Mar 09

Today’s News 9th March 2022

  • Video: Reporter Refuses To Accept Psaki’s Attempt To Blame Russia For Gas Price Surge
    Video: Reporter Refuses To Accept Psaki’s Attempt To Blame Russia For Gas Price Surge

    Authored by Steve Watson via Summit News,

    As the price of gas surged to a national average of $4 and even surpassed $7 in some areas, White House Press Secretary Jen Psaki attempted to deflect the blame away from the Biden administration, but one reporter refused to accept it.

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    As we noted earlier, gas prices are now higher in places than in zombie apocalypse movies, an entirely predictable reality, but the White House would have Americans believe it’s all because of Vladimir Putin.

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    Fox News reporter Peter Doocy wasn’t willing to quietly accept Psaki’s deflection, noting “It sounds like you are blaming Putin for the increase in gas prices recently, but weren’t gas prices going up anyway because of post-pandemic supply chain issues?”

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    Incredible, Psaki doubled down on the lie, claiming “…there’s no question that…the increase…is a direct result of the invasion of Ukraine.”

    Doocy noted that Biden halted new gas and oil leases on public land in his first week in office:

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    He continued to press Psaki on how high prices have to go before Biden would consider reversing the previous executive actions, also noting that Biden stopped the construction of the Keystone XL Pipeline.

    “Gas prices are approaching an all-time high per gallon. How high would they have to get before President Biden would say, ‘I’m going set aside my ambitious climate goals adjust increase domestic oil production, get the producers to drill more here, and we can address the fossil fuel future later?’” Doocy stated.

    Psaki responded by blaming oil companies and falling back on the age old claim of being better than Trump. “Well, again, Peter, the US produced more oil this past year than in President Trump’s first year,” she said.

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    Psaki declared “if we’re looking to the future, and what, how, what we can do to prevent this from being a challenge in future crises, the best thing we can do is reduce our dependence on fossil fuels and foreign oil, because that will help us have a reliable source of energy so that we’re not worried about gas prices going up because of the whims of a foreign dictator.”

    Doocy fired back, “You guys think that asking Saudi Arabia or Venezuela for Iran is reducing our dependence on foreign oil?” pointing out that this is the administration’s strategy:

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    Remember in 2018 when Democrats were so outraged with high gas prices that they instituted a whole campaign to “Demand Lower Gas Prices”? They demanded that the Trump administration lean on OPEC nations to ramp up oil production.

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    Gas prices are now even higher but I guess ‘it’s OK when we do it’.

    Tyler Durden
    Wed, 03/09/2022 – 02:00

  • Poland's Offer Of Jets For Ukraine "Raises Serious Concerns For Entire NATO Alliance": Pentagon
    Poland’s Offer Of Jets For Ukraine “Raises Serious Concerns For Entire NATO Alliance”: Pentagon

    Update(20:45ET): Some sharp words and a swift rejection from the Pentagon Tuesday evening: “The prospect of fighter jets ‘at the disposal of the Government of the United States of America’ departing from a U.S./NATO base in Germany to fly into airspace that is contested with Russia over Ukraine raises serious concerns for the entire NATO alliance,” Pentagon press secretary John Kirby said of the Polish announcement which caught the Biden administration by surprise.

    Kirby described the Pentagon perspective on Poland’s earlier in the day declaration that it would send all its Russian-produced MiG-29 jets to Ramstein Air Base in Germany for the United States to be able to transfer them to Ukraine further as follows:

    • “It is simply not clear to us that there is a substantive rationale for it,” he added, stressing that the proposal “shows just some of the complexities this issue presents.”
    • “We will continue to consult with Poland and our other NATO allies about this issue and the difficult logistical challenges it presents, but we do not believe Poland’s proposal is a tenable one.”

    One insightful online commentator quipped of Tuesday’s inter-NATO confusion: “No, one wants to take the responsibility. Poland passed it to the US, and now the US says this is all Poland. What a farce.”

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    Update(17:24ET): This level of huge contradiction among allies on such a big development is just a bit awkward and even embarrassing. The Biden administration is saying it was caught completely by “surprise” at Poland’s declaration hours ago that it would send all its Russian-produced MiG-29 jets to Ramstein Air Base in Germany for the United States to be able to transfer them to Ukraine.

    While the possible plan was reportedly under consideration for days, it doesn’t appear the White House was notified of Warsaw’s final decision prior to the announcement being declared as a ‘done deal’ via the Polish Ministry of Foreign Affairs website. Apparently for Washington, there was no done deal at all.

    “Poland’s decision to put all its MIG-29 jets at the disposal of the United States was not pre-consulted with Washington,” State Department Undersecretary Victoria Nuland said Tuesday in the wake of Poland’s statement. And more:

    “To my knowledge, it wasn’t pre-consulted with us that they planned to give these planes to us,” she said at a hearing of Senate Foreign Relations Committee. “I look forward when this hearing is over to getting back to my desk and seeing how we will respond to this proposal of theirs to give the planes to us,” she said.

    Here’s how the exchange began:

    “I was in a meeting where I ought to have heard about that just before I came (to a Senate hearing), so I think that actually was a surprise move by the Poles,” Undersecretary of State for Political Affairs Victoria Nuland told US lawmakers.

    Asked by a senator whether US officials coordinated ahead of time with Poland before Warsaw made its announcement, Nuland said: “Not to my knowledge.”

    The official statement from Poland had said, “The authorities of the Republic of Poland, after consultations between the President and the Government, are ready to deploy – immediately and free of charge – all their MIG-29 jets to the Ramstein Air Base and place them at the disposal of the Government of the United States of America.”

    Elsewhere during her Senate testimony remarks, Nuland said that the US is currently considering placing Patriot missile batteries in Poland.

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    The bizarre back-and-forth over the “surprise” MiG fighter jet agreement gave rise for some in Congress to demand the White House see it through, now that the offer has apparently already been made by Poland. It would require, according to the statement from Warsaw, for Washington to supply in place of the depleted MiGs new F-16s at a future date.

    All of this possibly just brought Warsaw into Russia’s crosshairs, or at least some in Poland might now be worrying… After all, the logistics alone of such a major transfer during a war inside Ukraine would be perilous and difficult, to say the least. Russia has also warned it could target such externally supplied major weapons systems entering from abroad.

    And then there was this deeply alarming scenario floated on Tuesday in the Senate hearing with Nuland:

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    In the latest major development in what’s become a “huge operation” mounted by individual NATO member states to assist Ukraine’s military, Poland has announced it is ready to transfer all of its Russian-made MIG-29 jets to the Rammstein Air Base in Germany.

    A statement posted Tuesday to its Ministry of Foreign Affairs website indicated the jets will be placed “at the disposal of the Government of the United States of America” which in turn is expected to send them to Ukraine, after President Zelesnky has issued a series of urgent appeals for fighter planes.

    “The authorities of the Republic of Poland, after consultations between the President and the Government, are ready to deploy – immediately and free of charge – all their MIG-29 jets to the Rammstein Air Base and place them at the disposal of the Government of the United States of America,” it said. 

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    It’s part of a controversial deal which had in the last days emerged and which was widely reported as being in the works, despite Poland as recently as Sunday greatly downplaying it – perhaps not wanting to prematurely provoke Russia’s wrath. It was previously confirmed that the other side of the deal would see Washington quickly replace Warsaw’s depleted MiG-29 jets with F-16 fighters.

    The statement from Poland’s government followed with: “At the same time, Poland requests the United States to provide us with used aircraft with corresponding operational capabilities. Poland is ready to immediately establish the conditions of purchase of the planes.”

    “The Polish Government also requests other NATO Allies – owners of MIG-29 jets – to act in the same vein,” the statement concluded.

    Days ago Secretary of State Antony Blinken said the US is “very actively” looking at resupplying Poland if it can quickly transfer its own Russian-made aircraft to Ukraine. 

    “We are looking actively now at the question of airplanes that Poland may provide to Ukraine and looking at how we might be able to backfill should Poland decide to supply those planes,” Blinken previously from in Moldova, while on a trip that highlighted the growing refugee crisis from the war.

    “A perilous delivery” it will be, ABC’s chief Washington correspondent observes, given Russia has threatened to militarily block major external weapons shipments…

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    Crucially, there was also this recent statement from an unnamed Polish official given to FT: “I can’t speak to a timeline but I can just say we’re looking at it very, very actively.” The official said further, “Poland is not in a state of war with Russia, but it is not an impartial country, because it supports Ukraine as the victim of aggression. It considers, however, that all military matters must be a decision of Nato as a whole.”

    Already many NATO nations have been supplying Ukraine with anti-tank and anti-air should fired missiles, but if a large-scale movement to get more fighter jets to Kiev gains momentum, this will certainly mark a huge escalation, and the Kremlin has recently warned it could attack such provocative military supplies coming from the West.

    Tyler Durden
    Tue, 03/08/2022 – 23:47

  • Western Economies On Brink Of Recession As Russia Sanctions Escalate
    Western Economies On Brink Of Recession As Russia Sanctions Escalate

    By John Kemp, Senior Market Analyst at Reuters

    U.S. and European leaders now face an unpleasant choice as they decide how aggressively to use economic sanctions in response to Russia’s military invasion of Ukraine.

    The moral imperative is to exert maximum economic pressure rapidly on Russia to end the fighting in Ukraine as quickly as possible and repel Russian forces. But the economic imperative is to protect businesses and employment at home, minimise the fallout for lower income households and sustain support for sanctions policies.

    In mid-February, top policymakers appeared to have thought they could reconcile these objectives through a carefully controlled sanctions escalation strategy exempting oil and gas trade. But that plan has broken down as a result of Russia’s slow progress on the battlefield and immense diplomatic and public pressure on U.S. and European leaders to maximise sanctions swiftly.

    U.S. and European policymakers must choose between imposing maximum pressure on Russia by cutting off oil and gas purchases or a more modest approach that will avert recession.

    Recession Indicators

    Even before the invasion, the rapid economic rebound after the pandemic was beginning to decelerate, price increases were accelerating and interest rates were set to rise. The flattening U.S. Treasury yield curve indicated a heightened probability of a mid-cycle slowdown or end-of-cycle recession in the next year.

    Russia’s invasion and the sanctions that have followed super-charged these trends, disrupting supply chains, sending energy and food prices soaring and flattening the yield curve further. 

    The financial crisis in 2008/2009 and the pandemic in 2020/2021 were demand-side shocks that could be offset by lowering interest rates, buying bonds, cutting taxes and boosting unemployment insurance. But the invasion and sanctions are a supply-side shocks that have cut the global economy’s production capacity so they cannot be offset in the same way.

    Boosting demand by more bond buying, cutting taxes or increasing government spending would simply worsen the production-consumption gap and fuel even faster inflation.

    The crisis threatens to disrupt global trade in critical raw materials and industrial components ranging from aluminium, nickel and noble gases to car parts, ocean shipping and overland rail freight.

    But the biggest and most immediate impact is being felt in petroleum and natural gas, where Russia is one of the world’s top exporters, and grain, where both Russia and Ukraine are major global suppliers.

    Energy and food prices, which were already rising before the invasion, are now climbing at the fastest rate for 50 years, at a time when wages are increasing slowly, putting pressure on businesses and household finances.

    Lower income households in advanced and developing economies will be hit particularly hard since they spend a much higher share of their income on food and fuel and have fewer options to modify spending patterns.

    Uncontrolled Escalation

    Top U.S. and European policymakers seem to have been alert to the risks when threatening to impose unprecedented sanctions in an effort to deter Russia’s invasion. U.S. and European sanctions were carefully crafted to exclude trade in oil, gas and other energy items from the embargo and to permit energy-related financial transactions.

    Planning had assumed that sanctions would be intensified progressively and measures targeting oil and gas flows would be imposed last, if at all.

    The controlled escalation strategy was designed to deter and punish Russia while limiting costs for motorists, households and energy-intensive industries in the United States and Europe.

    But both sides of the conflict appear to have miscalculated the resolution of the other and underestimated what it would take to bring the conflict to a swift end.

    For Russia, that meant misjudging its ability to deliver a rapid victory before sanctions plunged its economy into turmoil.

    The United States and Europe, meanwhile, seemed to have assumed incremental sanctions could deter an invasion or bring it to a quick halt before the wider economic fallout was felt. For the West, the result is now broader sanctions that could last longer than anticipated, increasing economic disruption.

    Limiting Disruption

    U.S. and European policymakers seem to have calculated they could take a strong public line on sanctions while letting oil and gas traders to continue purchasing Russian fuel. But most traders have concluded that the legal and reputational risks are too great and have shunned Russian exports, bringing oil flows to a halt. Shell felt the impact acutely. It purchased a Russian crude cargo on March 4, only to be met with such a public outcry that on March 8 it apologized and said it would stop spot purchases immediately.

    Now political pressure is mounting in the United States, and to a lesser extent in Europe which is far more reliant on Russia, for a complete ban on Russian oil and gas imports.

    The possibility that the United States and Europe might initiate an embargo has already sent oil and gas prices surging to levels that will be unaffordable for many households and firms if sustained for an extended period.

    In response, Russia has indicated it could cut oil and gas exports if economic warfare continued to escalate, a move that would trigger an immediate full-blown energy crisis.

    There is no way the United States and Europe can replace Russian oil and gas exports fully within the next 12 months or absorb the consequences of a further price spike without entering recession.

    European economies, with much bigger economic exposure to Russia, are particularly at risk of heading into a downturn.

    Phased Sanctions?

    U.S. and European policymakers may try to announce that they will progressively reduce oil and gas purchases from Russia according to a fixed timetable over the next two to three years.  Such a phased reduction in Russian oil and gas purchases every six months would be similar to previous progressive sanctions on Iran’s oil exports.

    Such a move would give more time to secure replacement supplies from others including Saudi Arabia, Qatar, Iran, Venezuela and the U.S. shale industry over the 12-36 months. It could also give U.S. and European policymakers negotiating leverage with Russia while reducing, if not eliminating, the immediate upward pressure on energy prices.

    Progressive sanctions might even prove more effective if they limit the economic fallout in North America and Europe, and make them more economically and politically sustainable in the medium term.

    Tyler Durden
    Tue, 03/08/2022 – 23:00

  • Not All Oil Is Equal: Why Banning Russia's Crude Is Risky
    Not All Oil Is Equal: Why Banning Russia’s Crude Is Risky

    By Irina Slav of OilPrice.com

    Crude oil prices are soaring, with Brent breaking $130 over the weekend as the United States and Europe discussed banning Russian oil imports. But according to some industry insiders, this might not be the smartest move.

    “The only way to stop Putin is to ban oil and gas exports,” Scott Sheffield, chief executive of Pioneer Natural Resources, told the Financial Times in an interview last week. “[But] if the western world announced that we’re going to ban Russian oil and gas, oil is going to go to $200 a barrel, probably — $150 to $200 easy.”

    The narrative in support of a ban is that U.S. local production will make up for the canceled imports. According to Sheffield, however, the process of making up will take a while.

    The U.S. shale oil industry has certainly benefited from higher oil prices, but it has also seen its fair share of problems, reflecting broader difficulties in the U.S. economy after the pandemic.

    Labor shortages are ubiquitous across industries, for example, and U.S. shale is no exception. Supply chains are still suffering disruptions that began during the pandemic, with industry insiders complaining about delivery delays of various materials. A frack sand shortage is also plaguing the industry.

    There are also specific difficulties for the shale oil industry. The biggest among them is that drillers seem to be running out of the so-called sweet spots where oil is relatively easily accessible. Of course, with prices of above $120 per barrel, the definition of sweet spots might well expand, but not all would be tempted to take advantage, it seems.

    Public oil companies in the United States have maintained their financial discipline despite the oil price rally—something that would have been unthinkable a couple of years ago. With growing pressure from shareholders to return cash instead of growing production, most public shale industry players have resisted the call of higher prices successfully.

    Indeed, it was Sheffield again who said that “Whether it’s $150 oil, $200 oil, or $100 oil, we’re not going to change our growth plans.” Speaking to Bloomberg in February, the executive added, “If the president wants us to grow, I just don’t think the industry can grow anyway.”

    Continental Resources is another shale major that has no plans to boost output substantially. At least it had no such plans when it released its latest financial results and issued a production update. “We project generating flat to 5% annual production growth over the next five years as we have previously noted,” Continental’s chief executive Bill Berry said in February.

    Russian oil exports account for 8 percent of global supply. Exports to the United States are mostly fuel: according to data from the American Fuel and Petrochemical Manufacturers association, last year the U.S. imported some 209,000 bpd of Russian crude but 500,000 bpd of refined products.

    As the AFPM explains, these imports would be challenging to replace. “U.S. West Coast (USWC) refineries rely on imports of light sweet crude oil from other countries, including Russia, because access to U.S. produced light sweet crude oil is challenged by geography, transportation, and logistics.

    “Our refineries in the U.S. Gulf Coast (USGC) import heavier crude and unfinished oils from Russia that our complex refineries can transform into other products including gasoline, diesel and jet fuel.”

    Sources of heavy crude are few and far between, although Canada is one of the biggest. Its exports to the United States, however, are not enough to satisfy the country’s refining industry’s needs. It was probably because of this that U.S. representatives this weekend traveled to Venezuela—a formerly big producer of heavy crude but heavily sanctioned by the United States.

    According to a Reuters poll, an overwhelming majority of Americans from both parties support a ban on Russian oil. This effectively means that an overwhelming majority of Americans either support much higher gasoline prices or are unaware of the direct link between international oil prices and gas prices at the pump. Whatever the case, the government, at least, is aware that it would need to tread cautiously.

    U.S. inflation hit 7.5 percent in January, and there are few signs it will be coming down soon, even with the planned rate hike the Fed is expected to announce this month. Energy costs are a major contributor to higher consumer prices, and currently, energy costs are pretty much out of control, not least because of the Russian oil export ban discussions.

    Theoretically, Venezuelan and Iranian crude could make up for sanctioned Russian barrels. In reality, Venezuela’s oil industry will need time to ramp up production even if sanctions are lifted immediately, which has not been suggested publicly. Lifting sanctions on Venezuela without political reforms would effectively amount to recognition of the Maduro regime by the White House after years of insisting on a change. Meanwhile, Iranian talks have stalled, reminding us all that the Iran nuclear deal is not a certainty either. No wonder analysts are talking about much higher oil prices.

    Tyler Durden
    Tue, 03/08/2022 – 22:30

  • Biden: Gas Prices Are "Going to Go Up… Can't Do Much Right Now… Russia Is Responsible"
    Biden: Gas Prices Are “Going to Go Up… Can’t Do Much Right Now… Russia Is Responsible”

    President Joe Biden said gas prices in America that are already at historical highs are going to continue to go up and that there’s not much that can be done about it at this time.

    On Tuesday the president announced a ban on Russian energy imports as the latest move from the United States to isolate Russia’s economy in response to its invasion of Ukraine. Later in the day, as Biden landed in Texas, a reporter asked for his message to the American people on gas prices, which reached a record $4.173 on Tuesday, according to the American Automobile Association (AAA).

    “They’re going to go up,” said Biden of the prices.

    When asked what he can do about it, the president responded: “Can’t do much right now … Russia is responsible.”

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    Just so everyone is on the same page, here is the Russian invasion in the context of the average US gas prices.

    Gas prices have been on the rise ever since dropping below $2.00 a gallon during the COVID lockdown measures in 2020. Those increases have accelerated since around the start of 2022 as Russian tensions with Ukraine escalated and Russia later invaded.

    Biden has moved to release a total of 90 million barrels of oil from the Strategic Petroleum Reserve this fiscal year, but that amounts to a drop in the bucket as the United States consumes an average of about 20 million barrels per day. The national average price of gas has increased by more than 71 cents over the past month, according to AAA.

    “Americans are paying a higher price at the pump because of the actions of President Putin,” said White House press secretary Jen Psaki Tuesday aboard Air Force One. “This is a Putin spike at the gas pump, not one prompted by our sanctions.”

    Needless to say, that statement is misleading at best: despite explicitly provisioning for Russian energy exports across the first round of sanctions in late February, the relentless jawboning by western powers spooked potential buyers that an even harsher round of sanctions was coming and they decided to “self-sanction” and balk at buying Russian oil. Shell, which was the only major that publicly purchased Russian Urals Brent (at a massive $28.50 discount last week) after getting explicit government approval to do so, was publicly shamed and ostracized and today announced it would not purchase any more Russian oil. As a result, while Russian oil went bidless, the price of non-Russian oil went offerless…

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    … and since it was already effectively pricing in de facto sanctions, the White House saw little downside in pulling the cord and at least getting some optic virtue signaling points (the only reason it can do that is because Russian oil exports to the US are relatively modest; the reason Europe hasn’t followed the US in banning Russian oil is because the continent imports far more Russian crude). After all, the damage was already done.

    Meanwhile, some members of Congress have called for the United States to increase its domestic oil production as a means of stabilizing gas prices, though this runs counter to the Biden administration’s effort to move the United States away from fossil fuels, a core impartive of the ultra-progressive (and vocal) flank of the Democratic party.

    Biden signed an executive order during his first days in office, putting a halt to new fossil fuel drilling leases, prioritizing goals meant to “mitigate climate change.” But the White House has since repeatedly denied its policies are limiting oil production, pointing to an increase of production compared to President Donald Trump’s first year in office and 9,000 unused permits for oil companies to drill on federal land.

    “They have 9,000 permits to drill now. They could be drilling right now, yesterday, last week, last year. They have 9,000 to drill onshore that are already approved,” President Joe Biden said of U.S. oil companies Tuesday as he announced the ban on Russian oil imports. “So let me be clear—let me be clear: They are not using them for production now. That’s their decision. These are the facts. We should be honest about the facts.”

    White House press secretary Jen Psaki has repeatedly made the same point to reporters during press briefings.

    “We’ve actually produced more oil, it is at record numbers, and we will continue to produce more oil. There are 9,000 approved drilling permits that are not being used,” Psaki said on Monday. “So, the suggestion that we are not allowing companies to drill is inaccurate.”

    But American Petroleum Institute spokesman Kevin O’Scannlain calls this argument “a red herring, a smokescreen for energy policies that have had a hamstringing effect” on U.S. natural gas and oil production.

    O’Scannlain says the White House is mischaracterizing the way leases work. He points to “use it or lose it” requirements that oil companies produce gas or return leases to the federal government. He also notes the significant time and financial investment needed to lease land and search for oil, as well as federal limits on companies locking up excess unproductive land.

    Kathleen Sgamma of Western Energy Alliance called Psaki’s comments a “cynical attempt to deny the effects of the president’s own ‘no federal oil’ policies.” Sgamma said many lease are held up by environmentalist groups and federal red tape.

    Since before Russia decided to invade Ukraine, the White House has said it was in discussions with large oil producers around the world to negotiate ways to stabilize the energy market. These have included Saudi Arabia, Iran, and Venezuela.

    Reports from over the weekend were later confirmed by the White House that high-level Biden administration officials were travelling to Venezuela to meet with the regime of socialist dictator Nicolás Maduro.

    Republican National Committee (RNC) Chairwoman Ronna McDaniel released a statement blasting Biden during his visit to Texas.

    “Instead of witnessing his border crisis or meeting with American energy producers, Biden would rather buy oil from terrorist regimes and let millions of illegal immigrants flow into the country,” the statement reads. “Americans are paying for Biden’s abject failure.”

    Biden travelled to Texas Tuesday with a bipartisan group of lawmakers to meet with veterans groups and deliver remarks on veterans’ health.

    Meanwhile, as we reported last night, there is a one simple thing that the White House can do to offer immediate, if modest, relief at the pump: it can reactive the Keystone XL pipeline: this weekend, the top officials of the oil-producing province Alberta said that Canada’s oil could easily replace American imports of Russian crude.

    Alberta’s Premier Jason Kenney said that would be attending the CERAWeek conference in Houston this week, where “we will be meeting with decision-makers to secure access to markets, attract job-creating investment to our province, and argue for Canadian energy to displace Russian conflict oil.”

    Kenney also said that Alberta would be delighted to welcome a visit from U.S. President Joe Biden, as one reportedly being considered to Saudi Arabia.

    Kenney noted that in a visit by President Biden to Alberta “We could discuss how to ship nearly 1 million barrels of day of responsibly produced energy every day from the USA’s closest friend and ally! All it would take is his approval for Keystone XL. Easy.”  

    Alas, something tells us the White House doesn’t really care about figuring out solutions but is far more obsessed with coming up with excuses, instead.

     

    Tyler Durden
    Tue, 03/08/2022 – 21:49

  • Saudis, UAE Refuse To Take Biden's Calls To Discuss Ukraine Situation, Talk To Putin Instead
    Saudis, UAE Refuse To Take Biden’s Calls To Discuss Ukraine Situation, Talk To Putin Instead

    First, Brazilian President Jair Bolsonaro declined to condemn the Russian invasion of Ukraine. Then, India followed suit – as the Modi government attempted to balance its historic ties with Moscow and its strategic partnership with Washington.

    Biden with Indian PM Narendra Modi

    Now, Saudi and UAE leaders are refusing to take Biden’s calls as the US president tries to contain surging oil prices, according to the Wall Street Journal, which adds that the Persian Gulf monarchies have signaled “they won’t help ease surging oil prices unless Washington supports them in Yemen, elsewhere.”

    “There was some expectation of a phone call, but it didn’t happen,” said one US official of a planned discussion between Biden and the Saudi Crown Prince Mohammed bin Salman. “It was part of turning on the spigot [of Saudi oil].”

    Saudi Arabia’s Crown Prince Mohammed bin Salman

    The U.A.E.’s Sheikh Mohammed bin Zayed al Nahyan also ghosted Biden in recent weeks according to Middle East and US officials.

    Yet, both Prince Mohammed and Sheikh Mohammed took phone calls from Russian President Vladimir Putin after declining to speak with Biden, according to the WSJ. They also spoke with Ukraine president Volodymyr Zelensky.

    Biden was able to get through to Prince Mohammed’s 86-year-old father on Feb. 9, however the U.A.E.’s Ministry of Foreign Affairs said the call between Mr. Biden and Sheikh Mohammed would need to be rescheduled, according to the report.

    What do they get out of it?

    As the Journal notes, “The Saudis have signaled that their relationship with Washington has deteriorated under the Biden administration, and they want more support for their intervention in Yemen’s civil war, help with their own civilian nuclear program as Iran’s moves ahead, and legal immunity for Prince Mohammed in the U.S., Saudi officials said. The crown prince faces multiple lawsuits in the U.S., including over the killing of journalist Jamal Khashoggi in 2018.”

    There’s the ask.

    Meanwhile, the Emiratis share Saudi concerns about the less-than-adequate level of engagement by the US regarding recent missile strikes by Iran-backed Houthi militants in Yemen against both the UAE and Saudi Arabia. The two kingdoms are also concerned about the revival of the Iran nuclear deal – which is in its ‘final stages of negotiations,’ yet does zero to address their security concerns.

    So for those keeping track, while the west has continued to insist that Russia is isolated – and make no mistake, these sanctions will be immediately crippling – if one considers the population and resources which originate in China, India, Brazil and the Middle East kingdoms – basically half the world’s population and those who control most of the world’s commodities aren’t on board with punishing Putin or easing the situation to the west’s benefit.

    And as the Journal points out, “Saudi Arabia and the U.A.E. are the only two major oil producers that can pump millions of more barrels of more oil—a capacity that, if used, could help calm the crude market at a time when American gasoline prices are at high levels.”

    Too little, too late?

    Late last month, Brett McGurk, the National Security Council’s Middle East coordinator, and Amos Hochstein, the State Department’s energy envoy, flew to Riydah to try and smooth relations – while McGurk also met with Sheikh Mohammed in Abu Dhabi to hear out their frustrations with America’s response to Houthi attacks.

    Obviously, diplomacy didn’t go well.

    To date, the Saudis and Emiratis have declined to increase oil production – and are instead holding to the previously agreed OPEC production roadmap. What’s more, their energy alliance with Russia, another top oil producer, has boosted OPECs global reach while bringing the Kingdoms closer to Moscow.

    Saudi Arabia and the U.A.E. forged deep ties with former President Donald Trump, who sided with them in a regional dispute with Qatar, pulled the U.S. out of the Iran nuclear deal that they had opposed, made his first trip abroad to Riyadh in 2017 and stood by Prince Mohammed after the killing of Mr. Khashoggi. But Mr. Trump’s decision not to respond to an Iranian drone and missile attack on major Saudi oil sites in 2019 rattled Gulf partners who have relied for decades on the promise of U.S. security protection. Iran denied involvement in the oil facility attacks.

    The rift between Mr. Biden and Saudi Arabia’s crown prince stretches back to the 2020 presidential election, when the Democratic candidate vowed to treat the kingdom as a “pariah” state after a Saudi hit team killed Mr. Khashoggi in 2018 in Istanbul. -WSJ

    Biden also released an intelligence report shortly after taking office which concluded that the 2018 Istanbul murder of WaPo journalist Jamal Khashoggi was approved by Prince Mohammed – who has denied knowledge of the plot despite close associates having been convicted in Saudi court over the the journalist’s death.

    The US president also slammed Saudi Arabia over its long war in Yemen, and cut off weapons that the Saudis were using to target Houthis. Biden also removed Houthis from a list of global terrorist groups, after former President Trump added them.

    And on Monday (after Biden was ghosted), White House spox Jen Psaki confirmed that Biden stood by his view that the Saudis should be treated like a “pariah,” and that their leadership has ‘little redeeming social value.’

    In an interview with the Atlantic magazine published last week, Prince Mohammed said when asked if Biden misunderstood him: “Simply, I do not care,” adding that the US president shouldn’t have alienated Saudi leaders. “It’s up to him to think about the interests of America,” he said, adding “Go for it.”

    So, perhaps don’t call the country that could bail you out of an oil crunch a “pariah” if you might require their assistance.

    Tyler Durden
    Tue, 03/08/2022 – 21:30

  • U.S. Sanctions Can’t Keep China From Buying Russian Oil
    U.S. Sanctions Can’t Keep China From Buying Russian Oil

    By Simon Watkins of OilPrice.com

    China has proven with Iran that it has much practice and great skill in working around sanctions, and the U.S. has made it even easier to do so in the case of Russia in several ways, including leaving gaping loopholes in its sanctions that China and Russia can exploit. The current ambiguity surrounding these mechanisms suits China perfectly, as until it believes that it is militarily, technologically, and economically able to directly challenge the U.S. as the world’s number one superpower its strategy will remain to gradually build up its economic power through the multi-generational power-grab project, ‘One Belt One Road’ (OBOR), as analysed in depth in in my new book on the global oil markets.

    This project contains within it a corollary colonialist element by dint of its land and sea routes secured through chequebook diplomacy. Given this, China cannot afford at this stage of its strategy to be seen to back Russia fully in President Vladimir Putin’s apparently ill-considered invasion of Ukraine and this was clearly evidenced in China’s abstentions – unwanted and unexpected by the Kremlin – in the United Nations Security Council’s votes last Friday firstly to condemn the war and secondly on whether to open the special emergency session of the General Assembly the next day. One basic factor that has worked in China’s favour in circumventing sanctions on continuing to do business, especially oil and gas business, with Iran – and will equally apply to its doing the same with Russia – is the lack of exposure of China’s firms to the U.S. financial infrastructure – particularly to the U.S. dollar – and the ease with which companies can set up new special purpose vehicles to handle ring-fenced areas of their businesses to allow for special situations, such as sanctions.

    As a corollary of this operational independence, China made no secret at the time of the pre-2016 sanctions against Iran or the post-2018 sanctions against it that it was going to use its Bank of Kunlun as the main funding and clearing vehicle for its dealings with Iran. The Bank of Kunlun has considerable operational experience in this regard, as it was used to settle tens of billions of dollars’ worth of oil imports during the U.N. sanctions against Tehran between 2012 and 2015. Most of the bank’s settlements during that time were in Euros and Chinese renminbi and in 2012 it was sanctioned by the U.S. Treasury for conducting business with Iran. Rather like Iran – whose Foreign Minister, Mohammad Zarif, infamously stated back in December 2018 at the Doha Forum, that: ‘If there is an art that we have perfected in Iran, [that] we can teach to others for a price, it is the art of evading sanctions’ – China has always regarded any U.S. sanctions as a fun puzzle to solve. 

    Washington learned early on – when it sanctioned Zhuhai Zhenrong Corp, the massive state-owned oil trading firm founded by the man who started oil trading between Beijing and Tehran in 1995 as a means by which Iran could pay for arms supplied by China to be used in the Iran-Iraq War – that Beijing would not be playing the sanctions game according to anyone’s rules but its own. Indeed, at a time when according to the U.S. ‘there is clear evidence that China did not import any crude oil from Iran in June [2020] for the first time since January 2007’, OilPrice.com showed that over a period of only 51 days just before the U.S. statement, China imported at least 8.1 million barrels of crude oil (158,823 barrels per day) from Iran.  

    In the case of Russian oil and gas exports, though, there is no need for China to go through all the trouble it took to circumvent the sanctions on Iran, for three key reasons. Firstly, there are currently no direct sanctions in place from either the U.S. or the E.U. on Russian oil or gas energy exports. A statement was released over the weekend that both are discussing a ban on Russian oil imports but this has not been approved yet and can still be worked around by China in the same way it did for Iran. In fact, despite several announcements last week of various types of sanctions being placed on a slew of Russian banks, one bank that was notably absent from all of the U.S.’s lists was Russia’s third biggest lender, Gazprombank, which serves Russian state gas giant (with huge oil interests as well) Gazprom. Indeed, Gazprombank and Russian state-owned banking giant, Sberbank, are also not on the list of the seven institutions that the E.U. wants banned from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging and payments system. 

    The second reason why Russia and China are untroubled that their oil and gas trade will be affected is that, in addition to the de facto exemptions so far granted to the aforementioned institutions, the U.S. issued on 24 February the ‘General License 8A’ waiver. Although this sounds as sexy to many as a cold haddock, to would-be sanctions evaders it is the waiver equivalent of Scarlett Johansson or Brad Pitt. Just in case any potential sanctions evaders may have missed the signal being given by the U.S., the U.S. Treasury Department went to great trouble to explain the nub of the point: “Treasury is reiterating … that energy payments can and should continue.” In its further detailed guidance, just in case any would-be sanctions evader thought that they would have to engage in any tricky manoeuvring to circumvent the wrath of the U.S., the Treasury explained how to use the waiver to continue to deal with a Russian oil or gas company: “For example, a company purchasing oil from a Russian company would be able to route the payment through a non-sanctioned third-country financial institution as an intermediary for credit to a sanctioned financial institution’s customer in settlement of the transaction.” The Treasury concluded: “Treasury remains committed to permitting energy-related payments – ranging from production to consumption for a wide array of energy sources – involving specified sanctioned Russian banks.” 

    Even in the unlikely event that this extraordinary free-for-all waiver is stopped, the third reason why China and Russia will continue to go about their oil and gas trade – and all other trades – relatively unhindered is that over the past few years they have been securing their own bilateral infrastructural and financial structures for years, as also analysed in-depth in my new book on the global oil markets. China has long seen increased internationalisation of its renminbi currency as a fitting reflection of its growing status in the world and the chief executive officer of Russia’s Novatek, Leonid Mikhelson, said in September 2018 that Russia had been discussing switching way from US$-centric trading with its largest trading partners such as India and China, and that even Arab countries were thinking about it. “If they [the U.S.] do create difficulties for our Russian banks then all we have to do is replace dollars,” he added. At around the same time, China launched its now extremely successful Shanghai Futures Exchange with oil contracts denominated in yuan (the trading unit of the renminbi currency). Such a strategy was tested initially at scale in 2014 when Gazpromneft tried trading cargoes of crude oil in Chinese yuan and roubles with China and Europe.

    Infrastructural development for oil and gas trading between China and Russia has also been extremely extensive in recent years, as examined several times in depth by OilPrice.com. The most recent examples of this was, in the oil sector, Rosneft signing an US$80 billion 10-year deal to supply the China National Petroleum Corporation (CNPC) with 100 million metric tonnes of oil over the period (slightly over 200,000 barrels per day). In the gas sector, at almost exactly the same time, Gazprom signed a 10 billion cubic metres per year (bcm/y)  deal to supply gas to CNPC, adding to another supply contract between the two companies signed in 2014 – a 30-year deal for 38 bcm/y to go from Russia to China. This, in turn, is part of, and augments, the ‘Power of Siberia’ pipeline project – managed on the Russian side by Gazprom and on the China side by CNPC – that was launched in December 2019. And just in case there were any doubts on where China stands – in practical terms – on Russia in light of its invasion of Ukraine, Beijing’s foreign ministry spokesperson, Wang Wenbin, said in a press conference on 28 February: “China and Russia will continue to conduct normal trade cooperation in the spirit of mutual respect, equality and mutual benefit.” For good measure, over the weekend China warned the U.S. against any moves that “adds fuel to the flames” in Ukraine and its Foreign Minister, Wang Yi, called on the West to take account of Moscow’s concerns about NATO expansion.

    Tyler Durden
    Tue, 03/08/2022 – 21:00

  • NYT Reporter Says 'Ton Of FBI Informants' Were At J6 – Calls Traumatized Fellow Journos 'Bi*ches'
    NYT Reporter Says ‘Ton Of FBI Informants’ Were At J6 – Calls Traumatized Fellow Journos ‘Bi*ches’

    Can’t a lonely New York Times journalist try to get laid without a Project Veritas operative tricking him into loose lips?

    As Project Veritas reports – the answer is, once again, no…

    Meet Matt…

    Now read what Matt said about FBI informants at the January 6th ‘insurrection,’ along with a host of other revelations, Via Project Veritas:

    • NYT National Security Correspondent, Matthew Rosenberg, contradicts his own January 6 reporting: “There were a ton of FBI informants amongst the people who attacked the Capitol.”

    • Rosenberg: “It was like, me and two other colleagues who were there [January 6] outside and we were just having fun!”

    • Rosenberg: “I know I’m supposed to be traumatized, but like, all these colleagues who were in the [Capitol] building and are like ‘Oh my God it was so scary!’  I’m like, ‘f*ck off!’”

    • Rosenberg: “I’m like come on, it’s not the kind place I can tell someone to man up but I kind of want to be like, ‘dude come on, you were not in any danger.’”

    • Rosenberg: “These f*cking little dweebs who keep going on about their trauma. Shut the f*ck up. They’re f*cking b*tches.”

    • Rosenberg: “They were making too big a deal. They were making this an organized thing that it wasn’t.”

    • Rosenberg RESPONDS: “Will I stand by those comments? Absolutely.”

    [NEW YORK – Mar. 8, 2022] Project Veritas published a bombshell video on Tuesday showing Pulitzer Prize winning New York Times correspondent, Matthew Rosenberg, speaking about the events of January 6, 2021, in a way that contradicts his own reporting. 

    Rosenberg, who covers national security matters for the Times says on the undercover video that “there were a ton of FBI informants among the people who attacked the Capitol.”

    This revelation is a break from Rosenberg’s reporting on the matter where he characterized such a notion of FBI informants in the crowd as a “reimagining of Jan. 6.”

    This was not the only time Rosenberg’s commentary to Project Veritas’ undercover reporter directly contradicted his own published words. Despite telling a Veritas journalist that January 6 was “no big deal,” his article says that downplaying the events of that day was “the next big lie.”

    Soundbites of Rosenberg published Tuesday show him saying, “It’s not a big deal as they [media] are making it, because they were making too big a deal. They were making this an organized thing that it wasn’t.”

    Project Veritas founder and CEO James O’Keefe revealed that Rosenberg’s article titled, “The Next Big Lies: Jan 6 was No Big Deal, or A Left-Wing Plot,” was written around the same time as he was making contradictory statements to a Project Veritas undercover reporter.

    In the video, Rosenberg also revealed that January 6 was “fun,” a contradiction to his reporting that January 6 was “a violent interruption to the transition of power in American history.”  

    Rosenberg said, “It was like, me and two other colleagues who were there outside and we were just having fun.” 

    He even appears to make fun of his New York Times colleagues in one soundbite saying, “I know I’m supposed to be traumatized, but like, all these colleagues who were in the [Capitol] building, and are like, ‘Oh my God it was so scary!’ I’m like, ‘f*ck off!’” He adds, “I’m like come on, it’s not the kind place I can tell someone to man up but I kind of want to be like, ‘dude come on, you were not in any danger.’”

    Rosenberg concludes, “These f*cking little dweebs who keep going on about their trauma. Shut the f*ck up. They’re f*cking b*tches.”

    Watch:

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    The entire video can be seen here.

    Project Veritas is a registered 501(c)3 organization. Project Veritas does not advocate specific resolutions to the issues raised through its investigations.  Donate now to support our mission.

    Tyler Durden
    Tue, 03/08/2022 – 20:30

  • Amidst The Geopolitical Conflict, Shipping Stocks Could Continue Moving Higher
    Amidst The Geopolitical Conflict, Shipping Stocks Could Continue Moving Higher

    Submitted by QTR’s Fringe Finance

    This is part 1 an exclusive Fringe Finance interview with shipping analyst (and friend of mine) J Mintzmyer, where we discuss the state of the Russian invasion of Ukraine and its effect on markets and shipping stocks.

    J is a renowned maritime shipping analyst and investor who directs the Value Investor’s Edge (“VIE”) research platform on Seeking Alpha.  You can follow him on Twitter @mintzmyer. J is a frequent speaker at industry conferences, is regularly quoted in trade journals, and hosts a popular podcast featuring shipping industry executives.

    J has earned a BS in Economics from the Air Force Academy, an MA in Public Policy from the University of Maryland, and is a PhD Candidate at Harvard University, where he researches global trade flows and security policy.

    Part 2 of this interview will be up in days.

    Q: How has the invasion of Ukraine changed the short-, mid- and long-term outlook for shipping?

    It’s important to recall that most shipping markets, with the exception of oil tankers, were already very tight prior to the recent invasion of Ukraine. This invasion and the ripple effects of international sanctions are likely to have 3 key effects:

    1) There will be significant delays and increase of congestion around regional ports, which could escalate further to major hubs like Rotterdam. This will synthetically reduce supply of ships similar to the disruptions we saw around COVID shutdowns.

    2) Food and energy products must eventually move, so we will likely see re-routing into less efficient trade channels across the world. This will lead to higher total ton-miles (i.e. total cargo moved x distance between trading partners), which is the correct way to measure shipping demand.

    3) Higher oil prices drive up the cost of the bunker fuel utilized by ships, which will incentivize “slow steaming” to consume less fuel, providing an additional synthetic supply reduction.

    Ultimately, we have two clear pathways to reduce available ship supply in the short- and medium-term as well as one pathway to increase demand. There is a common misconception that ties shipping demand to global GDP growth or to total global commodity consumption, but that’s not the correct way to analyze the markets.

    You have to look at trade routes on a product-by-product basis and see what happens when inefficiencies are introduced. There can be a scenario where total transport volumes go down, but ton milage still increases, and I think we likely see that outcome in both grain trades and crude oil trades. 

    In the longer-term, we need to be cognizant of the potential ripple effects to the global economy. Russia makes up an extremely tiny slice of global GDP once we exclude oil, gas, and other commodities, but it is still worth considering. Additionally, if the war ravages all spring, summer, and next fall without agricultural exclusion zones or other mitigating events, we could have a global food shortage crisis on our hands by next fall/winter. It’s still too early to be making strong predictions here, but I am watching the situation as closely as possible.

    If short-term is a few weeks, then shipping is likely mixed, slightly bullish. Medium-term, say 1 month through a year, I believe shipping companies and equities are extremely well positioned. In the longer-term, there are legitimate concerns about global food crisis, extreme energy prices, and the ultimate impacts to the global economy.

    Shipping doesn’t do well in a global recession, but it can be an amazing place to be in a mature cycle. Lots of 10-bagger returns in shipping from 2005-2008 and valuations today are even lower than valuation in 2005. 

    What parts of the shipping/logistics sector haven’t yet seen their stocks rise in proportion to what you think they will? Have any stocks gone “unnoticed” yet?

    Great question! Folks are always looking for the ‘uncovered gems’ so to speak and of course I have to reserve a good portion of our ongoing research for members of Value Investor’s Edge, but I will foot-stomp a couple previous public picks which haven’t moved much even as fundamentals have significantly increased.

    The added ‘bonus’ of these firms is that the core business is based on long-term contracts, so although they are benefiting at the margins from the current supply chain tensions, these aren’t ‘boom and bust’ operations.

    These two stocks are Global Ship Lease (GSL) and Textainer Group (TGH). Although both stocks have increased on a y/y basis, both firms are significantly cheaper today in terms of current and forward earnings multiples, free cash flow multiples, net asset values, and virtually any other valuation metric than they were a year ago. Both companies were included in our latest Value Investor’s Edge top picks update (posted for members on March 2nd), which highlighted 14 firms across the industry. 

    What is the best possible outcome, assuming a ceasefire tomorrow, and a worst possible outcome, assuming the conflict in Ukraine lasts many more months or years?

    I’m glad we agree on what the best outcome would be, since my best wish would be for this crisis to be resolved tomorrow. It is important to remember that shipping stocks were performing incredibly well before any of the Ukraine tensions and eventual invasion, so any sort of return to normality would still be good for these firms!

    In terms of a near-term ceasefire, sadly it does not appear likely at this stage, but if it does occur, we should see a significant drop in oil and gas prices and a slow return to pre-war situations in shipping.

    However, sanctions tend to be stickier on the way out, so I still expect trade disruptions and re-routing to continue. I also expect both European and Asian nations to significantly bolster their stockpiles of all types of commodities, which of course would lead to a surge in dry bulk and tanker demand, likely for at least several years. A reminder that dry bulk supply/demand remains incredibly tight and the current orderbook (i.e. forward supply) is the lowest in modern history. And that’s before considering significant environmental regulations which begin kicking in January 2023!

    The worst outcome, without getting into the extremes of thermonuclear war (in which case, stocks are irrelevant), would be a multi-year conflict which disrupts the global food and energy supplies, leading to millions facing starvation along with extremely high oil prices ($150-$200+), which could threaten the global economy. As I mentioned above, if you believe a global recession is likely, then shipping isn’t likely to perform well. However, almost nothing performs well here, so S&P 500 (SPY) and Nasdaq (QQQ) index puts probably make a lot more sense than trying to bet against shippers. 

    If we’re in a similar state as 2006, for instance, there could indeed still be a recession down the road, yet many of these firms might still return 2,3, or even 5-10x, in the final stages of the global economic cycle.  

    Part 2 of this interview can be read here. 

    Disclosure: J is long EGLE, GSL and TGH. J and I may have positions in other names mentioned in this interview. J is a podcast Patreon of mine and has been donating to my podcast monthly (as listeners already likely know from my constant shout-outs), though that is not why I seek his expertise. I have known J and have been reading his work for almost a decade now on Seeking Alpha and have met him numerous times in person. He’s a top class person – and analyst – in my opinion.

    I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. I may hedge in any way. None of this is a solicitation to buy or sell securities. Please do not attempt these trades at home. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot. 

    Tyler Durden
    Tue, 03/08/2022 – 20:30

  • Zelensky Ready To 'Discuss & Find Compromise' On Crimea, No Longer Insists On NATO Membership
    Zelensky Ready To ‘Discuss & Find Compromise’ On Crimea, No Longer Insists On NATO Membership

    Update(12:38ET): President Zelensky’s 14-hour old ABC News interview (which we detailed hours ago below) is finally getting widespread distribution and is being repackaged as a significant nod to Moscow on what’s been Putin’s core issue he cited as justification for launching the war:

    In another apparent nod aimed at placating Moscow, Zelensky said he is open to “compromise” on the status of two breakaway pro-Russian territories that President Vladimir Putin recognized as independent just before unleashing the invasion on February 24.

    “I have cooled down regarding this question a long time ago after we understood that …NATO is not prepared to accept Ukraine,” Zelensky said in an interview aired Monday night on ABC News.

    “The alliance is afraid of controversial things, and confrontation with Russia,” the president added.

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    “I’m talking about security guarantees,” Zelensky said, explaining that Ukraine is now open for dialogue on these central Russian security demands in order to stop the war.

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    For those who missed it when it first came out 14 hours ago, the interview is here:

    * * *

    Update(10:51ET): Yesterday ahead of what was the third round of Russia-Ukraine attempts to establish a ceasefire, which reportedly didn’t result in much progress, the Kremlin issued updated demands saying it would halt all military operations if Ukraine agreed to the following: recognize Russian sovereignty over Crimea, acknowledged the statehood of Donetsk and Luhansk, and importantly to update the Ukrainian constitution barring entry into external military alliances (namely NATO).

    In fresh remarks given to ABC News, President Zelensky hinted that Kiev could be willing to compromise on some of these proposals. He said: 

    “I’m talking about security guarantees. I think items regarding temporarily occupied territories and unrecognized republics that have not been recognized by anyone but Russia, these pseudo-republics. But we can discuss and find the compromise on how these territories will live on. What is important to me is how the people in those territories are going to live who want to be part of Ukraine.”

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    However, he reaffirmed in the interview that Ukraine is not ready to compromise based on “ultimatums”. Previously Zelensky said he wouldn’t negotiate based on a “gun at this head” – and so far the talks have been focused on establishing local pauses in fighting for the sake of civilian evacuations of cities. “I’m ready for dialogue, we’re not ready for capitulation,” he said.

    Zelensky in the newly published ABC interview for the first time since the war began on Feb.24 issued a significantly toned down rhetoric on the question of future NATO membership:

    “Regarding NATO, I have cooled down regarding this question a long time ago, after we understood that NATO is not prepared to accept Ukraine. The alliance is afraid of controversial things and confrontation with Russia. We never wanted to be a country that is begging for something on its knees, and we are not going to be that country and I don’t want to be that president.”

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    Meanwhile a regional Ukrainian military commander has sounded the alarm over the worsening humanitarian situation surrounding Kiev. Military spokesman Oleksiy Kuleba said Tuesday, “The main issue today remains humanitarian aid. Bucha, Irpin, Gostomel, Makariv, Borodyanka, Vorzel — residents of these settlements are forced to stay in bomb shelters for days without water and food. The occupiers do not give humanitarian corridors, do not give guarantees,” Kuleba said. 

    The districts named lie to the north and west of the capital: “Russian occupiers keep shelling residential areas. They keep bringing more military vehicles,” he added. “We demand silence every day, every hour, every minute. We will promptly and immediately send help and evacuate our people,” he said.

    The UN on Tuesday said that at least 474 civilians have been killed since the start of the invasion – including civilians in the Donbass. 

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    The Kremlin has contradicted Kiev’s assessment of broken promises for local ceasefires, with CNN citing the defense ministry in the following:

    The Russian defense ministry said 723 people have been evacuated along an agreed evacuation route out of the northeastern Ukrainian city of Sumy on Tuesday. 

    The ministry was quoted by the state news agency RIA Novosti. It said those evacuated included Indian, Chinese and Jordanian and Tunisian citizens.

    The first convoy that left Tuesday morning reached the city of Poltava without incident, Ukrainian officials said.

    On Tuesday, both the Director of National Intelligence and the head of the CIA weighed in on Russia’s intention’s and the state of the conflict…

    • PUTIN IS LIKELY TO REMAIN UNDETERRED AND MAY ESCALATE ASSAULT IN UKRAINE -HAINES
    • PUTIN PROBABLY STILL CONFIDENT RUSSIA CAN DEFEAT UKRAINE – HAINES
    • PUTIN IS “DETERMINED TO DOMINATE AND CONTROL UKRAINE” -CIA DIRECTOR BURNS
    • PUTIN IS ANGRY, FRUSTRATED, LIKELY TO DOUBLE DOWN IN UKRAINE WITH NO REGARD FOR CASUALTIES -BURNS

    Further CIA Director William Burns described that US intelligence expects an “ugly next few weeks” coming in Ukraine. 

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    * * *

    Courtesy of Newsquawk, here is a summary of the relentless firehose of all Ukraine war news to hit in the past few hours.

    Discussions/Negotitations:

    • Russian forces have held fire within Ukraine, as of 07:00GMT, via Reuters citing Ifx/Defence Ministry; subsequently, Ukrainian Presidential Official says the evacuation of civilians from Sumy and Irpin is underway.

    Energy/Economic Updates

    • EU is reportedly considering a massive joint bond sale to finance defence and energy, according to Bloomberg citing sources; plan could be announced as early as this week. An announcement which sparked risk-on action, details here
    • EU Commission has prepared a new set of sanctions against Russia and Belarus following the invasion of Ukraine, according to Reuters sources; to be discussed today, blacklisting further oligarchs, providing guidance over monitoring crypto-assets, ban export of maritime tech to Russia.
    • EU will unveil a plan on Tuesday to reduce gas imports from Russia by two-thirds within a year, according to FT.
    • US House Majority Leader Hoyer said a bill to ban Russian oil imports could be introduced this week.
    • Shell (SHEL LN) intends to withdraw from the Russian oil and gas business, in the immediacy will cease spot purchases of Russian oil and gas.
    • Ukrainian leaders are expected to send a letter to US Congress asking the US to ban from the stock market all companies that pay taxes to Russia’s government, according to WaPo citing a letter.
    • Japanese Chief Cabinet Secretary Matsuno announced that Japan banned exports of oil refining equipment to Russia, while Japan imposed personal sanctions on another 20 Russian citizens and 12 Belarusian citizens, according to Sputnik.
    • MSCI said it is to discontinue certain indexes following the reclassification of Russia.
    • Fitch decided to suspend commercial operations in Russia with immediate effect, while it downgraded Belarus from B to CCC.
    • German Economic Affairs and Climate Action Minister Habeck does not see Russia halting flows from Nord Stream 1, according to RTL.
    • Russian gas flows to Slovakia via Ukraine have decreased sharply, via Reuters citing Entsog data.

    Third Party Remarks

    • UK MPs support a package of sanctions to toughen government powers and speed up sanctions against Russian tycoons.

    Defense/Military Imports

    • Russian President Putin said they will only use professional soldiers in its Ukraine operation and will not use conscript soldiers in Ukraine.
    • EU Commission VP Dombrovskis says that Russia President Putin is likely to increase his military ambitions and challenge NATO in Baltic Sea nations, unless Putin is stopped in Ukraine, via Politico; additionally, Dombrovskis was sceptical about diplomatic overtures towards Putin and maintained that nothing should be off the table re. sanctions.

    Other

    • China and India are to conduct border discussions on March 11th, via Bloomberg citing an Indian official.
    • Russian Foreign Ministry says that Russian and the US should go back to the principle of peaceful co-existence as was the case during the Cold War, according to Interfax.
    • Iranian President says Tehran will not back down from its red lines regarding the nuclear deal, via Fars.
    • Qatar stepped up mediation between US and Iran regarding a nuclear deal, according to FT sources; Qatari officials have also been working to facilitate direct talks between Washington and Tehran, should a deal be reached.
    • Russia says it understands N. Korea’s decision to renew missile tests, via Reuters citing Ria; when N. Korea paused missile tests it only saw increased military cooperation between Seoul and Washington.

    Tyler Durden
    Tue, 03/08/2022 – 20:11

  • DOJ Offers 70- to 87-Month Prison Sentence For Man Photographed With Feet Up in Nancy Pelosi’s Office
    DOJ Offers 70- to 87-Month Prison Sentence For Man Photographed With Feet Up in Nancy Pelosi’s Office

    By Joseph Hanneman of The Epoch Times

    Richard ‘Bigo’ Barnett poses for photos in the office of House Speaker Nancy Pelosi on Jan. 6, 2021. He would receive roughly 6 to 7 years in prison under a plea offer that his attorney called “ridiculous.”

    Richard ‘Bigo’ Barnett, the Arkansas man photographed with his feet up on a desk in House Speaker Nancy Pelosi’s office on Jan. 6, 2021, would spend 70 to 87 months in prison under a plea agreement offered by the U.S. Department of Justice.

    Barnett, 61, of Gravette, Ark., faces three charges from his time in the U.S. Capitol, including knowingly entering or remaining in any restricted building or grounds while armed with a dangerous weapon, violent entry and disorderly conduct on Capitol grounds, and theft of public money, property, or records.

    Barnett’s attorney, Joseph McBride, rejected the plea offer, calling it “ridiculous.” Barnett will proceed to trial this fall, he said.

    “The very general question is, ‘Does the punishment fit the crime?’ And the answer is a resounding, ‘Hell no.’” McBride told The Epoch Times. “There is no standard of reasonableness under which 70 or 87 months of incarceration for a 61-year-old man with no criminal record can ever amount to justice.

    “In this situation, it is egregious. It is disgusting,” McBride said. “It is a criminalization of the First Amendment’s right to participate in political speech. While it was not a perfect day, he certainly should not spend years of his life—basically the entire decade of his 60s—behind bars. It’s ridiculous.”

    Richard ‘Bigo’ Barnett holds up an envelope he took from House Speaker Nancy Pelosi’s office on Jan. 6, 2021. He said he took the envelope because he got blood on it from a cut finger

    According to federal prosecutors, Barnett entered into the conference area of the Speaker’s office about 2:50 p.m. and left at 2:56 p.m. He put his feet up on a desk and posed for photographs that went viral on the internet later that day.

    Theft Charge Came from an Envelope

    Barnett picked up an empty envelope addressed to Rep. Billy Long (R-Missouri), then carried it out with him because a cut on his finger dripped blood on the paper, McBride said. Barnett gave the envelope to FBI agents when he first met with them in January 2021.

    Barnett cut his finger when a crowd pushed him through the Capitol’s Columbus Doors a short time before he entered Pelosi’s office, McBride said.  

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    Law enforcement got a tip that Barnett was carrying a stun gun in the photos taken in the office of Pelosi (D-California). It was later determined to be a ZAP brand Hike ’n Strike aluminum walking stick with built-in flashlight and 950,000-volt stun gun.

    McBride said the stun function was disabled the day prior, and there were no batteries in the device on Jan. 6. Barnett only used it as a walking stick that day.

    “It’s clearly not working. So for them to use this as an excuse to give him an exorbitant amount of time, it’s ridiculous,” McBride said. “They’re just using it as a pretext to hit him over the head with a hammer because of the fame that came along with his picture.”

    Barnett described the situation with a bit more color in the government’s charging documents.

    “I did not steal it. I bled on it because they were macing me and I couldn’t [expletive] see. So I figured, I am in her office. I got blood on her office. I put a quarter on her desk, even though she ain’t [expletive] worth it.

    “And I left her a note on her desk that says, ‘Nancy, Bigo was here, you [expletive],’” Barnett said.

    Sentencing in the Spotlight

    The sentencing of non-violent Jan. 6 offenders became a nationally discussed issue last week with the Feb. 25 suicide of Matthew L. Perna, 37, of Sharon, Pennsylvania. Perna hung himself in his garage after learning the U.S. Department of Justice would seek sentencing enhancers that could have put him in prison for 41 to 51 months.

    Perna spent 20 minutes in the Capitol on Jan. 6. He was not accused of vandalism, violence, or engaging with police. His plea deal included a felony for obstructing an official government proceeding, the certification of Electoral Votes by Congress.

    McBride said excessive sentencing recommendations are part of a strategy.

    “They want to crush all things January 6-related, when it comes to you being on the opposite side of the political spectrum,” he said. “They are merciless, they are soulless, they have evil in their hearts.

    “It’s very unfortunate. And that’s that’s why we’re in this fight,” McBride said. “They’re not going to pitch a shutout. They’re not going to win all these trials. They’re going to start to take losses at some point. They know that, so they are getting their pound of flesh now.”

    Tyler Durden
    Tue, 03/08/2022 – 20:00

  • Demand Destruction Arrives In Everything From Paper To Crackers
    Demand Destruction Arrives In Everything From Paper To Crackers

    Earlier today, when discussing the various supply-driven actions at the disposal of politicians and markets to reduce the price of oil including SPR releases, core-OPEC surge, and potential lift of sanctions on oil imports from Iran and Venezuela – Goldman said that while such measures could help offset a sizable decline in Russian seaborne exports, they would leave the global oil market with no buffer, still requiring demand destruction through higher prices. In fact, Goldman – as well as JPMorgan, BofA and MS – have also been saying that demand destruction – i.e., a sharp, induced economic slowdown – is the only solution to soaring oil prices.

    Well, sure enough, demand destruction is now here, gradually at first and then all at once.

    Stratospheric oil prices are flowing through into the plastics industry with producers reducing activity as profit margins collapse, a first sign of the demand destruction that may spread to other sectors.

    As Bloomberg notes, several Asian operators of plants that make the petrochemicals used as the building blocks for everything from children’s toys to car interiors have cut processing rates to as low as 80%. The facilities, known as crackers, typically run at or near full capacity.

    Cracker.

    Speaking to Bloomberg, several traders said that the soaring price of crude and question marks over the supply of oil-derived naphtha – a popular feedstock in Asia – from Russia are challenging the economics of producing plastics in crackers in South Korea, Taiwan and Malaysia. They added that the problems are an early indication of the difficulties Russia’s invasion of Ukraine may create for industries that rely on raw materials.

    Think of it as supply-chain chokepoints, and in this case the weakest link is naphta: according to industry consultant FGE, as much as 15% of Asia’s naphtha imports come from Russia and the Black Sea and Baltic regions. But amid the sanctions fallout, many petrochemical plants have paused purchases from Russia, and are also hesitant to buy crude from anywhere at such high levels, given that their finished products won’t be ready for around six weeks or so. Expensive freight rates are adding to the problem and causing companies to cut activity now rather than risk massive losses.

    “The situation is very foggy for crackers in Asia,” said Armaan Ashraf, a senior analyst at FGE. It’s a “big risk” to buy naphtha when crude is at $130 a barrel, he said, adding that profit margins are going to stay poor for at least a month.

    The premium for prompt naphtha deliveries to Asia over contracts another month out is more than $30 a barrel, compared with less than $10 in early January. The so-called backwardation is another indicator of anxiety over the extremely tight supply situation.

    This fiasco also is a harbinger of what will happen to profit margins once soaring commodities pass through the income statement (spoiler alert: they will crash). Indeed, as Bloomberg notes, profit margins from products including ethylene and propylene – which are used to make plastics – were already weak and have shrunk further since Russia’s invasion of Ukraine.

    Which brings us to the demand destruction: Taiwan’s Formosa Petrochemical is running crackers at its Mailiao plant at 80% to 85%, while Lotte Chemical Titan Holding has cut run rates at its facility in Malaysia to below 90% and plans to reduce them further if market conditions deteriorate, while Hanwha Total Petrochemical, Lotte Chemical and LG Chem in South Korea have lowered processing by 10% to 20%, traders said.

    The cost of producing ethylene from naphtha was $1,200 to $1,300 a ton in Asia last week, but it was fetching only around $1,200 in the market before shipping, according to IHS Markit, part of S&P Global. “The crackers aren’t making money,” said April Tan, an associate director at IHS.

    * * *

    We have also seen demand destruction in a completely separate place and industry: packaging group Pro-Gest has announced a temporary production stop at all of its six paper mills due to exorbitant energy prices.

    Italy’s integrated tissue und packaging producer Pro-Gest has announced that production at the group’s’s six paper mills operating in Italy has been suspended. The company said that following the rapid escalation of natural gas prices, now at historic highs, it was resorting the force majeure and had decided to temporarily stop production.

    Pro-Gest operates nine tissue and packaging paper machines at its six paper mills. Packaging production is not affected and the packaging plants will continue producing normally for the time being, the company reports.

    “We are closely monitoring the war situation and are deeply saddened for the Ukrainian people hoping for an immediate solution to the armed conflict. Also because of the severe tensions we are witnessing, we have to record that the price of natural gas, now more than ten times higher than twelve months ago, has tripled in little more than a week. We will do our best to support our customers by assessing the delivery situation on a case by case basis. We sincerely hope to be able to resume production as soon as the situation allows,” the company said in a statement.

    Tyler Durden
    Tue, 03/08/2022 – 19:40

  • Russia Central Bank Bans Sales Of Foreign Currency For 6 Months
    Russia Central Bank Bans Sales Of Foreign Currency For 6 Months

    Russians who want to convert their rapidly devaluing rubles, as Joe Biden was quick to point out today…

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    … into dollars or any foreign currency, are stuck for at least the next six months

    In a statement on Tuesday, the Bank of Russia banned banks from selling cash currency to citizens who do not already have FX accounts for period of 6 months starting March 9, effectively ending ruble convertibility until September 9. It’s unclear if the ban means there effectively won’t be a RUB FX market until September, but it may also be a hint that the current crisis will be over by then, one way or another.

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    The central bank also said that Russians who currently have accounts in FX can withdraw up to $10,000 in cash, and can withdraw additional amounts in rubles at market rate on day of issue. The bank was quick to point out that 90% of accounts in foreign currency do not hold over $10,000 and so will be unaffected, central bank says.

    When FX withdrawals do happen, they will be paid in U.S. dollars, regardless of original foreign currency of account; and conversion to dollars will be at market rate, which is probably not a great option with the ruble seen trading anywhere between 120 and 170 to the dollar in the past day.

    The bank also said that it may take “several days” for the banks to supply the necessary amount of foreign currency to the actual office, it added.

    Meanwhile, for citizens who open new accounts in FX, withdrawals will be in rubles during this period. And of course, citizens will still be able to sell FX to banks, although we very much doubt it that there will be much demand to convert hard currency – whether FX or gold – into rubles during this crisis period.

    It wasn’t immediately clear how the Bank of Russia would treat conversions in or out of gold or crypto, although if the recent shift in political sentiment is any indication…

    • RUSSIA’S DEPUTY GORELKIN CALLED ON THE AUTHORITIES TO SUPPORT THE CREATION OF RUSSIAN  CRYPTOCURRENCY EXCHANGE

    … Russia may soon join El Salvador as one of the most active adopters of digital currencies. For now, however, it appears locals are mostly buying gold.

    The ruble hit an all-time low against Western currencies on Monday after Russia was hit by unprecedented Western sanctions targeting the central bank and major financial institutions. On Tuesday, the Russian economy was dealt another blow when US President Joe Biden imposed an embargo on US imports of Russian oil and gas.

    Tyler Durden
    Tue, 03/08/2022 – 19:20

  • Russia Proposes Nationalizing Foreign-Owned Factories That Shut Operations
    Russia Proposes Nationalizing Foreign-Owned Factories That Shut Operations

    Dozens of Western companies have fled Russia in recent days, abandoning inventory, property and investments worth billions and now sitting idle. Russia has a solution for how to deal with that: a senior member of Russia’s ruling party has proposed nationalizing foreign-owned factories that shut down operations in the country over what the Ukraine invasion.

    Toyota, Nike and IKEA are among the companies that have announced shutdowns of stores and factories in Russia in order to put pressure on the Kremlin to stop its invasion of neighboring Ukraine. In a statement published on Monday evening on the United Russia website, the secretary of the ruling party’s general council Andrei Turchak said that shutting operations was a “war” against the citizens of Russia.

    The statement mentioned Finnish privately-owned food companies Fazer, Valio and Paulig as the latest to announce closures in Russia.

    “United Russia proposes nationalizing production plants of the companies that announce their exit and the closure of production in Russia during the special operation in Ukraine,” Turchak said.

    Secretary of the United Russia Party’s General Council Andrey Turchak

    “This is an extreme measure, but we will not tolerate being stabbed in the back, and we will protect our people. This is a real war, not against Russia as a whole, but against our citizens,” he said. “We will take tough retaliatory measures, acting in accordance with the laws of war.”

    Paulig Chief Executive told Reuters in an email that this would not change its plans to withdraw from Russia.

    Fazer, which makes chocolate, bread and pastries, has three bakeries in St Petersburg and one in Moscow, employing around 2,300 people. Valio has one cheese factory and employs 400 people in Russia, and Paulig has a coffee roastery and employs 200 people in the country.

    Tyler Durden
    Tue, 03/08/2022 – 19:00

  • WisdomTree Terminates Triple Leveraged Nickel Product After Investor Wipeout
    WisdomTree Terminates Triple Leveraged Nickel Product After Investor Wipeout

    A leveraged nickel exchange-traded commodity (ETC) product is dead. WisdomTree Investments announced on Wednesday the Nickel 3x Daily Short exchange-traded commodity (ticker 3NIS) has been wiped out due to the metal’s historic short squeeze in the last 48 hours. 

    “The Redemption Amount of the WisdomTree Nickel 3x Daily Short securities has been calculated as zero so investors should not expect to get paid for the securities they hold,” a notice on WisdomTree’s website read. 

    3NIS had a little more than $7 million in assets last week ago. The 250% surge in nickel prices on the London Metal Exchange to over $100k per ton has blown up the ETC’s commodity investments which were likely in future contracts.

    On Monday, WisdomTree declared a “restrike event” for 3NIS to limit declines in the leveraged product by effectively resetting it before moves in the underlying security could destroy all value.

    Here’s the full statement from WisdomTree about 3NIS’s demise: 

    WisdomTree Commodity Securities Limited today announced that WisdomTree Nickel 3x Daily Short (3NIS) will be compulsorily redeemed.  

    Further to the restrike announcement on 7 March 2022 where the 25% restrike threshold was triggered, the extreme and continual movements in nickel prices on the 7 March 2022, led to the product moving more than 33% from the previous close price before the restrike process was able to be concluded. As a result of this price move the Calculation Agent determined the value of the product had dropped by 100% and was less than zero (3 x 33.3334%), causing the commodity contracts to be terminated in accordance with the conditions set out in prospectus.

    Application has been made to the London Stock Exchange and Borsa Italiana where the WisdomTree Nickel 3x Daily Short securities are listed to request that they are to be suspended with immediate effect and delisted. The Redemption Amount of the WisdomTree Nickel 3x Daily Short securities has been calculated as zero so investors should not expect to get paid for the securities they hold.

    Leveraged products are prone to blowing up. In 2018, readers may recall that VelocityShares Daily Inverse VIX Short Term ETN (XIV) was terminated after the most popular way of shorting volatility for retail investors blew up. 

    Tyler Durden
    Tue, 03/08/2022 – 18:40

  • U.S. Markets Face An Unprecedented Era Of Discomfort That Many Could Never Fathom
    U.S. Markets Face An Unprecedented Era Of Discomfort That Many Could Never Fathom

    Submitted by QTR’s Fringe Finance 

    I wasn’t even going to write a note this morning, but then I had an interesting set of realizations while walking to get my coffee:

    1. Many young people on Wall Street nowadays have never experienced real volatility in markets

    2. Russia’s invasion of Ukraine and inflation at 7.5% in the U.S. are two extremely different, complex and unmapped pieces of terrain that we are going to be forced to navigate

    In other words, we have a ton of inexperienced market participants that should be bracing for the economic shock of their lifetimes, but they’re not – they’re still at the stage where walking around Manhattan in Patagonia vests, drinking Starbucks and making dinner reservations at whatever douche-motel is trendy this week are among their top concerns.

    This wasn’t a big deal when I first pointed out in November that I thought the NASDAQ could crash. We weren’t dealing with Russia or inflation just 5 months ago.

    In that same short span of time, risks to markets have gone from non-existent, to potentially grave. 5 months is nothing; it’s a split second when gauged relative to the reaction times of 27 year old guys named Kyle who help draw up models to justify 45x P/Es on sell side reports.

    And I think there’s a chance shit gets real for the Kyles, the Tylers and the Jordans working on Wall Street, in addition to a lot of other “investors” who got their financial education from 2AM Tik Tok videos, YouTube livestreams and Twitter spaces calls with AMC “apes”, very soon.

    While market pullbacks over the last two decades have been akin to light breeze on a summer day, a coming supercycle of discomfort, where the U.S. dollar is challenged and our debt may actual come due, could be a Category 5 hurricane.

    And nobody has even considered “evacuating” markets yet.

    The housing crisis was almost 15 years ago at this point. We’ve had the better part of 2 decades of nothing but synthetic, Fed produced heroin, mainlined into our brokerage accounts since then.

    Lehman's Collapse, on the Front Page - WSJ

    I have a long railed against what I have called this “arrogant” monetary policy: the idea that we can micromanage the economy in a way that is going to make everybody comfortable, all the time.

    I have argued that the feeling of entitlement that comes with expecting to be comfortable all the time goes beyond being “arrogant”: it’s just plain unreasonable. The laws of nature – no matter what industry we’re talking about – all but guarantee some discomfort somewhere along the way.

    This is a lesson that I think we’re going to be learning the hard way this year, and potentially for years to come. Over the last 20 years, we have watched people make fortunes in the market simply by guessing a stock and pouring money into it while the Fed backstops markets from ever moving lower.

    We have overdrawn ourselves at the bank, so to speak, as much as humanly possible. Not only have companies with terrible financials been bid up, they have been bid up to fever pitch valuations that – even in the best of financial circumstances – no company should really ever be afforded.

    And in addition to discomfort, one of nature’s guarantees is often reversion to the mean. Reversion to the mean becomes far more painful the further off the path of normalcy you have drifted. Heading into 2022, after two years of unprecedented and basically unlimited quantitative easing, which was lopped on top of two decades of additional quantitative easing, we’ve gotten about as far off that path as possible.

    In addition to veering off course, the shock of running headfirst into two immoveable monoliths of volatility – the Fed attempting to curb unrelenting and blistering inflation and an unprovoked invasion of a sovereign nation in Europe – may have only just begun to be absorbed by markets. There’s a reason that the cycle of markets diagram, when swinging lower, starts with “anxiety” and “denial”.

    We haven’t even begun to approach “fear” yet, because markets have sold off in orderly fashion. This was the cornerstone of my prediction that we are still due for a limit down morning and real capitulation one of these days.

    Riding the Emotional Wave of a Market Cycle | by Chris | Argent Crypto, Inc. | Medium

    The truth is that while many investors see this as simply another “BTFD” moment like we’ve had in years’ past, we haven’t even started to ponder the long-lasting effects of what could be coming down the pike for U.S. markets, the U.S. dollar and geopolitical tensions.

    Today’s blog post has been published without a paywall because I believe the content to be far too important. However, if you have the means and would like to support my work by subscribing, I’d be happy to offer you 22% off to become a subscriber in 2022: Get 22% off forever

    The Fed doesn’t have any other option but to hike, in my opinion – regardless of what happens in Ukraine.

    Either the Fed will allow the American public to suffer through continued unprecedented inflation, which will have psychological and monetary effects on the American consumer the likes of which we’ve never seen, or they will be consistently hiking rates, which will start the countdown on a ticking time bomb of debt and malinvestment that has been gestating and growing since 1999. Given that the geopolitical conflict is making inflation worse than it was when CPI was 7.5%, the Fed is going to have to react – even if it’s just for show.

    And Russia’s invasion of Ukraine is an all out wild card. Nobody knows what path it is going to go down or how it will end. Analysts have drawn up scenarios ranging from a cease-fire tomorrow to a full-on nuclear holocaust. And while there are hopes for a temporary cease-fire, which would at least stop the humanitarian crisis of killing of innocent civilians, the shockwaves on the global economic system and the geopolitical implications of Russia’s actions are likely to stick around for years to come.

    In fact, I wrote a week ago that I believe this invasion marks the beginning of Russia and China’s official war on the U.S. dollar as the global reserve currency.

    Both rate hikes and the geopolitical conflict will have effects, even in a best case scenario, that linger for years to come. The number of potential outcomes that can occur as a result of these effects that also end with the market moving to all time highs over the next few years, has dwindled. The outcomes that do result in new all-time highs – hyperinflation and QE – would have devastating consequences that would make the market’s move higher, in nominal terms, moot.

    Perhaps over long periods of time, the market may move higher in real terms once again, but appear to clearly be entering a stagflationary period of discomfort that many “analysts” couldn’t have ever fathomed just months ago.

    And if analysts couldn’t have predicted it, markets – commodity markets, equity markets, debt markets, FX markets and otherwise – may only be pricing in the very, very beginning of this new era for the United States.

    The “new era” of discomfort may not last weeks, months or years, but rather decades, especially if the U.S. dollar is finally called into question as the world’s reserve currency.

    This coming week, I’ll be publishing an article that asks about the opposite idea: is it possible for us to get through this and put it behind us relatively quickly? In fact, I’ll even urge my readers to think about whether or not the worst could be over. But this morning,  I couldn’t help but feel that – even in a situation where the volatility dies down – the market’s discomfort could be long lasting.

    If we are, in fact, approaching a new epoch of discomfort for investing in the U.S. (which, by the way I hate to say that we probably deserve), investors’ reactions in the public markets have still not reflected the size of the potential volatility going forward.

    There’s a part of me that still believes markets need to move 30% or 40% lower just based on Fed rate hikes alone, as I predicted weeks ago. Throwing into the mix a new, uncharted geopolitical relationship with Russia and Putin as the “wild card”, I can’t help but feel that the odds of long lasting discomfort have spiked profoundly.

    And remember: the next crisis, we may not be able to print our way out of anymore…

    Today’s blog post has been published without a paywall because I believe the content to be far too important. However, if you have the means and would like to support my work by subscribing, I’d be happy to offer you 22% off to become a subscriber in 2022: Get 22% off forever

    Thank you for reading QTR’s Fringe Finance . This post is public so feel free to share it: Share

    Now read:

    Tyler Durden
    Tue, 03/08/2022 – 18:00

  • Chinese Firms Mull Buying Stakes In Russian Energy Giants
    Chinese Firms Mull Buying Stakes In Russian Energy Giants

    As it turns out, American megabanks like JPMorgan and Goldman Sachs aren’t the only ones buying up distressed Russian assets. Chinese banks are also getting in on the fun.

    China is considering buying or increasing stakes in Russian energy and commodities companies, such as gas giant Gazprom and aluminum giant Rusal International, according to people familiar with the matter, Bloomberg reports.

    Beijing is in talks with its state-owned firms, including China National Petroleum, China Petrochemical, Aluminum Corp. of China and China Minmetals Corp., about potential opportunities for potential investments in Russian companies or assets, the people said. Any deal would be to bolster China’s imports as it intensifies its focus on energy and food security, not as a show of support for Russia’s invasion in Ukraine, the people said.

    The talks are still in an early stage, and it’s unclear whether a deal will result, as the discussions aren’t public. Some talks between Chinese and Russian energy companies have started to take place. The Chinese companies involved refused to comment to Bloomberg.

    As European and American firms cut ties with Russian firms, China has vowed to continue normal trade relations with Russia. The decision comes as American and European energy giant Exxon Mobil, Shell and BP have walked away from Russian assets worth billions of dollars. 

    China Foreign Minister Wang Yi said during a press briefing earlier this week that China-Russia ties remain “rock solid”, even as Beijing called on Russia to engage in peace talks to try and end the war.

    Among China’s current energy investments in Russia, CNPC has a 20% stake in the Yamal LNG project and a 10% stake in Arctic LNG 2, while Cnooc owns 10% of Arctic.

    China and Russia have been strengthening ties for years. Just last month, President Xi and President Putin signed a series of deals to boost the Russian supply.

    Gazprom and Rosneft have sealed major supply deals with China, which have helped soften the impact of western sanctions (which, remember, have largely left Russia’s vital gas and oil industry untouched). The partnership has inspired Russia’s own “pivot to Asia”, a policy that Barack Obama had also tried to impose on the US.

    An investment by China could help solidify Moscow’s effort to accelerate its own “Pivot to Asia” as it looks for new markets for its energy products. China has doubled purchases of Russian energy products to nearly $60 billion over the past five years, and most analysts expect this figure to continue to rise.

    Tyler Durden
    Tue, 03/08/2022 – 17:40

  • Nuland Warns Russia May Seize Ukraine Biolabs, Could Stage False Flag Using Bioweapons
    Nuland Warns Russia May Seize Ukraine Biolabs, Could Stage False Flag Using Bioweapons

    On Tuesday morning, Bloomberg reported that China had accused the US military of operating “dangerous” biolabs in Ukraine – which “echoed a Russian conspiracy theory that Western officials warned could be part of an effort to retroactively justify President Vladimir Putin’s invasion.”

    Members of Ukraine’s Territorial Defense stand guard in Independence Square in Kyiv, on March 3.Photographer: Erin Trieb/Bloomberg

    “U.S. biolabs in Ukraine have indeed attracted much attention recently,” said Chinese Foreign Ministry spokesman Zhao Lijian in response to a question from a local reporter – adding that “all dangerous pathogens in Ukraine must be stored in these labs and all research activities are led by the U.S. side.”

    Zhao called on “relevant sides to ensure the safety of these labs” and said that “the U.S., as the party that knows the labs the best, should disclose specific information as soon as possible, including which viruses are stored and what research has been conducted.”

    According to the report, these claims ‘mirror the diversion tactics China’s diplomats used last year when questioned about the origins of Covid-19’.

    Meanwhile, Britain’s Defense Ministry tweeted on Tuesday that it had noticed an uptick in allegations by Russia that Ukraine has, or is working on, biological or nuclear weapons.

    “These narratives are long standing but are currently likely being amplified as part of a retrospective justification for Russia’s invasion of Ukraine,” it added.

    The labs exist

    Hours later, US Undersecretary of State Victoria Nuland told Sen. Marco Rubio during a hearing that the labs do indeed exist, and must be protected from Russia – which, as Rubio suggested – may stage a biological or chemical false flag attack that they blame on Ukraine.

    “Ukraine has biological research facilities, which, in fact, we are now quite concerned Russian troops, Russian forces may be seeking to gain control of. So we are working with the Ukrainians on how they can prevent any of those research materials from falling into the hands of Russian forces should they approach.”

    Rubio responded – “I’m sure you’re aware that the Russian propaganda groups are already putting out there all kinds of information about how they’ve uncovered a plot by the Ukrainians to release biological weapons in the country and with NATO’s coordination. If there’s a biological or chemical weapon incident or attack inside of Ukraine, is there any doubt in your mind that 100% it would be the Russians that would be behind it?“

    To which Nuland replied: “There is no doubt in my mind Senator, and it is classic Russian technique to blame on the other guy what they’re planning to do themselves.”

    Watch:

    Tyler Durden
    Tue, 03/08/2022 – 17:20

  • Ukrainian Women Being Forced Into Prostitution As Sex Traffickers Prey On Refugees
    Ukrainian Women Being Forced Into Prostitution As Sex Traffickers Prey On Refugees

    According to a handful of reports in the British press, criminal gangs are looking to exploit Ukrainian women fleeing the war so that they can be sold into sex slavery.

    At this point, some 1.5 million people (mostly women and children) have already fled Ukraine over the past 11 days alone, according to the UN’s numbers. Gangs are looking to manipulate women by first offering them a place to live.

    Warnings have come from police and aid workers in Poland, who have warned that sex traffickers are attempting to snatch up vulnerable girls weary from the long, perilous trip.

    Most of the time, sex traffickers are posing as “good samaritans”, according to the Daily Mail.

    The criminals are offering unaccompanied women and children promises of safe accommodation and free transport, posing as good Samaritans to lure them away from the safety of official checkpoints.

    It comes as European Union officials expressed concerns on Saturday that as many as seven million people could cross into neighbouring countries such as Poland, Moldova, Romania, Slovakia and Hungary in the coming months, which campaigners say will create a ‘disturbing spike in human trafficking’.

    What’s more, the UN on Tusday declared the exodus from Ukraine repreents Europe’s “fastest growing refugee crisis since World War II'” (that means the situation is even worse than the Syrian Refugee Crisis from the middle part of the last decade.

    Poland so far is the most popular country for Ukrainian refugees, being right next door. All of this has led to an increase in Ukrainian refugees getting into random cars with strangers they do not know.

    Tom Bell, a British aid volunteer working at Poland’s Medyka border checkpoint just 50 miles from the Ukrainian city of Lviv, told the Telegraph: ‘A lot of desperate Ukrainians are getting picked up in a car by someone they’ve never met and don’t know.

    Volunteers have been checking IDs to look for women traveling with strange men who might be targeted by the criminal gangs.

    One source who spoke with the Daily Mail said she saw a confrontation between one 27-year-old woman and her would-be sex trafficker.

    Meanwhile, a 27-year-old Ukrainian woman told MailOnline: ‘I heard from a friend who crossed into Poland and told me she went with a guy who said he would take her to Warsaw for free but when they got there he asked for money.

    “He got aggressive with her but he didn’t get physical just saying he owed her the money and would have to pay her by working for him.”

    “She started shouting and managed to run away as people were watching. We are spreading the word among people to be careful.”

    One expert in human trafficking told the Daily Mail that the situation would likely only get worse.

    Lauren Agnew, human trafficking policy expert for the charity CARE, told MailOnline: “The war in Ukraine will create a worsening situation in terms of human trafficking.”

    “It will have a vulnerable domino effect across Europe and refugees are at an increasingly high risk of exploitation.”

    She added that there would be a spike in the number of refugees being forced into prostitution.

    “It is certain that as time goes on we will see a spike in numbers caused by refugees being exploited by traffickers and ending up potentially as sex workers, involved in criminal gangs or forced labour and domestic slavery.”

    “These gangs prey on the precariousness of refugees and the war is a business opportunity for them to make a profit and get people into Europe and ultimately the UK.”

    Gangs typically rely on some version of the “bait and switch”: they offer women a “free ride” to some European country, but when they arrive, the trafficker insist that the women must now repay them by “working for them”.

    Tyler Durden
    Tue, 03/08/2022 – 17:00

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