Steve Bull's Blog, page 1362
May 25, 2017
Will Venezuela Be The Battleground In The Next U.S.-Russia Proxy War?
(MPN) There’s no denying that Venezuela is deeply embroiled in a significant crisis. While most are aware of the country’s recent string of violent protests, food shortages and government crackdowns on opposition protesters, few are aware of the opposition’s use of underhanded and downright illegal tactics, as well as the United States’ role in funding opposition forces.
The U.S. has long had its sights set on Venezuela, which possesses the largest proven oil reserves in the world, particularly following the “revolution” that began with the election of the late President Hugo Chávez and has continued under his successor Nicolás Maduro. But changing circumstances within Venezuela may soon push the U.S. to repeat a nefarious practice it has carried out elsewhere – funding a proxy war in order to prevent Venezuelan oil from falling into Russian and Chinese hands.
At first, the U.S. government seemed content to let Maduro’s administration run out of steam on its own. But the U.S. has already issued separate sanctions against the country three times this year alone, with more planned in the coming months, as evidenced by the introduction of a recent U.S. Senate bill that would target Venezuelan government officials. The bill, titled “Venezuela Humanitarian Assistance and Defense of Democratic Governance Act” (S.1018), would funnel $20 million to the Venezuelan opposition, which has already received an estimated $50 to $60 million since Chávez’s election in 1998.
And now, the stakes may now be too high for the U.S. to allow Maduro’s regime to collapse under the weight of economic sabotage. By all accounts, Venezuela’s state-owned oil company PDVSA is already on the brink of collapse.
…click on the above link to read the rest of the article…
China Accuses US Warship Of “Trespassing” In Disputed Waters, Warns It To “Leave Immediately”
In the first unofficial challenge to Beijing over China’s domination of disputed waters in the South China Sea since President Trump took office, a US navy warship sailed within 12 nautical miles of an artificial island built up by China in the South China Sea according to the WSJ. The navy vessel, the USS Dewey, traveled close to the Mischief Reef in the Spratly Islands, among a string of islets, reefs and shoals over which China has territorial disputes with its neighbors.
The USS Dewey
The “freedom of navigation” operation which in the past has infuriated Beijing, comes as Trump is seeking Beijing’s cooperation to rein in ally North Korea’s nuclear and missile programs. Territorial waters are generally defined by U.N. convention as extending at most 12 nautical miles from a state’s coastline. China’s claims to the South China Sea, which sees about $5 trillion in ship-borne trade pass every year, are challenged by Brunei, Malaysia, the Philippines, and Vietnam, as well as Taiwan.
Mischief Reef in the disputed Spratly Islands in the South China Sea
The U.S. patrol, the first of its kind since October, marks the latest attempt to counter what Washington sees as Beijing’s efforts to limit freedom of navigation in the strategic waters. One official said it was the first operation near a land feature which was included in a ruling last year against China by an international arbitration court in The Hague. The court invalidated China’s claim to sovereignty over large swathes of the South China Sea.
…click on the above link to read the rest of the article…
Catalonia Threatens Spain with “Financial Bloodbath”
Catalonia’s independence would set off Spain’s debt time-bomb.
On Monday El Pais published leaked excerpts from what it claims to be the Catalonian regional government’s road map to independence. The secret document includes a plan for the region to unilaterally break away from Spain should its citizens be prevented from holding a referendum on independence in the fall.
It provoked a fierce backlash from Madrid. “This proposal is an unacceptable attempt to blackmail the state,” Spain’s Prime Minister Mariano Rajoy said in a hastily convened press conference. Spain’s defense minister María Dolores de Cospedal likened the plot to a coup d’état. In the meantime, Madrid continues to refuse to even entertain the idea of allowing a referendum on Catalan independence, despite the fact that in just about every survey of the last few years 80% of Catalans, including many unionists, have requested one.
It would mean the loss of 25-30% of Spain’s gross domestic product (GDP), says Spain’s Minister of the Economy, Luis de Guindos. And that’s something the government “will never let happen.”
But Catalonia knows it has a card up its sleeves: its tick-tocking debt bomb. Catalonia can no longer issue its own debt and depends on the central government’s national liquidity fund (FLA, for its Spanish acronym) for about 60% of its funds. As ratings agency Fitch warned in April last year when it sent Catalonian debt even deeper into junk territory, the region has grave liquidity problems that will require “proactive management” and “close collaboration with the central state ” — something that’s clearly not on the cards any time soon.
…click on the above link to read the rest of the article…
Angry China Slams Moodys For Using “Inappropriate Methodology”
The market may have long since moved on from Moody’s downgrade of China to A1 from Aa3 (by now even long-only funds have learned that in a world with $18 trillion in excess liquidity, the opinion of Moodys is even more irrelevant), but for Beijing the vendetta is only just starting, and in response to Tuesday’s downgrade, China’s finance ministry accused the rating agency of applying “inappropriate methodology” in downgrading China’s credit rating, saying the firm had overestimated the difficulties faced by the Chinese economy and underestimated the country’s ability to enhance supply-side reforms.
In other words, Moody’s failed to understand that 300% debt/GDP is perfectly normal and that China has a very explicit exit strategy of how to deal with this unprecedented debt load which in every previous occasion in history has led to sovereign default.
The Ministry of Finance reaction came after Moody’s first, and very, very long overdue, downgrade of China since 1989 citing concerns about risks from China’s relentlessly growing debt load as shown below.
“China’s economy started off well this year, which shows that the reforms are working,” the ministry said in a statement on its website. Actually, it only shows that China had injected a record amount of loans into the economy at the start of the year, and nothing else. And now that the credit impulse is fading, the hangover has arrived.
Moody’s on Wednesday also downgraded the ratings of 26 Chinese government-related non-financial corporate and infrastructure issuers and rated subsidiaries by one notch. It also downgraded the ratings of several domestic banks, including the Agricultural Bank of China Limited’s long-term deposit rating from A1 to A2. It also eventually downgraded Hong Kong and said credit trends in China will continue to have a significant impact on Hong Kong’s credit profile due to close economic, financial and political ties with the mainland.
…click on the above link to read the rest of the article…
May 24, 2017
China “National Team” Rescues Stocks As Downgrade Crushes Commodities
Iron ore led a slump in industrial commodities after Moody’s Investor Service downgraded China’s credit rating and warned that the country’s debt position will worsen as its economic expansion slows. However, one glance at the divergence between industrial metals’ collapse and the sudden buying panic in Chinese stocks confirms what Asher Edelman noted yesterday about the US markets, China’s so-called “National Team” was clearly intervening…
As Bloomberg reports, Iron ore futures on the Dalian Commodity Exchange fell as much as 5.6 percent to 452 yuan a metric ton, almost by the daily limit, before closing at 455.50 yuan, extending Tuesday’s 3 percent loss. Nickel led a broad slump among base metals, dropping as much as 2.4 percent to $9,125 a ton on the London Metal Exchange. Nickel stockpiles rose the most in more than a year.
In context, the overnight reversal in Chinese stocks is even more obvious…
Moody’s move, downgrading China’s debt to A1 from Aa3, adds to concerns about the effects of a slowdown in the country’s economic growth, following on from downbeat manufacturing readings and weak commodity imports, Simona Gambarini, an analyst at Capital Economics Ltd., said by phone from London. “We’re not particularly concerned about credit growth getting out of hand, but in regards to industrial metals, we have been negative on the outlook for some time on the basis that Chinese growth will slow.”
Will The National Team be back tonight?
Moving Closer to the Precipice
Money Supply and Credit Growth Continue to Falter
The decline in the growth rate of the broad US money supply measure TMS-2 that started last November continues, but the momentum of the decline has slowed last month (TMS = “true money supply”). The data were recently updated to the end of April, as of which the year-on-year growth rate of TMS-2 is clocking in at 6.05%, a slight decrease from the 6.12% growth rate recorded at the end of March. It remains the slowest y/y growth since October of 2008, when the Fed had just begun to pump quite heavily.
US money supply and credit growth keep slowing.
The monthly y/y growth rate of M1 fell rather more sharply in April, from 8.76% to 7.07% (the most recent weekly annualized growth rate is lower at 6.80%). The composition of M1 is close to, but not quite equal to narrow money AMS (or TMS-1) – in particular, it does not contain the balances held at the Treasury’s general account with the Fed.
As a result, the growth rates of the two measures have drifted apart more sharply since 2016 than they usually do, as there were huge swings in the Treasury’s general account from mid 2016 to early 2017. These swings were very likely connected with money market funds moving large amounts of dollars from the euro-dollar market into treasury bills.
Reports by the Treasury Borrowing Advisory Committee suggest that the topic was on the agenda for a while. The surge in demand from MM funds may well have been accommodated by an increase in debt issuance, which the growing cash hoard mirrored.
Monthly y/y growth rates of TMS-2 and M1 – TMS-2 growth remains at the lowest level since October 2008 – click to enlarge.
…click on the above link to read the rest of the article…
Images Of British Troops Deployed In London
As Prime Minister Theresa May promised, troops have been deployed to guard “key locations,” including the Palace of Westminster, several embassies and “other sensitive sites,” in London and other British cities, the Evening Standard reported.
The mass deployment follows Monday’s attack at Manchester Arena, which killed 22 kids attending an Ariana Grande concert, as well as the 23-year old attacker. It was the worst terror attack in the U.K. since 2005.
The Financial Times reports that nearly 4,000 military personnel have been deployed across Britain to help police with counter-terror efforts after May raised the threat level to “critical” on Tuesday as authorities scramble to apprehend any accomplices that may have aided Salman Abedi, the chief suspect in the bombing who was known to police prior to Monday’s attack.
“There are fears an Islamist bombmaker may be on the loose because of the sophistication of the device used in the Manchester attack on Monday,” the Evening Standard noted.
The FT also noted that the attack occurred at a time when police chiefs across Britain have warned about difficulties recruiting the extra 1,500 police the U.K. government promised following the attacks in Paris and Brussels.
Counter-Terrorism forces have arrested Hashem Abedi, the younger brother of the Manchester attacker, in Tripoli, according to media reports.
Parliament has been closed to the public, the changing of the guard at Westminster has been cancelled and the Old Bailey’s public galleries were also shut, the Evening Standard reports.
Soldiers are likely to be on duty at this weekend’s FA Cup Final at Wembley. And Chelsea have cancelled Sunday’s victory parade to celebrate their premier league win, ESPN reported.
Here’s a few photos showing troops arriving outside the Palace of Westminster, Scotland Yard and 10 Downing Street:
…click on the above link to read the rest of the article…
Truth Has Become Un-American
Those of us who have exited The Matrix are concerned that there are no checks on Washington’s use of nuclear weapons in the interest of US hegemony over the world.
Washington and Israel are the threats to peace. Washington demands world hegemony, and Israel demands hegemony in the Middle East.
There are two countries that stand in the way of Washington’s world hegemony—Russia and China. Consequently, Washington has plans for preemptive nuclear strikes against both countries. It is difficult to imagine a more serious threat to mankind, and there is no awareness or acknowledgment of this threat among the Congress, the presstitute media, and the general public in the United States and Washington’s European vassal populations.
Two countries and a part of a third stand in the way of Greater Israel. Israel wants the water resources of southern Lebanon, but cannot get them, despite twice sending in the Israeli Army, because of the Lebanese Hezbollah militia, which is supplied by Syria and Iran. This is why Syria and Iran are on Washington’s hit list. Washington serves the military/security complex, Wall Street and the over-sized US banks, and Israel.
It is unclear if the Russians and Chinese understand that Washington’s hostility toward them is not just some sort of misunderstanding that diplomacy can work out.
Clearly, Russia hasn’t interfered in the US presidential election or invaded Ukraine, and does not intend to invade Poland or the Baltics. Russia let go the Soviet empire and is glad to see it gone, as the empire was expensive and of little benefit. The Soviet Eastern European empire comprised Stalin’s buffer against another Western invasion. The Warsaw Pact had no offensive meaning. It was not the beginning, as misrepresented in Washington, of Soviet world domination.
…click on the above link to read the rest of the article…
The Trump Collapse Scapegoat Narrative Has Now Been Launched
Last week was a rather crazy one for the news feeds, with cyber attacks and “Comey memos” and a host of other wild mayhem, it may have been difficult for many people to keep track of it all. That said, there was one event that I think went partly under the radar, and I think it is an important signal for anyone concerned with the ongoing process of economic collapse in the U.S.
Generally, the American public holds very little vigilance when it comes to economics. They are distinctly unaware of fundamental indicators such as commodities demand, energy usage, manufacturing, imports, exports and international shipping, etc. What they do take note of, and what the mainstream news will tell them about in 30 second blurbs, is the state of unemployment and whether stock markets were down for the day or up for the day. These two “indicators” are the extent of the average person’s exposure to fiscal health.
This is why the Federal Reserve and the establishment have been meticulous over the past several years in their efforts to keep employment statistics highly manipulated to the positive side and why they have been injecting untold trillions into stocks around the world through various measures including no cost overnight loans.
However, over the past couple of years something has changed. As I warned they would do in 2015 in my article The Real Reasons Why The Fed Will Hike Interest Rates, central banks including the Fed have been backing off of stimulus measures and they have now begun a series of interest rate hikes. Look at it this way — imagine the economy has a terminal disease and the only thing keeping it alive is a highly addictive drug called “free money.”
…click on the above link to read the rest of the article…
Brazil Deploys Troops To Protect Government Buildings As Protesters Set Ministries On Fire
Update 2: Physical confrontation erupts in Brazil’s Congress between Temer’s supporters & opponents after he deploys the military against protesters.
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Folha de S.Paulo
Deputados da base e da oposição se agridem durante sessão após Presidência decretar Forças Armadas na rua para garantir a ordem
4:22 PM – 24 May 2017
pdate 1: Reuters reports that Temer has deployed troops to protect government buildings::
BRAZIL DEFENSE MINISTER JUNGMANN SAYS PRESIDENT TEMER HAS ORDERED ARMY TROOPS TO PROTECT GOVT BUILDINGS FROM PROTESTERS
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Amid massive protests demanding the ouster of Brazilian President Michel Temer, local riot police used tear gas and concussion grenades against groups of violent protesters in the Brazilian capital, where according to GloboNews protesters set fire to several ministry buildings on Wednesday afternoon, as tens of thousands gathered outside Congress.
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Silver Surfer @AlexLFz
ERRATA: The protesters set on fire the Brazilian “IRS” federal buildings in Brasília th
rasília the capital of Brazil and the Ministry of Agriculture
3:22 PM – 24 May 2017
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