- Deep European Recession Forecast For 2020
Deep European Recession Forecast For 2020
Tyler Durden
Wed, 07/08/2020 – 02:45In its Summer Forecast published today, the European Commission downgraded its own projection from earlier in the year, making for an even grimmer outlook for the EU economy in 2020. The -7.4 percent contraction originally expected has been reassessed to -8.3 percent.
You will find more infographics at Statista
In the EC press release, the following context was given:
“The EU economy will experience a deep recession this year due to the coronavirus pandemic, despite the swift and comprehensive policy response at both EU and national levels. Because the lifting of lockdown measures is proceeding at a more gradual pace than assumed in our Spring Forecast, the impact on economic activity in 2020 will be more significant than anticipated.”
And don’t expect the European banks to help, as Daniel Lacalle recently notes, banks may face a tsunami of problems as three factors collide: rise in non-performing loans, deflationary pressures from a prolonged crisis and central bank keeping negative rates that destroy banking profitability. We estimate a rise in net debt to EBITDA of the largest corporations of the Stoxx 600 soaring to 3x from the current 1.8x. This means that banks may face a wall of delinquencies and weakening solvency and liquidity in the vast majority of their assets (loans) just as deflationary pressures hit the economy, growth weakens and the central bank implements even more aggressive but futile liquidity measures and damaging rate cuts.
This combination of three problems at the same time may generate a risk of a financial crisis created by using the balance sheet of banks massively to address the bailout of every possible sector. It may undo the entire improvement in the balance sheet of the financial entities achieved slowly and painfully in the past decade and destroy it in a few months.
Weakening the balance sheet of banks and hiding larger risk at lower rates in their balance sheets may be an extremely dangerous policy in the long run.
- Some See A Dark Cloud Hanging Over The European Rally
Some See A Dark Cloud Hanging Over The European Rally
Tyler Durden
Wed, 07/08/2020 – 02:00Authored by Bloomberg macro commentators Jan-Patrick Barnert and Michael Msika
Equities are still creeping higher even as more voices become cautious about the market rally. Although bulls and bears both have valid arguments, it seems that the technical data could flip the balance in favor of the latter.
European stocks just hit a one-month high and the daily Euro Stoxx 50 Future chart is knocking at the 200-day moving average again — a mark that saw a sharp three-day decline in June when the market was overheating from its previous rally. Overcoming this strong resistance could spur further gains for the index.
Yet relative strength indicators are very close to being overbought, which may suggest that potential gains could be limited.
With charts trading in such a range for the past weeks “short-term positioning has been a challenge,” writes LCM technical analyst Andy Dodd in a note to clients.
There’s also some ominous bearish signals hanging over markets for the longer term. A few weeks ago, the weekly chart for the Euro Stoxx 50 Future showed a so-called bearish Dark Cloud Cover candle as the future sold off from the cluster of moving averages. “That candle suggested limited upside in this time frame and was the reason I sold the rally,” says Dodd.
His cautious comments are echoed by Christian Curac, a technical analyst at Fuerst Fugger Privatbank AG, who notes that consolidation, with shares trading within a range, is still the name of the game in the medium-term. We “therefore consider the upside potential to be limited,” Curac says by email. “Defensive positioning appears advisable from a risk-return perspective.”
Turning to market breadth, the picture is neutral at best. There’s been a visibly steady decline in trading volume in cash and futures since the peak in June, suggesting investors are less engaged amid warnings not to chase the rally.
The picture would fit the view of Citigroup Inc. strategists that bullish and bearish forces will cancel each other out over the next few months. With the massive stimulus and improving economic backdrop on one side, and weak earnings and rising Covid-19 infections on the other, the preference is to wait for the next dip, they say.
To be sure, in this sideways environment, some investors might be tempted to listen to Morgan Stanley strategist Graham Secker, who thinks it makes sense to “keep things simple.” Improving economic data at the start of a new cycle, strong monetary and fiscal policy support, and muted investor participation in the rally to date ultimately implies an upbeat environment for stocks, he says.
- Luongo: Russia's Political Stability Ensured While The West Sinks
Luongo: Russia’s Political Stability Ensured While The West Sinks
Tyler Durden
Tue, 07/07/2020 – 23:30Authored by Tom Luongo via Gold, Goats, ‘n Guns blog
Despite what American and European commentators may think, there really is a deep desire among people to vote for their own sovereignty. And that impulse was on full display last week with the announcement of the results of Russia’s public vote to approve the changes to its constitution.
The final tally put the vote at 78% in favor with a 65% voter turnout for the referendum. These are the most sweeping changes to Russia’s constitution since it was ratified back in 1993, which vested the President with immense power.
And while the final package of reforms differed in one important aspect from the original one – allowing for a president to serve more than two ‘consecutive’ terms – the over-arching theme of the changes was to devolve power out of the presidency putting more power in the hands of the elected representatives in the Duma.
The president’s cabinet is to be drawn from the Duma rather than the appointed by the president, while the State Council has been officially added to the constitution which can implement presidential edicts directly to the regions. In effect, there is now a greater balance (and tension) between these various branches of government as the president loses control over appointing his cabinet but strengthens his ability to bypass the elected parliament.
What was clear at the outset of this process was that Putin was trying to prepare his succession while minimizing the potential for another ‘foreign puppet’ to wield the immense power of the Russian presidency, as it was under Boris Yeltsin.
Putin was looking to retire in 2024, at 71, with an eye of maintaining a strong presence in Russian politics by leading the Security Council, which with these reforms has a more direct role in shaping military and diplomatic policy than it did before.
Back in December I did a podcast with Alexander Mercouris of The Duran where we discussed these potential changes in detail (which pre-dates the changes to the president’s term limit) which I think is important to review at this point since the changes are now law.
No matter what political perspective you come from there will be valid criticisms of these changes seeing the potential for abuse, but the overall arc of them is to make Russia far more resistant to outside interference while reflecting the growing pride of Russians for their home and their surviving the hell imposed on them post-USSR.
And these changes have to be viewed through that lens. In my mind Russia has been in a state of war with the West since late 2013 with the EU’s attempt to fast-track Ukraine into its bosom. That morphed into the Maidan uprising and the subsequent reunification with Crimea and the War to Prevent Donbass Secession.
Putin came to power at the height of Russia’s post-Soviet economic and societal collapse. He knows who was behind it and where, metaphorically, the bodies are buried. He is still making moves which are, at best, incremental changes which are achievable when obvious wholesale changes are necessary.
That’s what a lot of these constitutional changes represent, incremental changes necessary to secure Russia’s near-term future in the context of an infinitely hostile West in the death throes of Empire.
For that reason, they are welcome, if to be distrusted as all power is to be inherently distrusted. And the Russian people understand the nature of the conflict to the degree that they were motivated to make a definitive statement about it.
The response from the western press has been suitably pathetic, leading with headlines which only emphasize the potential for Putin to remain in power until 2036 (at which point he’ll be 83) and the small pockets of resistance to these changes.
The people crying the most today are the neoliberal/neocons and their intelligence agents who Putin has consistently outmaneuvered over the past thirty years who planned on waiting him out. These changes to the constitution may, in the end, as Gilbert Doctorow suggests, strengthen the presidency in unforeseen ways, but the one thing it does do is ensure that if Russia is to sink into autocracy it will do so on its terms and not on those that openly destroyed it back in the 1990’s.
This is an age of extreme political instability which reflects the poisoned economic foundation those institutions are built upon. All across the West we are seeing massive resistance to the existing order from all sides of the political spectrum. Their anger and frustration have the same genesis while their goals are vastly different.
The powers that be are behind the ones aimed at tearing down the political order in the U.S. while opposing the same drive in Europe. The irony shouldn’t be lost on anyone that a color revolution is underway in the U.S. where the institutional system is vested in a national government with individual states still operating in accordance with that national government.
While at the same time, a loose collection of treaties binds sovereign nations together into the European Union which has almost zero legal authority to enforce its edicts, but which has violently, resisted all expressions of national sovereignty as barbaric.
So, the picture should be very clear what the dynamic is and who is pulling what strings to what end. And this is why there is the kind of howling and teeth gnashing coming from the West over these reforms, they cannot allow to stand any successful expression of national sovereignty lest the serfs get some funny ideas.
But I don’t think either of these dynamics will win out ultimately. The U.S. in its current form may not survive its civil war but neither will Europe go gently into the long night of The Davos Crowd’s intended supranational police state either.
The key to Putin’s success has been his conservative nature which understands that change comes over time. You can’t force lasting change. You have to allow people time to get used to an idea while also be willing to admit some changes made were the wrong ones.
That’s why these changes passed with a near 80% majority. They were overwhelmingly in agreement with public opinion about what Russia’s future should look like and who should make those decisions.
As such Russians stated to the world the other day that the truly dangerous disease infecting the West – unrestrained liberalism bordering on the libertine – will not be public policy going forward.
* * *
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- Australia Warns Citizens They Risk Arbitrary Detention While Traveling Through China
Australia Warns Citizens They Risk Arbitrary Detention While Traveling Through China
Tyler Durden
Tue, 07/07/2020 – 23:10The Australian government has issued a provocative new warning sure to damage already rocky and worsening relations with Beijing, updating travel advice for China telling Aussies they risk ‘arbitrary detention’ while traveling through the communist-run country.
Australia’s Department of Foreign Affairs revised the travel advice on Tuesday with this new phrase:
“Authorities have detained foreigners because they’re ‘endangering national security’. Australians may also be at risk of arbitrary detention.”
Image via Bloomberg Similar to the situation with the Trump administration, there’s been a developing tit-for-tat leveling of accusations between Australia and China, including last week’s charge from Beijing that Australia is waging an “espionage offensive”.
Already there had been travel warnings related to coronavirus restrictions when for months prior as authorities in China struggled to get the pandemic under control, but this latest official travel guidance for Aussies is somewhat unprecedented given its politically charged nature.
It will also no doubt hurt the Chinese tourism industry, given Australians are among the most frequent foreign travelers when it comes to southeast Asia.
The move could also be linked to the new Hong Kong national security law which went into effect July 1st, and has since been roundly condemned by the US, UK, and European countries. Australian media has cited Feng Chongyi, an Associate Professor in China Studies at the University of Technology Sydney, to explain of the travel update:
“In a sense that it subjects almost everyone into arbitrary detention,” he added according to Australia’s ABC. Local media has also warned of a “hostage diplomacy” type scenario in which China could detain Australian citizens on trumped up charges in order to gain leverage in any negotiations.
Australia Gov has updated its travel advice for China with information about national security laws and the risk to Australians. More information at: https://t.co/2y9B4EpDDR pic.twitter.com/tzID5nzjbi
— Taiwan Formosa Club 🌐 (@taiwanformosan) July 7, 2020
https://platform.twitter.com/widgets.js
This also comes amid a row between China and Canada, after Canada suspended its extradition treaty with Hong Kong. Beijing has since urged Canada to change course immediately, or risk retaliatory action.
Ironically China then issued its own travel advisory on Canada Monday, reading in part that citizens must remain “cautious” while traveling there because of “frequent violent actions by law enforcement agencies in Canada, which have triggered many demonstrations.”
- Judd Gregg: The Coming Biden Coup
Judd Gregg: The Coming Biden Coup
Tyler Durden
Tue, 07/07/2020 – 22:50Authored by Judd Gregg, op-ed via The Hill,
It is more than a possibility, and slightly less than a likelihood, that Joe Biden will be elected president in November.
Biden has made it clear that a woman will be his running mate.
What is becoming equally apparent is that he may be cornered into choosing a socialist or progressive as that person.
As he runs his campaign from his basement, allowing President Trump to stomp his feet and shout as he tries to mount a more traditional campaign, Biden has shown little inclination to take on his own foot-stomping base.
Thus the socialist/progressive wing of the Democratic Party is now center stage — and insisting one of their own be Biden’s vice presidential candidate.
That individual could be Sen. Elizabeth Warren (D-Mass.) or Sen. Kamala Harris (D-Calif.) or any number of lesser-known advocates for the far left.
The underlying agenda is becoming more and more apparent:
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Promoting and promulgating – not merely accepting – the massive protests that have occurred in some cities, even when they have led to lawlessness, looting, riots and declarations of autonomy.
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Searching out and destroying unbelievers in pursuit of a politically correct version of history, and doing so with a zeal that would have made Cotton Mather blush.
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Removing statues of historical figures that are deemed unacceptable based on today’s parameters of social justice.
It is of course ironic that figures such as Ulysses S. Grant, Francis Scott Key and even those who make up the faces of Mount Rushmore — Presidents Washington, Lincoln, Jefferson and Theodore Roosevelt — are now deemed evil by the progressive ideologues of the new Democratic Party.
It is difficult, if not impossible, to see how the nation would have developed without these extraordinary men.
It is also ironic that when leftists condemn these historical figures, they are using freedoms and rights that would not exist without the leadership of those selfsame giants of our past.
But the Democratic Party is, to use a highly politically incorrect phrase, “on the war path” against the nation’s history if it is not interpreted pursuant to their dogma.
The pilgrims of the progressive cause countenance no dissent as they rope and spray-paint the statues of people who once led the nation.
They are a fanatical group.
Biden is suspect to them, of course.
He defeated their patron saints, Sen. Bernie Sanders (I-Vt.) and Warren, and thus they demand that he have as his cohort an acceptable socialist/progressive who is fervent about the cause.
This is about power.
All major elections are.
The socialist/progressives understand this as well as any political movement does.
But the difference is that the socialist/progressive movers who now control the board in the game of Democratic Party politics have no ethical tether.
They are filled with the flames of clarity as to the rightness of their goals. They see all who attempt to dampen those flames as enemies.
Theirs is first and foremost a social justice cause that is justified by their self-proclaimed correctness.
It allows them to move forward without any doubt and with untempered intensity.
They can proclaim sections of cities independent nations. They can proclaim America’s most important past political leaders evil. They can promote lawlessness in the name of the rightness of their cause.
They can essentially march outside the boundaries of the nation’s history and political structure, asserting that what they do is best for all.
They will not tolerate for long not being in total control. They will have their vice president, but not their president. And they are a very impatient people and movement.
Since their goal is power and their purpose pure, why should they wait?
The path to total control is clearly there once they have the vice presidency.
It is the 25th Amendment.
Within a few months of assuming the presidency, Biden may find himself being the next statue toppled as the socialist/progressive movement moves closer to power.
Replacing him with his vice president could be deemed necessary to the cause.
His colleagues could declare him too old to handle the presidency and remove him under the 25th Amendment.
Et tu, Brute?
The Cause will have been completed.
Power will be fully in the hands of the statue-removers, the social justice police and those who see America’s political history as basically evil. Socialist/progressive excess will govern.
It will be a coup.
Look over your shoulder, Joe. Watch your back. Donald Trump is not your most threatening problem.
* * *
Judd Gregg (R) is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee, and as ranking member of the Senate Appropriations Foreign Operations subcommittee
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- Visualizing The Size Of Amazon, The World's Most Valuable Retailer
Visualizing The Size Of Amazon, The World’s Most Valuable Retailer
Tyler Durden
Tue, 07/07/2020 – 22:30As brick-and-mortar chains teeter in the face of the pandemic, Amazon continues to gain ground.
The retail juggernaut is valued at no less than $1.4 trillion – roughly four times what it was in late 2016 when its market cap hovered around $350 billion, and as Visual Capitalist’s Dorothy Neufeld notes, last year, the Jeff Bezos-led company shipped 2 billion packages around the world.
Today’s infographic shows how Amazon’s market cap alone is bigger than the nine biggest U.S. retailers put together, highlighting the palpable presence of the once modest online bookstore.
The New Normal
COVID-19’s sudden shift has rendered many retail outfits obsolete.
Neiman Marcus, JCPenney, and J.Crew have all filed for bankruptcy as consumer spending has migrated online. This, coupled with heavy debt loads across many retail chains, is only compounding the demise of brick-and-mortar. In fact, one estimate projects that at least 25,000 U.S. stores will fold over the next year.
Still, as safety and supply chain challenges mount—with COVID-19 related costs in the billions—Amazon remains at the top. It surpasses its next closest competitor, Walmart, by $1 trillion in market valuation.
How does Amazon compare to the largest retailers in the U.S.?
Source: Deloitte, YCharts
*Largest public US retailers based on their retail revenue as of fiscal years ending through June 30, 2019, e=estimatedWith nearly a 39% share of U.S. e-commerce retail sales, Amazon’s market cap has grown 2,830% over the last decade. Its business model, which aggressively pursues market dominance instead of focusing on short-term profits, is one factor behinds the rise.
By the same token, one recent estimate by The Economist pegged Amazon’s retail operating margins at -1% last year. Another analyst has suggested that the company purposefully sells retail goods at a loss.
How Amazon makes up for this operating shortfall is through its cash-generating cloud service, Amazon Web Services (AWS), and through a collection of diversified enterprise-focused services. AWS, with estimated operating margins of 26%, brought in $9.2 billion in profits in 2019—more than half of Amazon’s total.
Amazon’s Basket of Eggs
Unlike many of its retail competitors, Amazon has rapidly diversified its acquisitions since it originated in 1994.
Take the $1.2 billion acquisition of Zoox. Amazon plans to operate self-driving taxi fleets, all of which are designed without steering wheels. It is the company’s third largest since the $13.7 billion acquisition of organic grocer Whole Foods, followed by Zappos.
TECHNOLOGY
Visualizing the Size of Amazon, the World’s Most Valuable Retailer
Published
4 days ago
on
July 2, 2020
By
Visualizing the Size of the World’s Most Valuable Retailer
As brick-and-mortar chains teeter in the face of the pandemic, Amazon continues to gain ground.
The retail juggernaut is valued at no less than $1.4 trillion—roughly four times what it was in late 2016 when its market cap hovered around $350 billion. Last year, the Jeff Bezos-led company shipped 2 billion packages around the world.
Today’s infographic shows how Amazon’s market cap alone is bigger than the nine biggest U.S. retailers put together, highlighting the palpable presence of the once modest online bookstore.
The New Normal
COVID-19’s sudden shift has rendered many retail outfits obsolete.
Neiman Marcus, JCPenney, and J.Crew have all filed for bankruptcy as consumer spending has migrated online. This, coupled with heavy debt loads across many retail chains, is only compounding the demise of brick-and-mortar. In fact, one estimate projects that at least 25,000 U.S. stores will fold over the next year.
Still, as safety and supply chain challenges mount—with COVID-19 related costs in the billions—Amazon remains at the top. It surpasses its next closest competitor, Walmart, by $1 trillion in market valuation.
Accounting for the lion’s share of Amazon-owned physical stores, Whole Foods has 508 stores across the U.S., UK, and Canada. While Amazon doesn’t outline revenues across its physical retail segments—which include Amazon Books stores, Amazon Go stores, and others—physical store sales tipped over $17 billion in 2019.
Meanwhile, Amazon also owns gaming streaming platform Twitch, which it acquired for $970 million in 2017. Currently, Twitch makes up 73% of the streaming market and brought in an estimated $300 million in ad revenues in 2019.
Carrying On
Despite the flood of online orders due to quarantines and social distancing requirements, Amazon’s bottom line has suffered. In the second quarter of 2020 alone, it is expected to rack up $4 billion in pandemic-related costs.
Yet, at the same time, its customer-obsessed business model appears to thrive under current market conditions. As of July 1, its stock price has spiked over 51% year-to-date. On an annualized basis, that’s roughly 100% in returns.
As margins get squeezed and expenses grow, is Amazon’s growth sustainable in the long-term? Or, are the company’s strategic acquisitions and revenue streams providing the catalysts (and cash) for only more short-term success?
- China Inks Military Deal With Iran Under Secretive 25-Year Plan
China Inks Military Deal With Iran Under Secretive 25-Year Plan
Tyler Durden
Tue, 07/07/2020 – 22:10Authored by Simon Watkins via OilPrice.com,
Last August, Iran’s Foreign Minister, Mohammad Zarif, paid a visit to his China counterpart, Wang Li, to present a roadmap on a comprehensive 25-year China-Iran strategic partnership that built upon a previous agreement signed in 2016.
Many of the key specifics of the updated agreement were not released to the public at the time but were uncovered by OilPrice.com at the time. Last week, at a meeting in Gilan province, former Iran President Mahmoud Ahmadinejad alluded to some of the secret parts of this deal in public for the first time, stating that:
“It is not valid to enter into a secret agreement with foreign parties without considering the will of the Iranian nation and against the interests of the country and the nation, and the Iranian nation will not recognize it.”
According to the same senior sources closely connected to Iran’s Petroleum Ministry who originally outlined the secret element of the 25-year deal, not only is the secret element of that deal going ahead but China has also added in a new military element, with enormous global security implications.
One of the secret elements of the deal signed last year is that China will invest US$280 billion in developing Iran’s oil, gas, and petrochemicals sectors. This amount will be front-loaded into the first five-year period of the new 25-year deal, and the understanding is that further amounts will be available in each subsequent five year period, provided that both parties agree. There will be another US$120 billion of investment, which again can be front-loaded into the first five-year period, for upgrading Iran’s transport and manufacturing infrastructure, and again subject to increase in each subsequent period should both parties agree. In exchange for this, to begin with, Chinese companies will be given the first option to bid on any new – or stalled or uncompleted – oil, gas, and petrochemicals projects in Iran. China will also be able to buy any and all oil, gas, and petchems products at a minimum guaranteed discount of 12 per cent to the six-month rolling mean average price of comparable benchmark products, plus another 6 to 8 per cent of that metric for risk-adjusted compensation. Additionally, China will be granted the right to delay payment for up to two years and, significantly, it will be able to pay in soft currencies that it has accrued from doing business in Africa and the Former Soviet Union states.
“Given the exchange rates involved in converting these soft currencies into hard currencies that Iran can obtain from its friendly Western banks, China is looking at another 8 to 12 per cent discount, which means a total discount of around 32 per cent for China on all oil gas, and petchems purchases,” one of the Iran sources underlined.
Another key part of the secret element to the 25-year deal is that China will be integrally involved in the build-out of Iran’s core infrastructure, which will be in absolute alignment with China’s key geopolitical multi-generational project, ‘One Belt, One Road’ (OBOR). To begin with, China intends to utilise the currently cheap labour available in Iran to build factories that will be financed, designed, and overseen by big Chinese manufacturing companies with identical specifications and operations to those in China. The final manufactured products will then be able to access Western markets through new transport links, also planned, financed, and managed by China.
In this vein, around the same time as the draft new 25-year deal was presented last year by Iran’s Vice President, Eshaq Jahangiri (and senior figures from the Islamic Revolutionary Guard Corps and intelligence agencies) to Iran’s Supreme Leader, Ali Khamenei, Jahangiri announced that Iran had signed a contract with China to implement a project to electrify the main 900 kilometre railway connecting Tehran to the north-eastern city of Mashhad. Jahangiri added that there are also plans to establish a Tehran-Qom-Isfahan high-speed train line and to extend this upgraded network up to the north-west through Tabriz. Tabriz, home to a number of key sites relating to oil, gas, and petrochemicals, and the starting point for the Tabriz-Ankara gas pipeline, will be a pivot point of the 2,300 kilometre New Silk Road that links Urumqi (the capital of China’s western Xinjiang Province) to Tehran, and connecting Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way, and then via Turkey into Europe.
Now, though, another element that will change the entire balance of geopolitical power in the Middle East has been added to the deal.
“Last week, the Supreme Leader [Ali Khamenei] agreed to the extension of the existing deal to include new military elements that were proposed by the same senior figures in the IRGC [Islamic Revolutionary Guard Corps] and the intelligence services that proposed the original deal, and this will involve complete aerial and naval military co-operation between Iran and China, with Russia also taking a key role,” one of the Iran sources told OilPrice.com last week.
“There is a meeting scheduled in the second week of August between the same Iranian group, and their Chinese and Russian counterparts, that will agree the remaining details but, provided that goes as planned, then as of 9 November, Sino-Russian bombers, fighters, and transport planes will have unrestricted access to Iranian air bases,” he said.
“This process will begin with purpose-built dual-use facilities next to the existing airports at Hamedan, Bandar Abbas, Chabhar, and Abadan,” he said.
OilPrice.com understands from the Iranian sources that the bombers to be deployed will be China-modified versions of the long-range Russian Tupolev Tu-22M3s, with a manufacturing specification range of 6,800 kilometres (2,410 km with a typical weapons load), and the fighters will be the all-weather supersonic medium-range fighter bomber/strike Sukhoi Su-34, plus the newer single-seat stealth attack Sukhoi-57. It is apposite to note that in August 2016, Russia used the Hamedan airbase to launch attacks on targets in Syria using both Tupolev-22M3 long-range bombers and Sukhoi-34 strike fighters. At the same time, Chinese and Russian military vessels will be able to use newly-created dual-use facilities at Iran’s key ports at Chabahar, Bandar-e-Bushehr, and Bandar Abbas, constructed by Chinese companies.
These deployments will be accompanied by the roll-out of Chinese and Russian electronic warfare (EW) capabilities, according to the Iran sources. This would encompass each of the three key EW areas – electronic support (including early warning of enemy weapons use) plus electronic attack (including jamming systems) plus electronic protection (including of enemy jamming). Based originally around neutralising NATO’s C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems, part of the new roll-out of software and hardware from China and Russia in Iran, according to the Iran sources, would be the Russian S-400 anti-missile air defence system:
“To counter U.S. and/or Israeli attacks.”
The Krasukha-2 and -4 systems are also likely to feature in the overall EW architecture, as they proved their effectiveness in Syria in countering the radars of attack, reconnaissance and unmanned aircraft. The Krasukha-2 can jam Airborne Warning And Control Systems (AWACS) at up to 250 km, and other airborne radars such as guided missiles, whilst the Krasukha-4 is a multi-functional jamming system that not only counters AWACS but also ground-based radars, with both being highly mobile.
It is again apposite to note here that an entire EW company (encompassing the three core elements of EW) can consist of as little as 100 men and, according to the Iran sources, part of the new military co-operation includes an exchange of personnel between Iran and China and Russia, with up to 110 senior Iranian IRGC men going for training every year in Beijing and Moscow and 110 Chinese and Russians going to Tehran for their training. It is also apposite to note that Iran’s EW system can easily be tied in to Russia’s Southern Joint Strategic Command 19th EW Brigade (Rassvet) near Rostov-on-Don, which links into the corollary Chinese systems.
“One of the Russian air jamming systems is going to be based in Chabahar and will capable of completely disabling the UAE’s and Saudi Arabia’s air defences, to the extent that they would only have around two minutes of warning for a missile or drone attack from Iran,” one of the Iran sources told OilPrice.com last week.
An indication of what Iran hopes to receive in return its co-operation with China, and Russia, came last week when Zhang Jun, China’s permanent United Nations (U.N.) representative, in a statement to the Security Council, told the U.S.:
“To stop its illegal unilateral sanctions on Iran… The root cause of the current crisis is the U.S.’s withdrawal from the Iran nuclear deal in May 2018 and the re-imposition of unilateral sanctions against Iran.”
He also opposed the U.S.’s push for the extension of the U.N. arms embargo on Iran, which expires in October. “This has again undermined the joint efforts to preserve the JCPOA [Joint Comprehensive Plan of Action],” Zhang said, and added: “The [JCPOA] agreement was endorsed by the U.N. Security Council [UNSC] and is legally binding.”
He concluded: “We urge the U.S. to stop its illegal unilateral sanctions and long-arm jurisdiction, and return to the right track of observing the JCPOA and Resolution 2231 [of the UNSC].”
Securing China’s support was a key reason for the original secret part of the deal agreed last year, along with that of Russia, as the two countries have two-fifths of the total Permanent Member votes on the UNSC, with the others being the U.S., the U.K., and France. Aside from this support and the US$400 billion+ of investments pledged by China, the other reason that Iran has agreed to such Chinese (and Russian) influence in its country going forward is that China has guaranteed that it will continue to take all of the oil, gas, and petchems that Iran requires.
- Hong Kong Activists Are Off The Streets – They're Too Busy Scrubbing Digital Footprints
Hong Kong Activists Are Off The Streets – They’re Too Busy Scrubbing Digital Footprints
Tyler Durden
Tue, 07/07/2020 – 21:50Hong Kong activists haven’t been too busy in the streets these days protesting China’s crackdown in the wake of the newly enacted national security law, instead they’ve been at home, frantically scrubbing their social media accounts and digital footprints.
The new law imposed by Beijing took effect July 1st, and given that it wasn’t until after that date that most people didn’t even know what’s in it, and with questions still looming over whether it can be applied to “crimes” and anti-mainland related activity ‘retroactively’ – many young activists aren’t waiting to find out, and are instead busy deleting all traces of their name and activities online. An alarming report in the South China Morning Post begins as follows:
Sam Wong [a pseudonym] remembers exactly when he deleted his Facebook account.
An hour before the clock struck midnight on July 1, Hong Kong officially adopted a new national security law imposed by Beijing. Like many others living in the city, Wong only learned about the full details of the sweeping legislation after it was signed into law. By the time it came into force, he decided that the moment had come for him to quit the social media platform.
Via Reason TV Many aspects to the law and what its diverse layers will look like as interpreted and applied in practice remains uncertain.
But some legal and industry experts say “the rules authorize the police to search electronic devices believed to contain criminal evidence, and require social media platforms and internet service providers to assist law enforcement without a warrant,” as the SCMP underscores.
The new legal situation has even forced app-makers and companies to issue statements related to the Hong Kong issue.
We’d announce that we’re stopping too, but we never started turning over user data to HK police. Also, we don’t have user data to turn over. https://t.co/BBb8BYmW61
— Signal (@signalapp) July 6, 2020
https://platform.twitter.com/widgets.js
Many Hong Kongers have reportedly taken to using an app called Signal, given that not only does it include end-to-end encryption, but even allows users to utilize “disappearing messages” – which allows for automatic deletion and scrubbing of message history anywhere from seconds after a chat to up to a week following.
Wong emphasized to SCMP that “If my account is compromised, or if my phone is hacked, or if I am kidnapped and someone else sees what’s on my phone, then it’s not just the stuff that I wrote that is being exposed but also my friends’.”
Recall too that the national security law allows for harsh prison sentences for conduct deemed subversive and ‘separatist’ within semi-autonomous Hong Kong, even life in prison for acts deemed terrorism which are politically motivated.
- Turkish Forces Lick Wounds After Airstrikes Hit Their Base In Libya
Turkish Forces Lick Wounds After Airstrikes Hit Their Base In Libya
Tyler Durden
Tue, 07/07/2020 – 21:30Submitted by SouthFront,
After a short break, the military confrontation between the Libyan National Army mainly backed up by Egypt and the UAE and the Turkish-backed Government of National Accord has once again entered an open phase.
On July 5, aircraft of the Libyan National Army conducted nine pinpoint airstrikes on the Turkish-operated al-Watiya Air Base in western Libya. According to the LNA, the strikes destroyed a Hawk air-defense system, several radars and a KORAL electronic warfare system. The Hawk system and other equipment were deployed to the base by the Turkish military in early July.
Turkish state media confirmed the incident saying that the strikes “targeted some of the base’s equipment, which was recently brought in to reinforce the base, including an air-defense system”. Pro-Turkish sources claimed that the airstrikes were carried out not by the LNA, but rather by the Egyptian or UAE Air Force. According to them, the warplanes took off from Egypt’s Sidi Barrani Air Base. However, according to the LNA, the strikes were delivered by its aircraft deployed in Libya. Commenting on the situation, the GNA said that it would respond at the “right place and at the right time.”
While the GNA in fact has no resources to conduct extensive airstrikes deep inside the territory controlled by the LNA, Ankara will have to respond to this attack in some way if it really wants to demonstrate that Turkey is committed to achieving a military victory (or at least a partial military victory) in the conflict in Libya.
At least 5,250 Syrian militants out of 15,300 originally deployed in Libya have returned to Syria, according to the London-based Syrian Observatory for Human Rights. The SOHR claimed that 300 Syrian child soldiers are still fighting in Libya. All of them range in ages between 14 and 18. Most of them were recruited by the Turkish-backed al-Sultan Murad Division. It’s interesting to note that the numbers provided by the SOHR mostly fit other sources that argue that about 10,000 Turkish-backed Syrian militants are currently deployed in Libya.
Therefore, Ankara is apparently set to continue its offensive operations by the hands of the GNA and Syrian groups in the countryside of Sirte. This strategic port city is now the main priority of Turkish-led forces.
On the other hand, if Turkey continues escalating the conflict, it may force Egypt and the UAE, the main backers of the LNA, to provide direct military support to the LNA and directly intervene in the conflict. In this case, the Libyan ‘civil war’ will officially turn into a war between Turkey and the UAE-Egypt bloc.
- The New CMBS: Italian Mafia Issues 'Crime & Murder Backed Securities'
The New CMBS: Italian Mafia Issues ‘Crime & Murder Backed Securities’
Tyler Durden
Tue, 07/07/2020 – 21:10It appears global bond investors were “made an offer they could not refuse” as, according to financial and legal documents seen by the Financial Times, they bought bonds backed by the crime proceeds of Italy’s most powerful mafia.
An estimated €1bn of these private bonds – backed in part by front companies charged with working for the Calabrian ’Ndrangheta mafia group – were sold to international investors between 2015 and 2019
As The FT notes, the ’Ndrangheta is less well-known outside Italy than the Sicilian mafia but has risen over the past two decades to become one of the wealthiest and most feared criminal groups in the western world, engaging in crimes ranging from industrial-scale cocaine trafficking to money laundering, extortion and arms smuggling.
As Vice.com reported back in 2014, unlike the world famous Cosa Nostra from Sicily and the Camorra from Naples, for years the ‘Ndrangheta has largely managed to avoid the attention of the media.
It’s a tight-knit family affair and members have done their best not to make too much noise, while police informers have always been a rare breed. Its name comes from the Greek for “courage” or “loyalty” and aptly its well observed code of silence gives investigators a hard time.
the ‘Ndrangheta has come a long way since it was denounced as a “sect of wrongdoers” way back in 1888. Between 1970 and 1991, besides usury and extortion in Calabria, the ‘Ndrangheta was mainly involved in kidnapping for ransom. The most famous case was that of John Paul Getty III, the son of Paul Getty and grandson of the industrialist Jean Paul Getty, founder of the Getty Oil company. The ‘Ndrangheta ended up raking in a ransom of around $3 million for Getty III after kidnapping him in Rome in July 1973, before releasing him onto the Salerno-Reggio Calabria motorway.
When the Berlin Wall fell, the ‘Ndrangheta siezed the moment and the cheap assets, moving quickly to expand its operations in former Soviet bloc countries and turning its operation global. The syndicate dealt heroin and cocaine and became a reliable ally of the South American drug cartels. Last year, an investigation linked its operation with an IRA money laundering scam.
It is well known that Mexican drug gangs Los Zetas and the Gulf Cartel are in business with the ‘Ndrangheta, and recent joint operations by police in Italy and the US—code-named “Crime 3,” “Reckoning/Solare,” and “New Bridge”—uncovered an elaborate logistical network. Operation “Crime 3” showed that the ‘Ndrangheta exercises absolute “hegemony over cocaine trafficking in Europe based on the alliance with Colombian traffickers in Europe and Los Zetas in the US.”
“The ‘Ndrangheta can and has to be considered one of the most powerful organizations in the world for the handling of international drug-trafficking,” said Raffaele Grassi, head of Italy’s national anti-racketeering division in February. He said that operations like “New Bridge” prove once more that the ‘Ndrangheta has expanded far beyond its place of origin and its activities in Northern Italy, and “is looking for criminals beyond the borders, invading new markets to make profit.”
And, for bond investors, it’s a good business – according to Europol, the mafia’s activities generate a combined turnover of €44bn a year… and would appear to be in recession-proof businesses with a strong moat from competitors.
The bonds themselves are backed by collateral consisting of unpaid invoices to Italian public health authorities from companies providing them with medical services (which under EU law, prodeuce a guaranteed penalty interest rate).
Most of the assets securitised in the deals were legitimate but, as The FT details, some were from companies later revealed to be controlled by certain ’Ndrangheta clans, which had managed to evade anti-money laundering checks to take advantage of international investor demand for exotic debt instruments.
One bond deal purchased by institutional investors contained assets sold by a refugee camp in Calabria that had been taken over by organised criminals.
They were later convicted for stealing tens of millions of euros of EU funds.
Entities involved in buying these bonds claim they had never knowingly purchased any assets linked to criminal activity; all saying that they conducted significant due diligence on all the healthcare assets that they handled as financial intermediaries.
The question remains, did Luca Brasi hold a gun to investors’ heads? And how long before the world’s largest organized crime business – The Fed – starts buying these bonds (for the good of the economy?)
- After Sending 1000s Of COVID Patients Into Nursing Homes, New York Blames Deaths On "Infected Staff"
After Sending 1000s Of COVID Patients Into Nursing Homes, New York Blames Deaths On “Infected Staff”
Tyler Durden
Tue, 07/07/2020 – 20:50Authored by Daniel Payne via JustTheNews.com,
New York officials issue a report this week concluding that the high number of coronavirus deaths in state care facilities was the result of infected workers, not sick residents, spreading the contagion.
New York has face sharp criticism over the past several months for its policy of allowing COVID-19-positive patients to return to nursing homes before they were declared free of the virus.
Democratic Gov. Andrew Cuomo said the state policy of allowing residents to return to elderly-care facilities was in line with guidance from the Centers for Disease Control and Prevention. However, PolitiFact in May rated that claim “mostly false,” pointing out the state appeared to pressure nursing homes to take COVID-19 patients regardless of whether they could properly house them.
The report by the New York Department of Health states that “an analysis of the timing between known nursing home staff infections and nursing home fatalities indicates that they are correlated.” It also states that “the peak number of nursing home staff reporting COVID-19 symptoms occurred 23 days prior to the date of the peak nursing home fatalities.”
The data “does not support [the] assertion” that infected patients were the spreaders of the disease, the department argues.
“Nursing home resident fatalities peaked on April 8, 2020,” the paper states.
“The peak of nursing home admissions from hospitals did not occur until April 14, 2020, a week after peak nursing home fatalities – suggesting the policy was not the cause.”
The report also argues that “most patients readmitted to nursing homes were likely not infectious,” claiming that they would likely have spent enough time in the hospital to have entered a non-infectious stage of the disease.
Data also “do not show a consistent relationship between admissions and increased mortality,” the report says, adding that “there were cases where nursing homes did not admit any COVID-positive patients, yet still had a high number of COVID-related deaths.”
The report states that any staff who spread the disease did so “through no fault of their own,” insofar as they would have been unaware they were infectious while working.
- Fearful And Frugal: COVID Weighs On Consumer Psyche
Fearful And Frugal: COVID Weighs On Consumer Psyche
Tyler Durden
Tue, 07/07/2020 – 20:30There is no question in our mind that consumer behaviors will be drastically reshaped in a post-corona world – one where a fearful and frugal consumer might result in a much slower economic recovery.
For more color on the evolving consumer, one that has been severely damaged by the virus-related recession, Bloomberg recently conducted a survey (of 2,200 adults) that found there is “waning interest in public events and material things, like appliances and clothes, and a new austerity, expressed through pantry stockpiling and delayed big-ticket purchases.”
The survey, polled between June 26-28, doesn’t account for the latest surge in coronavirus cases, and a stalled recovery with more than 40% of the country pausing or reversing reopenings. Shifting consumer trends, sort of like what happened in the Great Depression, is the government’s and Federal Reserve’s worst nightmare because declining consumption will result in no V-shaped recovery this year.
“People are generally expressing that they’ll do certain things less, or at home, on their own,” said Victoria Sakal, managing director of brand intelligence at Morning Consult, Bloomberg’s partner on the survey that was conducted on the last weekend of June. “There’s also a health component to how safe, comfortable and protected people feel.”
The survey first revealed that nearly half of the respondents aren’t ready to return to shopping malls.
Americans—often stereotyped around the world as confident to the point of arrogance—have developed a fear of enclosed retail spaces. While about three-quarters of U.S. adults feel okay shopping inside grocery stores or small businesses, more than half don’t feel safe inside a shopping center, the data show. This is only adding to the woes of malls. – Bloomberg
h/t Bloomberg Readers may recall, commercial real estate is an absolute disaster as retailers are failing to make rent payments; this is a byproduct of a consumer ditching malls for e-commerce stores.
Another sign the recovery could be painful and prolonged is the survey found America’s love affair with bars has abruptly died in the age of pandemic. Half of the respondents said they’re “not at all” looking forward to drinking at bars – but rather continue drinking at home.
h/t Bloomberg Respondents were less nervous about restaurants – though most said they would feel more comfortable if eateries adopted social distancing guidelines and new cleaning protocols.
h/t Bloomberg The survey reveals respondents have become more frugal – the day of putting everything on the credit card(s) are over.
These cautious attitudes mark a stark change for a country that is both admired and derided for its at-times extravagant consumer culture. America invented the shopping mall and the movie theater, and has eight of the world’s ten biggest sports stadiums. But the coronavirus lockdowns have given rise to a new attitude: If you reopen it, they might not come.
Some of the hesitance is economic. Americans became more frugal during the pandemic, the survey shows. Over the past three months, 23% of respondents purchased more generic items, 28% increased bulk purchases and 41% chose to save money more often by forgoing a purchase. People also increased price comparing, while putting luxury and expensive purchases on hold at a higher rate.
This thriftiness could be here to stay, permanently shifting the makeup of the average American consumer—not unlike the Great Depression’s impact on spending habits 90 years ago. More than three-quarters of consumers say they expect to increase their savings rate and financial conservatism after economies fully reopen.- Bloomberg
h/t Bloomberg Gen Z and millennial respondents appear to be the first generations looking forward to normalizing their social life – however, the percentages are still at very low levels.
h/t Bloomberg Tens of millions unemployed, nearly three million jobs eliminated, those who were just rehired and now being fired, and states pausing and or reversing reopenings because virus cases are surging once more, this all suggests consumers are entering an age of thriftiness – bad news for anyone betting on the consumer.
- Ghislaine Maxwell Goes From Posh Hideout To COVID-Stricken 'Third World Country' NY Jail
Ghislaine Maxwell Goes From Posh Hideout To COVID-Stricken ‘Third World Country’ NY Jail
Tyler Durden
Tue, 07/07/2020 – 20:11For the first time in her privileged life, ex-socialite Ghislaine Maxwell is living in conditions described by one judge in 2016 as similar to a ‘prison on Turkey or a Third World Country.’
The 58-year-old Maxwell was arrested after hiding out in a lavish four-bedroom, four-bathroom mansion in New Hampshire, which Bloomberg notes sports views of the Mount Sunapee foothills from every room.
After being initially booked in New Hampshire on multiple charges related to trafficking underage girls for the sexual gratification of dead pedophile Jeffrey Epstein, Maxwell was transferred on Monday to New York’s Metropolitan Detention Center (MDC) – home to over 1,600 male and female detainees which was built at the turn of the 20th century and used during both world wars, according to Bloomberg.
No one wants to go to jail, but the conditions described at the MDC have been the subject of numerous complaints and scrutiny that rival the rat-infested federal lockup in Lower Manhattan where Epstein was held.
In early 2019, hundreds of inmates at the MDC were locked shivering in their cells for at least a week after an electrical fire knocked out power in the building. The inmates spent some of the coldest days of that winter in darkness, largely without heat and hot water. –Bloomberg
One inmate, Derrilyn Needham, has been incarcerated at MDC since last November along with 30 other women who slept in bunk beds. Needham said social distancing was difficult, and that for three days starting April 23, the women were on “lockdown on our bunk beds, not able to leave our bunks except to use the bathroom or shower.
She added that they hadn’t been given gloves, hand sanitizer or disinfectant wipes – and that despite symptoms of COVID-19, the assistant warden said she couldn’t receive a test for the virus.
According to The Intercept, “The number of reported coronavirus symptoms far exceeds the number of tests MDC has performed.” In May, the facility came under fire for allegedly destroying medical records “as part of a deliberate effort to obscure the number of incarcerated people infected with the coronavirus.”
The report, filed Thursday as part of a putative class-action lawsuit by people held in custody at the Metropolitan Detention Center in Brooklyn, casts doubt on assertions by the Bureau of Prisons, which runs the jail, and the U.S. Attorney’s Office for the Eastern District, which serves as counsel for the bureau. The Bureau of Prisons and federal prosecutors have insisted in court that the situation at the jail is under control. But the medical examiner’s report — which contradicted prison assertions that Centers for Disease Control and Prevention guidelines were being followed — suggests that the six people in custody who have tested positive for the disease likely represent the tip of the iceberg. –The Intercept
After the pandemic began, the detention center was deemed “ill-equipped” to deal with the spread of COVID-19 by former chief medical officer for the city’s jails, Homer Venters, who says he’s “concerned about the ongoing health and safety of the population,” and slammed administrators for failing to adequately deal with the pandemic.
That said, MDC has been on the receiving end of criticism over its conditions long before coronavirus was an issue.
Cheryl Pollak, the federal magistrate in Brooklyn, has repeatedly voiced concerns about the MDC after reviewing a report by the National Association of Women Judges, who visited the facility and found that 161 female inmates were housed 24 hours a day, seven days a week, in two large rooms that lacked windows, fresh air or sunlight and weren’t allowed out to exercise. –Bloomberg
“Some of these conditions wouldn’t surprise me if we were dealing with a prison in Turkey or a Third World Country,” Pollak said during a 2016 hearing. “It’s hard for me to believe it’s going on in a federal prison.”
- The Madness Of Political Correctness
The Madness Of Political Correctness
Tyler Durden
Tue, 07/07/2020 – 20:10Via Monty Pelerin’s World blog,
The madness of political correctness is mocked in this e-mail sent to Clarence Page of the Chicago Tribune after an article he published concerning a name change for the Washington Redskins.
The author is unknown but perceptive, clever and sarcastic:
Dear Mr. Page:
I agree with our Native American population. I am highly jilted by the racially charged name of the Washington Redskins. One might argue that to name a professional football team after Native Americans would exalt them as fine warriors, but nay, nay. We must be careful not to offend, and in the spirit of political correctness and courtesy, we must move forward.
Let’s ditch the Kansas City Chiefs, the Atlanta Braves and the Cleveland Indians. If your shorts are in a wad because of the reference the name Redskins makes to skin color, then we need to get rid of the Cleveland Browns. The Carolina Panthers obviously were named to keep the memory of militant Blacks from the 60’s alive. Gone. It’s offensive to us white folk.
The New York Yankees offend the Southern population. Do you see a team named for the Confederacy? No! There is no room for any reference to that tragic war that cost this country so many young men’s lives. I am also offended by the blatant references to the Catholic religion among our sports team names. Totally inappropriate to have the New Orleans Saints, the Los Angeles Angels or the San Diego Padres.
Then there are the team names that glorify criminals who raped and pillaged. We are talking about the horrible Oakland Raiders, the Minnesota Vikings, the Tampa Bay Buccaneers and the Pittsburgh Pirates!
Now, let us address those teams that clearly send the wrong message to our children. The San Diego Chargers promote irresponsible fighting or even spending habits. Wrong message to our children.
The New York Giants and the San Francisco Giants promote obesity, a growing childhood epidemic. Wrong message to our children. The Cincinnati Reds promote downers/barbiturates. Wrong message to our children. The Milwaukee Brewers. Well that goes without saying. Wrong message to our children.
So, there you go. We need to support any legislation that comes out to rectify this travesty, because the government will likely become involved with this issue, as they should. Just the kind of thing the do-nothing Congress loves.
As a die-hard Oregon State fan, my wife and I, with all of this in mind, suggest it might also make some sense to change the name of the Oregon State women’s athletic teams to something other than “the Beavers” (especially when they play Southern California). Do we really want the Trojans sticking it to the Beavers?
I always love your articles and I generally agree with them. As for the Redskins name, I would suggest they change the name to the “Foreskins” to better represent their community, paying tribute to the dick heads in Washington DC.
One wonders whether Mr. Page grasped the madness of political correctness after this communication. Perhaps.
- Forget TikTok Ban, Trump Aides Discuss Busting The Hong Kong Dollar Peg To Punish China
Forget TikTok Ban, Trump Aides Discuss Busting The Hong Kong Dollar Peg To Punish China
Tyler Durden
Tue, 07/07/2020 – 19:50While admitting that there are many pushing back against the idea, Bloomberg is reporting that the Trump administration is escalating its plans to hold China accountable for its recent global pandemic chaos and Hong Kong freedom oppression.
Secretary of State Pompeo told Fox News earlier in the day that the US was mulling the possibility of banning social media app TikTok in the US, but tonight Bloomberg reports that some top advisors have suggested the Washington should undermine the Hong Kong dollar’s peg to the US dollar.
According to people familiar with the matter, Bloomberg reports that the idea of striking against the Hong Kong dollar peg – perhaps by limiting the ability of Hong Kong banks to buy U.S. dollars – has been raised as part of broader discussions among advisers to Secretary of State Michael Pompeo but hasn’t been elevated to the senior levels of the White House, suggesting that it hasn’t gained serious traction yet.
As a reminder, we suggested that one major reason for China’s recent push for everyone and their pet rabbit to buy stocks (sending Chinese markets exploding higher) was dramatic investment outflows from China.
China-dedicated equity funds saw an 11th consecutive week of net outflows.
Taking a page of the Robinhood playbook, China is desperate to halt and reverse the massive equity outflows as it urgently needs the flow of US Dollars to reverse into Chinese markets, instead of away from. To do that, it needs to create an initial upward momentum in prices which halts the selling/outflows and prompts a reappraisal of Chinese asset values. Ideally, it will also capture the euphoria of US daytraders who will buy Chinese, not US stocks.
This potential ‘strawman’ to break the HKD peg comes a day after we noted the simple maths that if 500,000 Hong Kongers were to leave the city and take USD1m equivalent with them then ceteris paribus, the HKD peg would surely have to go as all FX reserves evaporated.
In recent weeks we have seen the HK authorities publicly state they will not impose capital controls – which as a key global financial center should always be unthinkable. Yesterday, after a Chinese official response strongly opposing the UK government making clear it will offer 2.9m Hong Kongers a path to citizenship, the HK authorities had to publicly disavow rumours of a travel ban on its citizens.
Yes, that’s where we stand.
What does monetary policy have to offer here?
Not much, because it is The Fed’s ZIRP policy (relative to HIBOR) that is forcing carry traders’ flow to buy Hong Kong Dollars (and lend them) against cheaply-funded USDollars.
As the chart above attempts to show, the relative spread between USD funding and HKD funding implies a stronger HKD which would ‘break’ the peg band (green dotted line) and thus Hong Kong Monetary Authority had to intervene to maintain that upper peg band.
The proposal reportedly faces strong push back from others in the administration who worry such a move would only hurt Hong Kong banks and the U.S., not China.
But the very fact that this serious monetary threat has been raised (or leaked) implies two things: 1) US authorities appear to want to punish banks based in Hong Kong (especially HSBC after Pompeo singled out HSBC’s “show of fealty”); and 2) it will force a response (or pre-response) from China, which could also ripple through becalmed markets and ruin the glorious gains in Nasdaq for retail bagholders everywhere.
As Pompeo said earlier in the week: “We’d love to preserve the freedom in Hong Kong; but if we can’t, we’re going to hold the Chinese Communist Party accountable.”
- Public Forums & The First Amendment: Can Streets Be Painted With 'Black Lives Matter' Messaging?
Public Forums & The First Amendment: Can Streets Be Painted With ‘Black Lives Matter’ Messaging?
Tyler Durden
Tue, 07/07/2020 – 19:30Update (2130ET): In a stunning update, the Martinez couple caught on video painting over the “approved” Black Lives Matter mural on July 4th…
…are being charged with a hate crime.
* * *
Authored by Mark Glennon via Wirepoints.org,
Are Black Lives Matter supporters free to paint those words and its slogans on public streets? Do others have a right to put up contradictory views or cancel out BLM messages?
Those questions should be trending, given recent headlines, but they are yet to be discussed in the press. Perhaps that’s because answers are unclear, at least as far as I can tell.
Removing “Black Lives Matter” in Martinez, CA
“From Cleveland to Montpelier, Vt., BLM street slogans have been defaced,” says The Washington Post in a Monday story about two people in Martinez, California who painted over “Black Lives Matter” that had been painted on a public street. Major streets in New York and Washington, D.C. have been amond thosee painted with Black Lives Matter.
Locally, the words Black Lives Matter and Defund EPD, which had been painted on Evanston streets, were splattered with white paint this past weekend in what appears to be an attempt to deface the words, according to various news reports.
Who has what rights to paint public streets?
The starting point is what’s called the public forum doctrine. That doctrine, which courts have recognized under the First Amendment for over 80 years, requires “viewpoint neutrality” when government creates a public forum for speech. Under that doctrine, when government excludes a speaker from a public forum – such as a park or a podium at a government meeting – doing so may violate the speaker’s First Amendment rights if the exclusion is based on the content of the speech or the speaker’s viewpoint.
It’s under that doctrine that courts have denied government officials, including President Trump, the right to block critics on social media. Officeholders are obviously free to say what they want. But if they choose to go on a public forum like Twitter that allows responses, those officeholders cannot block reactions they don’t like.
By letting people paint messages on public streets, cities probably would be deemed to have created a forum, so it might seem that neutrality demands that competing messages be allowed. Or since contesting messages might make a mess of the streets, perhaps dissenters would defend erasing them by claiming neutrality can be preserved that way.
But not so fast.
Courts also recognize something called the government speech doctrine, which basically says the government itself can express whatever viewpoint it chooses. So, if the BLM messaging is the city’s own or the city blessed it, it’s probably protected.
If you are confused, you should be. The conflict between the public forum and government speech doctrines has been variously described as either a contradiction or a paradox. A Boston College legal journal put it this way:
[T]he government must show that it is not discriminating against a viewpoint. And yet if the government shows that it is condemning or supporting a viewpoint, it may be able to invoke the government speech defense and thereby avoid constitutional scrutiny altogether. Government speech doctrine therefore rewards what the rest of the First Amendment forbids: viewpoint discrimination against private speech.
Making things still murkier in Martinez and Evanston are the facts about whether the government was itself speaking. If it was private citizens and not the government, the government speech defense would not apply.
In Martinez, community members reportedly did the original Black Lives Matter painting though they had a city permit to do so.
“Defund EPD.” Source: Daily Northwestern.
In Evanston, it appears the city supported the Black Lives Matter painting but not the Defund EPD message, according to the Daily Northwestern, and those who painted the latter may face charges.
I’ll leave it there on how courts would deal with these cases and let First Amendment experts speculate further.
As a matter of policy, however, it certainly seems the government should stay away from divisive messaging unless they deliver it in forums where debate can be robust. Painting streets is no such forum.
Many will say, of course, that there is nothing divisive in BLM messaging and that dissenting views should be disregarded. Much of the press will go along with that, reporting the dissenters as vandals or racists. The San Francisco Chronicle headline on the Martinez incident was “Black Lives Matter mural in Martinez vandalized in ‘hateful and senseless’ act.” And in The Washington Post, the headline was, “Calling racism a ‘leftist lie,’ white vandals target California Black Lives Matter slogan.”
But the division BLM inflames is real and will grow. BLM Chicago recently retweeted a video of Fred Hampton with the message, “we not gon fight capitalism with black capitalism, we gon fight it with socialism… we’re going to fight their reactions when all us people get together and have an international proletariat revolution!” Hampton was a Black Panther leader killed in a 1969 police raid in Chicago.
And over the weekend BLM Chicago promoted training sessions on abolishing the entire police and prison system, which included “black only” sections.
We wrote more about them and the national BLM organization’s extremism earlier. Their supporters have their legal rights, but the facts are coming out.
Race relations are being set back by fifty years and BLM is part of the reason why.
- DoJ, FTC Investigating TikTok Over Child Privacy Violations
DoJ, FTC Investigating TikTok Over Child Privacy Violations
Tyler Durden
Tue, 07/07/2020 – 19:13Update (1840ET): Not long after President Trump confirmed that the administration is “looking into” banning TikTok, Reuters has reported that the DoJ and FTC are, in fact, looking into probing TikTok over allegations the company violated a 2019 agreement where it promised to protect children’s privacy.
And instead of citing the usual anonymous sources, the report cited officials from various nonprofit groups who claimed that officials from the DoJ and FTC had met with them over complaints that TikTok had violated an agreement reached with the two agencies in 2019.
Officials from both the FTC, which reached the original consent agreement with TikTok, and the DoJ, which often takes legal actions on behalf of the FTC, met via video conference with representatives from the various groups to discuss the matter, according to David Monahan, a campaign manager with the Campaign for a Commercial-Free Childhood, one of the sources who spoke with Reuters.
“I got the sense from our conversation that they are looking into the assertions that we raised in our complaint,” Monahan said.
According to the agreement, TikTok agreed to police sensitive information about minor users shared on its platform. But the digital privacy groups who brought the complaint alleged that “TikTok failed to delete videos and personal information about users age 13 and younger as it had agreed to do, among other violations.”
We suspect Beijing won’t be thrilled about this news, and we imagine the CCP will once again use this as another example of how Chinese companies are persecuted and slandered by the envious west.
* * *
After an intrepid group of “TikTok Teens” purportedly sabotaged President Trump’s Tulsa, Oklahoma campaign comeback rally by ‘fraudulently’ requesting “1 MILLION TICKETS” as Trump Campaign Manager Brad Parscale put it in a tweet when he announced the numbers. By doing this, the media narrative goes, the teens supposedly stopped thousands of eager Oklahoman Trump supporters (read: racists) from obtaining tickets to the rally.
Of course, we later learned that it didn’t really go down like that. And even NYT social media reporter Taylor Lorenz urged readers to accept her reporting with a grain of salt. Still, CNN was happy to run with the story.
But before the liberals break out the ukeleles and start strumming the opening to “I Believe the Children are the Future”, Secretary of State Mike Pompeo told Fox News Host Larua Ingraham during a Monday evening interview that the administration is “looking into” the possibility of banning the app in the US.
WaPo noted that Pompeo’s interview, and his comments on TikTok, followed the TikTok teens sabotage campaign. But this is hardly the first time the secretary of state has warned about the dangers of using the app. At this point, we wouldn’t be surprised to learn that the White House sees this as a bunch of gullible American teenagers being manipulated like a gang of ‘useful idiots’ by the CCP. Notably, Kellyanne Conway’s teenage daughter is now using the app to thoroughly embarrass the bejeezus out of her mother by airing the family dirty laundry in public.
Sec. Pompeo when asked if the Administration has considered banning TikTok: “We’re certainly looking at it.” pic.twitter.com/N9NmbDOka0
— Benny (@bennyjohnson) July 7, 2020
https://platform.twitter.com/widgets.js
India recently banned TikTok and dozens of other Chinese apps, and Ingraham was simply asking if the Trump Administration, which has been ratcheting up the pressure on China, might consider pursuing a similar tack.
“We’re certainly looking at it,” Pompeo said, adding that the administration was taking the issue “very seriously.” “With the respect to Chinese apps on people’s cellphones, I can assure you the United States will get this one right.”
But he added: “I don’t want to get out in front of the president, but it’s something we’re looking at.”
Asked if he could endorse Americans downloading the app to their phones, Pompeo replied: “Only if you want your data in the hands of the Chinese Communist Party.”
If you have any doubts about whether TikTok is working to expand the influence of the CCP in the US, give this WSJ story published last month a read…
This is insane https://t.co/Rt1t7SxoIc
— jsadinolfi (@jsadinolfi) June 17, 2020
- Ghislaine Should Be On Suicide Watch: Former MDC Warden
Ghislaine Should Be On Suicide Watch: Former MDC Warden
Tyler Durden
Tue, 07/07/2020 – 19:10A former warden at the jail holding Ghislaine Maxwell says the accused Jeffrey Epstein accomplice should be on suicide watch – as her case is ‘too explosive to risk her killing herself behind bars,’ reports the New York Post.
“She allegedly knows a great deal of information about a multitude of potential co-defendants in the actions against Jeffrey Epstein,” said Cameron Lindsay, who served as the warden of the Metropolitan Detention Center for three years, adding that he wouldn’t risk the possibility of her suicide.
“This is just such a sensitive case, it’s absolutely imperative that the government get it right,” added Lindsay. “Why take any chances? Just put her on suicide watch and keep her there until she’s out the door. I would just not risk it.“
At the jail, an inmate is placed on suicide watch at the discretion of the warden and the chief psychologist at the facility.
Once on inmate is on suicide watch, a staff member or fellow inmate who has been trained by the psychologist, sits outside their cell and stares at them constantly to ensure they don’t attempt to kill themselves. –New York Post
Maxwell will likely be placed in a cell by herself due to her status as a high-profile suspect which could make her a target for other inmates, according to the report.
Maxwell shortly after the death of her father in 1991 “To take someone out like that, that would be a badge of honor in the subculture of prisons,” he added. “Anytime an inmate with wide publicity of a very sensitive nature like this, they become a target.”
Maxwell, who arrived at the Sunset Park jail Monday, was likely transported to the facility in “full restraints,” which includes leg irons, a belly chain and handcuffs. After entering, she would’ve been stripped searched and cavity searched and given a medical examination.
She’ll likely ride out her time at the jail in “administrative lockdown status,” Lindsay added, which would keep her locked down in a cell 23 hours a day. She’d be given one hour of recreation time at a small outdoor area after being escorted from her cell in shackles under the lockdown status. –New York Post
Maxwell’s death would also be incredibly convenient for a host of high-profile individuals suspected of participating in Epstein’s underage sex trafficking ring. She was charged with four counts of sex trafficking and two counts of perjury, and will be held at the Metropolitan Detention Center at least until her bail hearing, tentatively scheduled for the 14th of July.
After his arrest on charges of sex-trafficking dozens of teenage girls, Jeffrey Epstein was found dead in his cell last August at New York’s Metropolitan Correctional Center (MCC) in lower Manhattan. While ruled a suicide, many have speculated that the combination of broken security cameras and ‘sleepy guards’ at the exact moment he allegedly hanged himself suggests he was ‘suicided’ before he could spill the beans on his high-profile friends and clients.
- Interactive Map Of All The PPP Mega Loans Over $1 Million Made To U.S. "Small" Businesses
Interactive Map Of All The PPP Mega Loans Over $1 Million Made To U.S. “Small” Businesses
Tyler Durden
Tue, 07/07/2020 – 18:50Submitted by Adam Andrzejewski, first published in Forbes
Yesterday, the Small Business Administration released data on which businesses received forgivable loans under the Paycheck Protection Program (PPP) in amounts between $150,000 and $10 million.
So, who received how much taxpayer money through the program? Our auditors at OpenTheBooks.com mapped the big loans – the nearly 83,000 loans between $1 million and $10 million. These businesses are located in 13,700 zip codes across the country.
Now, you can find out yourself, zip code by zip code, with an interactive tool we’ve built on our government transparency website.
This mapping tool allows users to quickly review every PPP transaction exceeding $1 million. Just click a pin (zip code) and scroll down to see the results that will appear in the chart beneath the map.
The overall subsidies are quite breathtaking.
Kanye West, who just declared for president and claims a net worth of $1.3 billion, took between $2 million and $5 million for his clothing and sneaker company, Yeezy LLC.
Robert Redford’s Sundance Institute received between $2 million and $5 million in lending. The non-profit’s latest IRS 990 lists $55.4 million in assets (FY2018).
Then, there is Francis Ford Coppola the legendary filmmaker of the Godfather and other movies.
Coppola is also a renowned wine maker and two of his affiliated companies received PPP funding including Francis Ford Coppola Presents LLC ($5 million to $10 million);and Niebaum Coppola Estate Winery, LP ($1 million – $2 million).
A spokesperson responded to our request for comment:
“Francis Ford Coppola Winery and Niebaum Coppola Estate Winery, LP applied for the PPP loans based on business necessity and are using the entirety of the loans on wages and benefits to save the employment of its wineries, hospitality, and restaurant workforce during these uncertain times.
We are family-owned wine businesses, and the PPP loans have enabled us to bring back over two hundred of our Direct to Consumer employees, even though we may not have work for all them for the foreseeable future.”
However, Coppola’s winery wasn’t alone as 601 wineries across America received at least $192 million in PPP lending.
Here is just a sample of our findings from the overall database:
- 43,815 restaurants across America received between $13.6 billion and $32.7 billion.
- 31,559 dentists and physician offices received between $9.9 billion to $24.3 billion. The world’s most famous cosmetic dentist – Dr. Bill (William) Dorfman – affectionately known as “America’s dentist” and featured dentist on ABC’s Extreme Makeover, and author of best-selling books – received up to $350,000.
- 14,306 law offices received between $5.3 and $12.8 billion including the prominent firm of Boies, Schiller and Flexner in Washington, D.C. who received $5 million to $10 million.
- 12,694 new car dealerships received between $7 billion and $16.7 billion including the Land Rover and Ferrari dealerships in Hinsdale, Illinois – each received between $350,000 to $1 million.
- 10,684 religious organizations received between $3 billion and $7.5 billion. Located in Notre Dame, Indiana, the Sisters of the Holy Cross received up to $5 million; Holy Cross College received up to $1 million; and the Corporation of St. Mary’s College Notre Dame received up to $10 million. (Colleges already received $12 billion in bailout money through the CARES Act.)
The large ranges (above) are the result of a transparency gap in the data.
The Trump administration did not release the known loan amounts. Instead, the amounts were disclosed within bands: $150,000 to $350,000; $350,000 to $1 million; $1 million to $2 million; $2 million to $5 million; and $5 million to $10 million.
Not surprisingly, many firms and non-profit organizations who signed up for a PPP loan will argue that the subsidies helped keep people employed when federal, state, and local government literally closed down the economy. And, in fact, these businesses employed 31.5 million people.
However, critics contend that many businesses legally gamed the system.
For example, Citizens Against Government Waste (CAGW) – a conservative Washington, D.C. oversight group founded to help President Reagan cut pork – publishes the annual “Congressional Pig Book.” Yet, they took up to $350,000 despite listing $4.2 million in assets on their recent IRS 990 (FY2018).
CAGW responded to our request for comment saying, “… COVID-19 had a significant impact on our funding sources and threatened our ability to provide continued employment to our staff.”
Media Matters For America – a Soros-funded progressive group – had $5.3 million in assets on their latest available IRS 990 (FY2018) and received up to $2 million in PPP lending.
“R” Street Institute, a self-described conservative and libertarian free market group based in Washington, D.C. and dedicated to limiting government, took between $1 million and $2 million.
In San Francisco, Apple co-founder Steve Wozniak co-founded the Electronic Frontier Foundation and they received between $1 million and $2 million even though they have assets of $40.3 million on their latest IRS 990.
Using the interactive map, citizens will find countless examples of businesses, churches, and non-profit organizations right in their own neighborhoods that received massive PPP subsidies.
As you search the federal PPP loan portfolio, keep in mind that taxpayers will pay for most of these “loans.” The loans are forgivable – treated as a grant – as long as the businesses retain their employees and don’t cut their paychecks.
What will you find in your own backyard? Whatever it is, let Washington know.
Note: Our watchdog organization at OpenTheBooks.com does not take government funding under any circumstances. Furthermore, we reached out to every entity mentioned and will update the piece if they respond.
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