcoming earnings season.

    At least Kolanovic did not again warn that Trump faces impeachment if he dares to launch a trade war with China (which he will do tomorrow at 12:30pm), and risk sending the precious S&P lower.

    And now, those who are eager to bet on whose reputation is torn apart first: that of Gartman, who last week made a “watershed call”  that the market has hit all time highs, or Kolanovic, who recently predicted that the market will keep rising to new records, you can make your bets now.

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