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SNBDL Daily Briefing
Report prepared using big data solution Quid
Our take from the last 24 hours news
Central Banks News: BoE minutes indicated that policymakers were against raising rates when they met in October. This was our expectations since March. We have been saying that the markets will be ahead of themselves pricing hikes while the conditions do not support such a move. Why have SNBDL see what the top-tier sell-side economists have failed to point to? We’ve given the details and the proofs it in our article “Perception & Reality: closing the gap using big data”. In nutshell, many economists continue to heavily rely on past Philipps Curve correlation. We do not because of our access to different topics, thanks to the use of big data solutions, enables us to point to the drivers which are changing the job market, making it more flexible and more fluid. For example, the old economic text books do not take into consideration new collaborative business model initiatives (such as AirBnB or other collaborative sharing platforms). These trends are here to stay notwithstanding the views expressed by some Gold bugs economics which imagine that with magic these transforming and disturbing technologies will disappear overnight.
The recent developments in Oil prices have taken by surprise many economists. We have been anticipating them. We have been calling to sell Oil and Oil volatility which they spiked in July. We have been right. It’s time to change the narrative which is spreading all over the places in the classical media because that narrative, and “expertise”, have cost investors, pensioners, and wealth a lot. The difficulties currently experienced by some hedge funds are the reflect of the need to question our “consensus beliefs”.
ECB is starting to communicate on the benefits of the AQR, as we expected differently from the consensus. Since the creation of the EUR and specifically since Greece government solvency crisis, many economists have been considering that the Eurozone cannot survive. During September, the existential threat which have been cooled by ECB OMT and Whatever it takes, started to increase again (Scotland independence, Br-exit etc.). But once again, the consensus was wrong because it failed to understand that 2 wake up calls have pushed Bruxelles and policymakers throughout the EU to rethink their strategy. Should the Juncker Commission fails, EU could be destroyed by populists parties or by Russia pressure. While there is no issue than surviving, the probability to survive increase. We take the commission for its world that it will broke a deal to generate investment and jobs. The mood has changed but the consensus continues to look at the past.
Finally, US CPI rose 1.7% far from the level which justifies that the overwhelming majority of media give excessive airtime to hawks, money printing haters, and anti-government folks. In January this year, we questioned where the inflation will come from. No one could genuinely answer this question.
I have been in the buy side and I have been disappointed by the lack of understanding of the connection between different subjects. I have been disappointed as well by the fact that some have pushed a political agenda while the buy-side job is about to protect the money people which trust us to manage. Be the change you want to see: this is why SNBDL exist and will continue to deliver. Our aim is to deserve your trust.
Economic news:
Russia: as expected in our Russia update, oil prices decrease is derailing the Russian economy. The oil price collapse since June have taken by surprise many commentators. But the single data point which increase our confidence in the fact that this trend is here to stay is the Saudi officials recent announcement “markets have to get use to low energy prices”. Deputy Governor Kudrin is pushing for emergency rate hikes to stop the free fall spiral in foreign investment. Rate hikes are likely to reduce the speed of deterioration but not reverse the tied. This forecast is based on the fact that President Putin is unlikely to reverse his stands on Crimea which makes the relief in sanctions very unlikely, at least in the short term.
Japan: we have said that the single most important risk for Japan is its trade deficit. The trade deficit deterioration is largely attributed to the energy bill which rose after Japan decided to turn off nuclear power plans after Fukushima. But while we acknowledge the risk, which could spur into a debt crisis should Japanese domestic investor rebalance out of Japan government bonds (JGBs) investment before PM Abe succeed in improving public finances. This risk has been the major driver why we differed from JGBs bears. First, we considered that BoJ will be cautious and refrain itself from any excessive additional monetary easing in order to avoid trashing the JPY which contribute to deteriorate the trade balance even further. Second, we do believe that Japan will have to undertake a second VAT hike (though this hike could be made in small steps). By doing so, PM Abe can start regain the trust of foreign investor that his government is committed to improve public finances and reform. We continue to be constructive on the Japanese story because the risk of any shift from the reforms could not only create a JGB solvency question but also weaken Japan in the international scene, at a point where Japan is negotiating disputed territories (with Russia and China).
Earnings news: earnings continue help to calm the excessive markets’ nervousness that corporations profit margins will be unsustainable and will push stocks prices into a depressed territories.
The Earning season just started by the overall view is not as “depressing” as many have been painting for months (we have disagreed with this view at many occasions). Except some important misses due to idiosyncratic reasons, such as IBM, the profit margins look still healthy.
But the corporations continue to see “challenging” top line. In fact the “balance sheet deleveraging” dynamics continue to be at play. In a nutshell, corporation anticipates less top line growth, they protect their margins, using tax initiatives, financial engineering (such as buy-backs) or rationalise their staff. This dynamic is usually used by some populists groups to point to the class-struggle between Rich (shareholders) and Poor (workers). But there is an untold story, which explains that even with the very high level of inequalities, there is a very low probability for a XIX Century style revolution *though many would love to see it to challenge the current governance improvement trend*. The untold story is that among people leaving big corporation, there is an overwhelming number of entrepreneurs, innovators and good professionals which have reached the level of intolerance vis-a-vis some crony capitalism phenomenon. This is what we like to call “Stalinism Capitalism”: it works like capitalism for large shareholders and management while its Stalinism for workers, small shareholders (including Pension Funds). Should big corporation move away from Stalinism Capitalism, a trend which is already in place, we would with more than 75% probability: 1) improve profit margins, 2) improve workers pay and conditions, 3) improve gender equality – which empowers workers -, 4) improve consumer services. This trend is a certainty because political activism has been focusing on criticising states actions, it has just get organised to challenge private sector bad behaviour. Furthermore, G-20 in Australia is likely to press government to move toward good governance.
We would like to take the opportunity here to repeat that this trend toward the good governance is in place and supported by many policymakers (China, Australia, France etc.). But, reports on bad governance practices overshadow the changes. But we continue to see a need to accelerate the change in governance in other to regain the public trust (the most important “asset” of the XXI Century).
Ebola: US decided to introduce systematic screening of visitors from 3 Ebola nations. Over the nearly 500 tests conducts one case has been taken to hospital. The CDC has required to check health development of the visitors during the 21 days after their arrival. Such a tracking will reduce even further the risk of an outbreak. Should any of the visitors experience health deterioration, the CDC could be quick in responding and in putting in quarantine the possible people infected. We do believe that the mistakes made in Dallas, and the increase of fear consecutive to these mistakes, have pushed the administration to take the necessary steps.
We are likely to see some “reduction” in the fear as the number of cases decrease. However, outbreak take place in waves. While we might have very good news during the coming 2 weeks, the cases are likely to increase again. There is no time to reduce vigilance until the virus is getting controlled and Ebola vaccines would have proven their effectiveness.
But the GOP continue to point to more measures such as Visa ban. But while Visa ban, alike travel ban, serves interests which want to inflict more pain to the economy (less trade, more pressure on an already fragile airline industry) it does not help reduce the outbreak.
In our special note on Ebola (Ebola a communication war) we stressed that Ebola virus will be more about communication issues than a medical problem. On one hand, we pointed to the excessive fear spurred by politically motivated participants on Twitter. On the other, we stressed that while spreading fear about Ebola could help short term interest groups such as increasing financial markets volatility which could help put the blame on excessive regulation. It does show how the Tea Party caucus and less moderate GOP are unprepared to take over the executive branch. If I was advising Marco Rubio or Rand Paul, I would have advised them to fire their communication and strategic teams. Why? For one simple reason, by emphasising the mistrust, both the two Senators are showing how unprepared, un-experienced they are to pretend running for office in 2016.
1. Would anyone trust a leader who will start trashing all the administration and pushing the public to panic while they have to be focus finding solutions?
2. Would anyone trust Marco Rubio, who continue to fight a XVI Century war against Science, to take the right decision while over sighting CDC operations?
3. Would anyone trust Sen. Rand Paul to be the leader to calm the public when he was indicating that Ebola is airborne (NB: this is not the case now please see our report)?
Should the Senate goes to the GOP, it would be the first time in my 20 years career analysing politics that I would have seen a group wining on the ground that : 1) they will spur fear instead of calming public nervousness and show they would be working, 2) they will trigger an economic crisis because they might be some highly hypothetical fear that Chair Yellen will be behind the curve, 3) they might call for President impeachment trial when the country is leading a coalition against terrorists (inc. ISIL). Will the US public prefer voting to help some private interests which have invested ~$1bn in ads? I doubt. I continue to believe that Tocqueville is right: the US is the best democracy invented so far.
The arrival of Ron Klain as a coordinator of the US administration efforts is likely to lead to a reduction in the excessive fear we have reached last week. WHO announcements, that some western african countries are free from Ebola and that a Vaccine should be ready by January 2015, are contributing to overcoming the outbreak.
Gaza: The closest we get to opening a discussion for a two-state solution, the more tension is likely to increase. A Palestinian resident of East Jerusalem drove his car into a crowded light-rail station Wednesday, killing a 3-month-old baby and wounding eight people, two of them seriously, according to Israeli police. The driver was identified as Abd al-Rahman al-Shaludi, a resident of the Silwan neighborhood who, according to police spokesman Micky Rosenfeld, has been previously jailed in Israel for involvement in terrorist activities.
But, the global community should separate between terrorist who’s sole aim is to derail any peace process (Turkeys usually don’t vote for Christmas) and the overwhelming palestinians which have been suffering for too long and deserve that an opportunity for peace got ceased. This is not a hope it’s a forecast. The global community understand very well that it has no chance to ultimately defeat ISIL if it does not solve the issues which are used by terrorists to hire jihadists. At the top of these issues the palestinian situation.
Returning from a Middle East visit, UN Secretary General Ban called for more collaborative work between Palestinian authorities and Israel government for peace.
Yesterday, we were repairing that China has joined the call for creating conditions for peace talks. Although this did not come as a surprised to us, we see in the global call for peace as an additional evidence that Israeli-Palestine problem is heading toward an unique opportunity to settle a renewed peace process. UN Secretary General Ban is pressing both Hamas and IDF to recognise excesses. First, the UN is refocusing the attention to facts we were indicating during the summer, that some Hamas weapons have been hidden in UN sites during Gaza war. This adds more evidence to the fact that Hamas has been using palestinian civilians as shields. Second, the UN is pressing the Israel Defence Forces (IDF) inquiry about the excessive use of force.
We have been expressing worries after the decision to reconstruct Gaza because there is a genuine lack of traceability of funding. Hamas confirmed that some funds are redirected to re-militarize. This is in line with the fact that as Hamas is losing its political capital to Fatah of President Abbas. The organisation announcement is a gesture to regain some of its “lieutenants” defecting to other “hard liner” organisations.
We have been saying for some time that a fight against terrorism and radical Islam required to genuinely rebuild trust which would phrase in 3 steps. First, reopen Palestine Israel peace process. Second, sell the narrative that this process is intend to be a win-win scenario (i.e. peace, jobs, and growth for the 2 countries). Third, reduce the speed of Jihadists hiring because those are getting radicalised by the feeling of “injustice” and a perceived war against palestinian and muslims in general.
Recent Secretary of State Kerry comments that a Palestinian – Israel two-state solutions will help derail ISIL are in line with the convictions we expressed since the start of Gaza war and the “fight for talents” terrorists organisation have been organising. Please see our comments on Iraq & Syria will indicate that the terrorists are loosing battle in the ground but want to keep their narrative alive in order to keep hiring (when the western countries are just realising that defeating ISIL will require defeating its hiring process).
Iraq & Syria: Canada parliament shooting is possibly linked to IS terrorists according to the Canadian governments. This indicates that ISIL risk is much important and the global coalition response is still inadequate. The coalition has focused on the urgency: stoping ISIL from spreading in Middle East. But the coalition should be held accountable for its continuing lack of response to the more important reason behind the jihadists hiring: MISTRUST. We are puzzled by how media is giving airtime to ISIL by spreading the video, message and communiques while moderate muslims have no voice (even when US President made reference to #NotInMyName community in his UN General Assembly speech). From a game theory prospective, we understand very well the reasons behind giving airtime to murders. By spurring the fear, some interests groups could imagine that they can derail the current trends toward good governance. In 2009, we were indicating : to solve today’s problems (financial, economic, ecological crisis), there is no way but improving governance. These interests groups will be defeated not because Terrorism is bad, but because terrorism and ISIL is an unstable equilibrium. Some are justifying this situation because it serves as a wake up call to move forward. We believe that the time has came to accelerate the G-20 initiatives and get rid of bad governance, because terrorism needs “dark” money to flourish and anyone who is link to these channels should be brought to justice.
Last week we were saying that, as soon as Turkey will have assurances that the Kurds will not use the current tension at Kobane to increase the tension over the Kurdish independence, ISIL is likely to start to loose this symbolic battle. We were indicating that Kobane is a must win for ISIL in order to pursue their “marketing campaign” borrowed from Spartacus and David & Goliath.
During the recent days, ISIL was loosing ground in Kobane and diverting its to-become-jihadists attention to Baghdad, Raqa to show how barbaric ISIL can be. These actions intend to keep the “to-become-Jihadists” (like Australian Abdullah Emir – click here-) attention on joining their fight. We have been witnessing that many non-affiliated groups have pledge allegiance to ISIL in order to keep hiring. We have seen for example that Algeria salafists groups have renamed themselves to “Califat fighters” to channel funding, weapons, supports etc. We would not be surprised if ISIL continues to spur disinformation that they can take their fight to the sky or that the have got access to US arms (as indicated by the US thanks message channeled by some extremists twitters.
By winning the communication war and cutting ISIL from attracting young fighters the coalition increases its chances to ultimately defeat ISIL.
We would like to remain our readers that ISIL is three groups: 1) psychopaths – drug addicted fighters who are leading the fight because their illness have reduced their fear of death, 2) Some sunni army groups which have been betrayed by Al-Maliki government (these include Ba’aht party), 3) Some sunni tribes. The “non-psychopaths” are using ISIL as a threat to push the global community to pressure Iraqi government to be more genuinely inclusive and reduce bad governance. We would not be surprised that Iraqi army would spur the information that they would be helping ISIL to take it fight to the sky, but let’s face facts, unless ISIL gets some government support, it’s very difficult to imagine how ISIL could have any chances vis-a-vis US and coalition airforces.
IHS confirmed the estimates we had that ISIL was making ~$2millions per day from oil, before US Strikes. But the combination of the oil facilities strikes and the plummeting oil prices are likely to bring this financial source down. Furthermore there is a genuine need to cut ISIL oil from market through a better oversight and regulation of the oil markets (to avoid money laundering and terrorism financing).
Two factors are important to watch in the coming days: 1) how President Ergodan will change is position when the situation deteriorates, 2) how the coalition will withstand two events (Iran nuclear negotiation and Saudi decision to let Oil prices stabilise at 70-80$). On the first topic, President Erdogan seems to be willing to provide help – sufficient help to keep ISIL away from Turkey where Muslim Brotherhood are reallocating after being “asked to leave” by Qatar. Second, the coalition is strong and seems to have accepted low oil prices.
Russia – Ukraine tension take away:
Russia and Ukraine tentative gas deal, reached in Milan, is likely to move ahead according to PM Yatsenuk. But this did not come with less tension, Merkel has been very critical to President Putin, while Germany BND (spies) have reported that MH-17 has been shot down by Pro-Russian rebels.
Yesterday, the head of the State Duma’s Foreign Affairs Committee, Mr. Pushkov, has denied Russia’s involvement in the downing of Malaysian Airlines flight MH17 following the publication of BND report. This communication war is likely to keep any trust about MH17 always challenged.
Chancellor Merkel attitude is in line with our view that she is using Putin threat to push EU to undertake more reforms and more integration, while keeping the threat of Russia isolation very high. Meanwhile, Russia economy continues to tank.
We would like to remain our reader that when it comes to whether Russia will cut gas delivery to Europe, we believe that it’s not a matter of “if” but “when”. Our study of Putin chess game enables us to see that a moment where fear over Ebola will reach the level where any non-lethal flu could become a source of panic and paranoia , would be the genuine timing of cutting gas. This will help populists (supported by Putin) to criticise Europe even more.
Actually, many other political groups are using the strategy of making allegiance to Putin in order to push some domestically driven agenda.
Reports out of Sweden relative to underwater activities indicate that Sweden is shifting away from its “neutral” stands and is heading to put some additional pressure on Putin. Should Sweden change stands as the recent evidence are starting to show, Ukraine tension might increase because it will leave President Putin without any example of neutrality Ukraine should be bind by.
Comments by Swedish PM Lofven “[Sweden] have already say [it] will stay out of NATO” hint that the recent events are bringing the question back to the table (at least from the Russian prospective). The recent “tension” over military planes violating Estonia air space is another example of the fact that the situation is unlikely to settle before the beginning of next year.
Finally, we shared today an opinion which points to the risk that Iran might go nuclear if President Obama is not pressured. The tool we use, Quid, pointed out to this article because a deal with Iran will free the country from sanctions and push oil prices even lower. This is not in the interest of commodity groups nor on the interest of Russia. Unfortunately, while a “AI Robot” quid had a very good question, the writer did not even mentioned this (focusing on old Iran and its old politicians which were using US and Israel as a way to pressure their people to swallow sanctions and an agonising economy).
We continue to see only two possible outcomes: 1) Russia pursue its aggressive attitude and pushed for a separation of Ukraine at the expense of a full-fledge isolation, or 2) Russia opposition start to “challenge” President Putin to return to reforms. The second outcome is unlikely for now because intelligence from the ground is indicating that while the opposition is willing to change the trend, there is a serious lack of appetite to challenge President Putin be in openly or behind the scenes.
We foresee the situation to continue to deteriorate while Oil prices continue to plummet. Russian economy is likely to suffer a lot, while EU narrative is likely to change because the “communication war” which have been spurred by Russia and its supporters in the Western political groups is loosing traction (facts have no religion).
Catalonia: referendum called off, Rajoy opened discussion to give more autonomy to Catalonia, Russia’s RT News is pressing Catalonian to revolt. We were expecting it and we add Catalonia to the numerous subjects were big data has proven its accuracy. However, any delay in negotiation between Catalonia and Madrid could reverse the tied. Unfortunately, many politicians have been used to procrastination and may try to promise reforms without delivering them. This time Spain has to face the reality: all over the world, the public awareness of “moral faults” has increased. Not solving Catalonia problem is giving more argument for the mistrust camp. It suffices that one sees the overwhelming indication that mistrust helps to radicalise the public, to conclude that procrastination would be responsible for public radicalisation. The Elite in Spain does not understand that the old days of the Spanish Monarchy without accountability is ending. They’re better get used to that and move forward.
We were saying “calls for independence referendum is increasing pressure on both Madrid and EU to move forward to offer better conditions and better narrative to the public. We see PM Rajoy taking constitutional actions to deter Catalonia from conducting the referendum, at a moment where more the referendum is gaining support from the independence forces all over the world. Madrid may accept to open discussion to devote additional autonomy to Catalonia in order to reduce the pressure. This story is likely to push EUR existential threat higher short term, but we consider that EUR is likely to rebound by the end of this year, when these threats will be repriced as less likely.” (daily briefing Sept. 30 2014). Catalonia decision to suspend formal campaign is the first step in our constructive scenario. However, Artur Mas uses the threat of going ahead with the referendum, though the constitutional court has specified that’s un-constitutional. This threat is urging PM Rajoy to act which he did in Saturday by opening discussion of some kind of PM Cameron solution to Scotland independence call (i.e. more fiscal autonomy). Catalonia government will decide by October 15 on whether to hold referendum. We see the most likely scenario to be some deal with Madrid which would : 1) help Artur Mas to claim victory – he would have secured more autonomy – and 2) help PM Rajoy to de-escalade the tension over Catalonia. We see the next region to start a fight for more autonomy to be Bavaria (Germany’s most wealthy region which is pushing Alternative fur Deutschland – AfD – anti-EZ party wants to reduce its contribution to other regions – “lazy” EZ members states, in their parlance -. Business interest (Football Clubs) are starting to indicate the cost of a secession. Novo-Russia continue to support Catalonia, as a secession could help justify Crimea. Many have been talking about war in the East, the War against Russia is also taking place in Catalonia. The relations between populists parties in EU and Russia speaks volume. Czar Putin should make no mistake EU is one and indivisible. Populism is a cancer, EU is recovering from it.
Ferguson – Missouri: One word take Replace Catalonia, HK Occupy with Ferguson, keep calm and carry on.
An independent commission will be created to study issues that have surfaced since the fatal police shooting of Michael Brown in Ferguson, Missouri Gov. Jay Nixon said Tuesday. This commission aims de-escalating a situation which could easy surge. The risk of surging is increasing as a newly leaked autopsy of Michael Brown, the unarmed 18-year-old black man shot by a white police officer in Ferguson, Missouri more than two months ago, indicates a gunshot wound to the hand from close range, the St. Louis Post-Dispatch reported.
The Tea Party caucus is using these events as a way to increase the racial tension, while Sen. Rand Paul wants to use the spread of African-American anger vis-a-vis President Obama administration as a way to bring these voters to the GOP. Sen. Rand Paul has used exactly the same strategy with the youth, which suffers the most from the global financial crisis consequences. The administration needs to increase it rhetoric against disinformation, mistrust and pessimism should it want to avoid that the voters turn to those who are placing the most emphasis on pessimism with the help of donors which interest is to keep status quo (at a moment when the US need urgently to undertake structural reforms – immigration, taxes etc. -). Furthermore, not only Tea Party caucus is using this strategy, the moderate Chris Christie whom have suffered from the Bridge scandal, is using the same strategy to change his image.
In general, Ferguson, HK Occupy, Scotland Independence, Catalonia share the same problem: inequality. Many are considering that Inequality will bring a class struggle and some kind of XIX century like revolution. Notwithstanding that depending on where someone seats, we might think that these mass protests (1000 for Ferguson, much more in Catalonia) are sufficient to start a revolution. But like we were saying in our earlier notes, we genuinely believe that Occupy and Anonymous groups have been hijacked by “commodity interest groups” (it suffice to look at the links between investment portfolio’s advise of those groups – Gold and Commodities – and the consequence of a derailed soft power to move toward better governance).
However, unlike in the old “organised revolutions” in LatAM, this time around the social media is in charge and the overwhelming majority wants to use soft power – and Ferguson is part of that – to press institutions to reforms. The chaos and Apocalypses imagined by the 3G group (the most radical group within libertarians and their name stands for Gold, Guns and God) are unlikely to take place. Of course Ebola, and ISIL are genuine threats but 1) the on-going improvement in governance (cf. Australia G-20), 2) the work to reduce disinformation and skepticism (EU, Gaza), 3) military and medical action against the two deadly diseases ISIL and Ebola, are supportive to the positive scenario. Furthermore, there is a win-win scenario which is taking place and which could help: workers, shareholders and consumer to benefit from.
US midterms elections:
November 4th midterm elections is coming with many uncertainties. Should GOP win the Senate, the US administration is likely to find itself stuck with a divided government which could make : debt ceiling, budget negotiation, Fed Transparency Bill negotiation, very hard. Some humorists have called the Tea Party caucus to be the “no-negotiators”. Without leaning toward a liberal Tea Party bashing, we would like to remind our readers of October 2013 debt ceiling talk. These period have created too much fear that the US might default that some Sovereign Wealth Funds (SWF) have been considering challenging the USD reserve currency privilege status. The average polls are giving 55% chance to the GOP to secure a win in the Senate. However, these polls do not track the weak signals narrative nor participation variable (a model we’ve built for Scotland Independence and which has proven a very good results). Koch donors story (politico here) is very interesting because it shows that Oil interest groups are busy trying to reduce the speed at which their wealth is evaporating. $1bn is the amount invested, hope that this investment does not include any link to gestures to destabilise the Homeland security. We are confident that private initiative such as Super Pac of Super Pacs (using public donation to cut interest groups campaign financing) would take over in the short term because Pension Funds and Investors will soon recognise that “Greed is NOT good” and better have a functioning democracy.
We continue to side with the consensus. But we consider that as soon as investors will start looking at the consequence of a GOP Senate majority win we might see some change in the dynamics. We have the opportunity to use a new source of big data information. We will be using it to bring the change in the narrative in the coming 3 weeks. Stay tuned and thanks for your support.
The recent polls which show a GOP turnout advantage, should be taken with a pinch of salt. The reason is that turnout is a very volatile variable and depend on the consequence of not showing in the polls. Countries differ in their reaction function to election. As a general view, the more a country struggles to get rights the more the public is fearing the return of any dark days and go to the polls. The more the media will focus on the fact that GOP are winning (with the consecutive effects) the more the voters might increase their turnout. We believe that this “reversibility of votes” is the “magic” bullet which might help save some efficacy for the second half of President Obama tenure as well as avoid an incredible economic headwinds (see here Ted Cruz agenda for GOP Senate). Should one add Senator Ted Cruz comments, those of Senator Rand Paul (which spur fear about Ebola), we might find ourselves in situation which would have many similarities to Nero burning Rome (click here).
These are the reasons why we are less confident than many commentators in the US that GOP Senate majority is a given.
US other news: We share today an interesting paper on why ISIS excels at recruiting American teens. This trend is the most worrying while the terrorists propaganda based, on the Apocalypse and the spread view that “institutions are rotten to the core”, is gaining traction is more forums (libertarians blogs for example). I was puzzled by the number of blogs and how some Hedge Funds have been financing libertarians views although they repeat all of them the same information, data, reasoning etc. This become clearer with the recent rush to sell to small investors energy funds, while the overwhelming data and news are supportive to do the opposite. It’s frustrating that the US SEC does not protect sufficiently investors by requiring to check how these funds are sold. From a 20 years marketing experience in finance, I witnessed at least one case of two deals where the investor has not been given the full information although salesmen knew it. In a world where data are everywhere and the tools to make the sense of it are already very efficient. I do believe that financial institutions have better to be cautious. As we have been saying many times: last time financial institutions suffers multi-billions sanctions, next time (if these do not take the genuine actions to improve governance and marketing practices) it may end up into jail time. I doubt that oil funds salesmen discussed with their clients the situation in Iran negotiation and how this could take the oil into another plunge.
Informations out of North Korea have proven our thoughts right: Kim Jong Un has personally ordered to free the M. Jowle. This is a weak signal that North Korea leadership is willing to soften its stands when its old partners are moving toward a new strategy. We see this development increasing the chances of a reunification with South Korea. This story should accelerate when President XI and PM Abe will meet and reduce the seemingly tension over the disputed regions.
EU is suffering from the combination of negative general sentiment (Ebola, ISIL etc.) and the negative press conducted by both populists when Russian media provides very good argument to drive the tensions between creditors and debtors higher. But the trend in EU continue to be supportive and as we were indicating the more markets will recognise the short term risk of US midterms elections, the more constructive they’ll become on EU and EUR. Markets were upset by questions about how quick Greece will exit from the program. The glass half full part of this story is that Greece, a country which once was considered to be doomed with the only hope for it is to become 2001 Argentina (according to some Nobel Prize laureates), is considering the idea of normalisation 5 years after its program. That’s in itself a strong argument which supports looking at the glass half full. France and Germany have started discussion about investment growth project (Juncker plan). We continue to see the most likely solution would be a EIB financed loans guaranteed by either the ESM or by states directly. The discussion are still on-going as EcoMin Macron and FinMin Sapin of France have been visiting the German cabinet on Monday.
Br-exit: Knowing that EU is changing its narrative, UKIP call for an early Br-exit vote doesn’t come as a surprise. Actually, we were expecting it to come earlier because the populist are likely to loose the supports they are having now. Populists parties are using investment advisory businesses to spread their mistrust. A recent study conducted by the AMF (France SEC), showed that 9 web-traders over 10 are loosing money when investing in FX. This is mainly due to the fact that 9 over 10 are investing like they vote: buy Gold, USD and sell EUR because it’s doomed (this is their beliefs not ours). By better regulating the internet retail investment sector, we are likely to see less spread of mistrust. These internet retail websites are widely spreading mistrust and advising ‘moms and pops’ to make easy money when the doom scenario will come. Again our legal have forbidden us from spreading some website adds (because they consider these are non respecting SEC and other regulations). These attract their “victims” by claiming making $8,000 a month by becoming a trader. The 9 over 10 are usually exposed to the next big splash in the markets. This is exactly how our research have found ISIL portfolio to be invested. While the first is betting that our institutions are rotten to the core and are listing to the doom and gloom widely spread, the former is speaking its own books. No one can be held accountable for making wrong investment decisions. However, by stressing the losses many individual investors are likely to change their strategy and diversify their views. This financial market war is likely to leave only those which bet on ISIL success largely exposed to the doom and gloom scenario. Please not the announcement by the UK that “trolls” might face as high as 2years in prison.
But as the pressure on Br-Exit arises, PM Cameron increases the pressure on EU to struck a better deal to campaign for the No to Br-Exit. We were indicating since August 30th EU Council that President Designated Donald Tusk remarks about the fact that Britain should not leave the EU are genuine support for a deal. Amongst UK requests, Shale gas ban seems to become an old issue. Indeed with Oil prices around $80 the shale gas exploration became non-economical. We do believe that EU will lose its stands vis-a-vis of shale gas, just to let the oil majors saying “thanks but we cannot make profit from it”.
China: PMI rose in October, adding to signs a resilient labor market and export demand are helping the world’s second-largest economy weather a housing market downturn. This is in line with the rebalancing objective to move away from the old growth drivers and focus on economic reforms. As the economy continue to soft land, we see the Chinese leadership continuing to support governance improvement and crack down on corruption. For example, Australian police have agreed to assist China in the extradition and seizure of assets of corrupt Chinese officials who have fled with hundreds of millions of dollars in illicit funds, the Sydney Morning Herald newspaper reported (see more below).
We believe that Chinese leadership will continue to drive the growth lower but smoothly to avoid triggering a hard landing chock. We see any stimuli to be small and targeted because the government continues to fear that the economic rebalancing has not taken momentum yet although 1) labor intensive manufacturers are relocating in cheaper labor countries, 2) businesses are upgrading their business models [while becoming environmental friendly], 3) President Xi has conducted many trade – investment agreement with Neighbours (after Premier Li did the same in Africa) to secure investment projects which use Chinese manpower – engineers know-how in this domaine, 4) China is gaining more military presence and has fluxed it mussels – e.g. China “Top Gun” intercept by a US fighter jet -, 5) China has signed many RMB agreement which reinforce the currency usage and prepare its full liberalisation – after Free Trade Zones (FTZ) have proven to be a success -, 6) China has undertaken a genuine fight against bad governance and better regulation – many examples in our recent daily briefings of fight against corruption and bad governance-.
While the recent decisions strengthen President Xi power, we foresee the first objective of the Chinese President to be rebalancing the Chinese economy while cooling the pressure which have developed in China (banking, housing etc.).
Australia: As we were expecting, Australia CPI remains low and enables RBA to stay put (due to the fear of a housing bubble, which the central bank is dealing with through macro prudential tools). However, Australia continues to be seen, by markets, as a derivative to the old Chinese model (i.e. commodity provider). This view explains the high beta between Australian assets and commodity prices (or China demand for commodities). Banks shares are suffering from the combination of the increase perception of increase in risks and additional macro prudential constants to curb housing prices frothiness. Small business defined the “goldilock range” for AUDUSD to be [.90-.94]. This level is much higher than RBA own assessment (based on PPP models). We have been criticising PPP models because they do not factor any structural changes.
These assume that neither China nor Australia are conducting their rebalancing agenda. We do believe that the current weaknesses offers genuine opportunity to benefit from the other drivers to the Australian economy which are not related to commodities. We see the current Australian Dollar weakness to continue at least until the USD start to weaken again when markets will realise that it has beaten too much on a quick rate normalisation. Meanwhile, from our previous daily briefing, we have gathered sufficient support to the view that the drivers of the Australian GDP are moving toward: 1) education, health and finance services provider to Asian neighbours, 2) innovation and digital sector, 3) energy resources export to Japan (the later contributes to our constructive view that the current negative Japan Energy Trade deficit will rebalance in the medium term – reducing Japanese Government bonds solvency risk – ).
Japan: Although two cabinet ministers resign over scandal, creating more questions about Abenomics, we do not see this derailing PM Abe objectives. Recent decision to crack down on tax dodgers is another piece of evidence that Japan is heading toward reforms and improving governance. Furthermore, as Japan trade deficit deteriorate (cf. our comments on this in Economics news) increase the pressure to reform.
North Korea decision to free Jeffrey Fowle, a US Citizen, is a positive indication that the relations with NK are improving in what we see as first genuine steps toward a reunification solution which would involve China, South Korea and Japan. We see the next China – Japan summit (discussed by FinMin Aso in Finance APEC Summit) as instrumental for reducing the tension between the two countries and to move ahead with reunification talks.
Central banks News
Central Banks News: BoE minutes indicated that policymakers were against raising rates when they met in October. This was our expectations since March. We have been saying that the markets will be ahead of themselves pricing hikes while the conditions do not support such a move. Why have SNBDL see what the top-tier sell-side economists have failed to point to? We’ve given the details and the proofs it in our article “Perception & Reality: closing the gap using big data”. In nutshell, many economists continue to heavily rely on past Philipps Curve correlation. We do not because of our access to different topics, thanks to the use of big data solutions, enables us to point to the drivers which are changing the job market, making it more flexible and more fluid. For example, the old economic text books do not take into consideration new collaborative business model initiatives (such as AirBnB or other collaborative sharing platforms). These trends are here to stay notwithstanding the views expressed by some Gold bugs economics which imagine that with magic these transforming and disturbing technologies will disappear overnight.
The recent developments in Oil prices have taken by surprise many economists. We have been anticipating them. We have been calling to sell Oil and Oil volatility which they spiked in July. We have been right. It’s time to change the narrative which is spreading all over the places in the classical media because that narrative, and “expertise”, have cost investors, pensioners, and wealth a lot. The difficulties currently experienced by some hedge funds are the reflect of the need to question our “consensus beliefs”.
ECB is starting to communicate on the benefits of the AQR, as we expected differently from the consensus. Since the creation of the EUR and specifically since Greece government solvency crisis, many economists have been considering that the Eurozone cannot survive. During September, the existential threat which have been cooled by ECB OMT and Whatever it takes, started to increase again (Scotland independence, Br-exit etc.). But once again, the consensus was wrong because it failed to understand that 2 wake up calls have pushed Bruxelles and policymakers throughout the EU to rethink their strategy. Should the Juncker Commission fails, EU could be destroyed by populists parties or by Russia pressure. While there is no issue than surviving, the probability to survive increase. We take the commission for its world that it will broke a deal to generate investment and jobs. The mood has changed but the consensus continues to look at the past.
Finally, US CPI rose 1.7% far from the level which justifies that the overwhelming majority of media give excessive airtime to hawks, money printing haters, and anti-government folks. In January this year, we questioned where the inflation will come from. No one could genuinely answer this question.
I have been in the buy side and I have been disappointed by the lack of understanding of the connection between different subjects. I have been disappointed as well by the fact that some have pushed a political agenda while the buy-side job is about to protect the money people which trust us to manage. Be the change you want to see: this is why SNBDL exist and will continue to deliver. Our aim is to deserve your trust.
ECB cools speculation over bank health checks ahead of results
MADRID/VIENNA (Reuters) – The European Central Bank cautioned on Wednesday against speculation over the outcome of its stress tests after a media report said at least 11 banks had failed the landmark financial health checks, driving some banking shares lower.
Austria’s Erste Group (ERST.VI: Quote) rejected the report from Spanish newswire Efe, which said that it along with banks from Italy, Belgium, Cyprus, Portugal and Greece, had failed the ECB review based on preliminary data, but it gave no details of the size of the capital holes at the banks.
The ECB, which will publish the test outcomes for 130 banks on Sunday, said final results had not yet been sent to the lenders involved, and it could not comment on individual institutions.
« Any inferences drawn as to the final outcome of the exercise would be highly speculative until the results are final on 26 October, » said an ECB spokesman.
Most Bank of England policymakers firmly against rate hike: minutes
(Reuters) – Most Bank of England policymakers were firmly against raising interest rates when they met earlier this month, seeing little evidence of inflation pressure, with only two continuing to vote to tighten monetary policy.
Minutes of the BoE’s Monetary Policy Committee’s meeting on Oct. 7-8 showed the Bank believed the amount of spare capacity in Britain’s economy was being reduced less quickly than it had previously expected.
In another sign the BoE was in no hurry to raise rates, most of the MPC’s nine members saw « few signs » of inflation pressures building, even taking into account how the stronger pound was lowering import prices, something that could prove temporary.
Carney’s BOE Majority Holds Firm on Heightened Euro-Area Risks
Oct. 22 (Bloomberg) — Mark Carney’s majority at the Bank of England hardened its view on interest rates this month, saying increased risks from the euro area mean it’s not yet time to begin raising borrowing costs.
Minutes of the Monetary Policy Committee’s October meeting published today showed officials voted 7-2 to keep the benchmark rate at a record low 0.5 percent.
The MPC said pessimism about the global economy had increased and there was “mounting evidence of a loss of momentum in the euro area.” For Carney’s majority, that “increased the risks to the durability of the U.K. expansion in the medium term.” In contrast, Martin Weale and Ian McCafferty said a rate increase was justified and the economy had so far “not been affected by damaging financial contagion” from its biggest trading partner.
The tone taken by the majority raises the probability that rates will be kept on hold for longer, after BOE Chief Economist Andy Haldane said last week that market expectations for the first increase to come in mid-2015 are “not a bad bet.” Haldane also said the international growth outlook and a lack of domestic inflation left him “gloomier.”
WRAPUP 2-U.S. inflation muted in September as energy costs drop
* CPI rises 0.1 percent; energy prices weigh
* Core index ticks up 0.1 percent as shelter costs increase
* Tame inflation suggests interest rates low a bit longer
WASHINGTON, Oct 22 (Reuters) – U.S. consumer prices rose marginally in September, painting a weak inflation picture that should give the Federal Reserve ample room to keep interest rates low for a while.
The Labor Department said on Wednesday its Consumer Price Index edged up 0.1 percent last month as a rise in food and shelter costs offset a decline in energy prices.
« The ongoing inflation weakness will give the Fed leeway to take a restrained approach to tightening monetary conditions, » said Robert Hughes, senior research fellow at the American Institute for Economic Research in Great Barrington, Massachusetts.
The CPI had dropped 0.2 percent in August and economists had expected a flat reading in September. In the 12 months through September, the CPI rose 1.7 percent after a similar gain in August. The Fed targets 2 percent inflation and tracks an index that is running even lower than the CPI.
Inflation has waned in recent months after quickening in the second quarter, with a stronger dollar and slower economic growth in China and the euro zone dampening import prices. Sluggish wage growth has also helped keep a lid on prices.
Economic News
Economic news:
Russia: as expected in our Russia update, oil prices decrease is derailing the Russian economy. The oil price collapse since June have taken by surprise many commentators. But the single data point which increase our confidence in the fact that this trend is here to stay is the Saudi officials recent announcement “markets have to get use to low energy prices”. Deputy Governor Kudrin is pushing for emergency rate hikes to stop the free fall spiral in foreign investment. Rate hikes are likely to reduce the speed of deterioration but not reverse the tied. This forecast is based on the fact that President Putin is unlikely to reverse his stands on Crimea which makes the relief in sanctions very unlikely, at least in the short term.
Japan: we have said that the single most important risk for Japan is its trade deficit. The trade deficit deterioration is largely attributed to the energy bill which rose after Japan decided to turn off nuclear power plans after Fukushima. But while we acknowledge the risk, which could spur into a debt crisis should Japanese domestic investor rebalance out of Japan government bonds (JGBs) investment before PM Abe succeed in improving public finances. This risk has been the major driver why we differed from JGBs bears. First, we considered that BoJ will be cautious and refrain itself from any excessive additional monetary easing in order to avoid trashing the JPY which contribute to deteriorate the trade balance even further. Second, we do believe that Japan will have to undertake a second VAT hike (though this hike could be made in small steps). By doing so, PM Abe can start regain the trust of foreign investor that his government is committed to improve public finances and reform. We continue to be constructive on the Japanese story because the risk of any shift from the reforms could not only create a JGB solvency question but also weaken Japan in the international scene, at a point where Japan is negotiating disputed territories (with Russia and China).
Lower oil prices push Russia toward recession
MOSCOW — If sanctions, inflation and political risk weren’t enough, falling oil prices are pushing Russia’s already beleaguered economy toward recession.
The price of Brent crude oil, a global benchmark, hit a four-year low last week, plunging to below $83 per barrel from $116 in June. While it was just under $85 on Wednesday, there is considerable risk it could dip well below $80, costing Russia, whose budget gets half its revenue from oil and gas exports, billions of dollars, analysts said. Geopolitics and oil prices have already reduced Russia’s budget by an amount equal to 4% of its gross domestic product.
A loss of « $10 per barrel costs (Russia) 500-600 billion rubles a year » — equivalent to $12.2 billion to $14.6 billion, said Natalia Orlova, chief economist at Alfa Bank, by telephone.
UPDATE 1-Russia may have to look « seriously » at rate hikes – central bank deputy
* Central banker says need to think seriously about rate hikes
* Ex-finance minister Kudrin warns of big drop in foreign investment
* Central banker says thinking about 1-3 year repos (Adds detail, quotes, background)
By Liisa Tuhkanen
LONDON, Oct 22 (Reuters) – Russia’s central bank may have to seriously consider raising interest rates if the slide in the rouble and jump in inflation continue, one of its top policymakers and a former finance minister both said on Wednesday.
Russia has come under intense market pressure this year as Western sanctions over the crisis in Ukraine and now falling oil prices put the brakes on an already struggling economy.
Japan’s Trade Picture Is Collapsing
Tokyo (AFP) – Japan’s shaky economy was dealt another blow Wednesday, as official data showed a widening September trade deficit that puts the world’s number-three economy on track to log a record annual shortfall.
The worse-than-expected deficit of 958.3 billion yen ($8.96 billion) adds to a string of weak figures and follows a sharp economic contraction in the second quarter after an April sales tax rise slammed the brakes on growth — fuelling fears of a recession.
The latest numbers translated into a trade deficit of 10.47 trillion yen for the first nine months of the year, a 35 percent leap from a year ago.
Earlier this month, the International Monetary Fund nearly halved its 2014 growth projections for Japan — to 0.9 percent from 1.6 percent — underscoring the damage that the tax increase inflicted on the economy.
Earnings News
Earnings news: earnings continue help to calm the excessive markets’ nervousness that corporations profit margins will be unsustainable and will push stocks prices into a depressed territories.
The Earning season just started by the overall view is not as “depressing” as many have been painting for months (we have disagreed with this view at many occasions). Except some important misses due to idiosyncratic reasons, such as IBM, the profit margins look still healthy.
But the corporations continue to see “challenging” top line. In fact the “balance sheet deleveraging” dynamics continue to be at play. In a nutshell, corporation anticipates less top line growth, they protect their margins, using tax initiatives, financial engineering (such as buy-backs) or rationalise their staff. This dynamic is usually used by some populists groups to point to the class-struggle between Rich (shareholders) and Poor (workers). But there is an untold story, which explains that even with the very high level of inequalities, there is a very low probability for a XIX Century style revolution *though many would love to see it to challenge the current governance improvement trend*. The untold story is that among people leaving big corporation, there is an overwhelming number of entrepreneurs, innovators and good professionals which have reached the level of intolerance vis-a-vis some crony capitalism phenomenon. This is what we like to call “Stalinism Capitalism”: it works like capitalism for large shareholders and management while its Stalinism for workers, small shareholders (including Pension Funds). Should big corporation move away from Stalinism Capitalism, a trend which is already in place, we would with more than 75% probability: 1) improve profit margins, 2) improve workers pay and conditions, 3) improve gender equality – which empowers workers -, 4) improve consumer services. This trend is a certainty because political activism has been focusing on criticising states actions, it has just get organised to challenge private sector bad behaviour. Furthermore, G-20 in Australia is likely to press government to move toward good governance.
We would like to take the opportunity here to repeat that this trend toward the good governance is in place and supported by many policymakers (China, Australia, France etc.). But, reports on bad governance practices overshadow the changes. But we continue to see a need to accelerate the change in governance in other to regain the public trust (the most important “asset” of the XXI Century).
Wall St surges on earnings and bond speculation
Wall Street rallied on the back of strong earnings figures and speculation the European Central Bank is buying bonds.
The Standard & Poor’s 500 Index rose for the fourth straight day, extending a rally that was initially sparked by comments from St Louis Federal Reserve president James Bullard that the US Fed should consider delaying the end of bond purchases.
A report from Bank of America Merrill Lynch strategists seems to add weight to that view.
It says another 10 per cent decline in US shares could encourage a fourth round of quantitative easing from the US Federal Reserve.
That would be in line with how the US Fed responded to equity slumps of 11 per cent in 2010 and 16 per cent in 2011.
By the close, the S&P added 36 points or 1.9 per cent to 1,940, capping off its biggest one day gain since October last year.
Ebola
Ebola: US decided to introduce systematic screening of visitors from 3 Ebola nations. Over the nearly 500 tests conducts one case has been taken to hospital. The CDC has required to check health development of the visitors during the 21 days after their arrival. Such a tracking will reduce even further the risk of an outbreak. Should any of the visitors experience health deterioration, the CDC could be quick in responding and in putting in quarantine the possible people infected. We do believe that the mistakes made in Dallas, and the increase of fear consecutive to these mistakes, have pushed the administration to take the necessary steps.
We are likely to see some “reduction” in the fear as the number of cases decrease. However, outbreak take place in waves. While we might have very good news during the coming 2 weeks, the cases are likely to increase again. There is no time to reduce vigilance until the virus is getting controlled and Ebola vaccines would have proven their effectiveness.
But the GOP continue to point to more measures such as Visa ban. But while Visa ban, alike travel ban, serves interests which want to inflict more pain to the economy (less trade, more pressure on an already fragile airline industry) it does not help reduce the outbreak.
In our special note on Ebola (Ebola a communication war) we stressed that Ebola virus will be more about communication issues than a medical problem. On one hand, we pointed to the excessive fear spurred by politically motivated participants on Twitter. On the other, we stressed that while spreading fear about Ebola could help short term interest groups such as increasing financial markets volatility which could help put the blame on excessive regulation. It does show how the Tea Party caucus and less moderate GOP are unprepared to take over the executive branch. If I was advising Marco Rubio or Rand Paul, I would have advised them to fire their communication and strategic teams. Why? For one simple reason, by emphasising the mistrust, both the two Senators are showing how unprepared, un-experienced they are to pretend running for office in 2016.
- Would anyone trust a leader who will start trashing all the administration and pushing the public to panic while they have to be focus finding solutions?
- Would anyone trust Marco Rubio, who continue to fight a XVI Century war against Science, to take the right decision while over sighting CDC operations?
- Would anyone trust Sen. Rand Paul to be the leader to calm the public when he was indicating that Ebola is airborne (NB: this is not the case now please see our report)?
Should the Senate goes to the GOP, it would be the first time in my 20 years career analysing politics that I would have seen a group wining on the ground that : 1) they will spur fear instead of calming public nervousness and show they would be working, 2) they will trigger an economic crisis because they might be some highly hypothetical fear that Chair Yellen will be behind the curve, 3) they might call for President impeachment trial when the country is leading a coalition against terrorists (inc. ISIL). Will the US public prefer voting to help some private interests which have invested ~$1bn in ads? I doubt. I continue to believe that Tocqueville is right: the US is the best democracy invented so far.
The arrival of Ron Klain as a coordinator of the US administration efforts is likely to lead to a reduction in the excessive fear we have reached last week. WHO announcements, that some western african countries are free from Ebola and that a Vaccine should be ready by January 2015, are contributing to overcoming the outbreak.
UPDATE 7-U.S. tightens Ebola monitoring for West African visitors
Oct 22 (Reuters) – The United States imposed new constraints on Wednesday on people entering the country from three nations at the center of West Africa’s Ebola epidemic, mandating that they report their temperature daily and stay in touch with health authorities.
President Barack Obama expressed cautious optimism about the situation in the United States after meeting with his Ebola response coordinator, Ron Klain, and other top officials on Klain’s first day on the job since being named on Friday.
The U.S. Centers for Disease Control and Prevention’s new restrictions on travelers arriving from Liberia, Sierra Leone and Guinea marked the latest precautions put in place by the Obama administration to stop the spread of the virus. The steps stopped short of a ban on travelers from those countries demanded by some lawmakers.
457 TEST NEGATIVE FOR EBOLA AT NY-AREA AIRPORTS
NEW YORK (AP) — The executive director of the agency that operates the New York area’s major airports said Wednesday no one screened for the Ebola virus has tested positive since the program began this month and, as an extra precautionary measure, he has ordered stricter cleaning protocols to guard against the possible spread of Ebola.
Patrick Foye of the Port Authority of New York and New Jersey said 389 people have been screened at John F. Kennedy International Airport and 68 at Newark Liberty Airport since screening began Oct. 11. No one had the virus, he said.
The number at Newark includes a passenger suspected to have Ebola who arrived Tuesday night and was taken to Newark’s University Hospital. By Wednesday, health officials determined the man didn’t have any symptoms of the virus, New Jersey Gov. Chris Christie said at a news conference.
Newark Liberty and JFK are among five airports in the country designated to receive all U.S.-bound passengers from West Africa. Travelers whose trips began in Guinea, Liberia or Sierra Leone are screened for symptoms.
CDC requiring 21-day monitoring for all travelers arriving from Ebola-stricken African nations
The Centers for Disease Control and Prevention on Wednesday announced that all travelers arriving in the U.S. from the three Ebola-stricken African countries will be subject to a 21-day monitoring program.
The expansive new rules apply to anyone returning from Liberia, Sierra Leone and Guinea — not just those who hold passports from those nations. This would include American journalists, health care workers and travelers.
Returning travelers will have to give authorities an address, two phone numbers and two email addresses, as well as the address and contact of a personal contact. They will get kits and be required to take their temperatures once per day and report to public health authorities, for 21 days.
The program will start Monday in six states: New York, Pennsylvania, Maryland, Virginia, New Jersey and Georgia.
The changes come amid bipartisan pressure to impose a blanket travel ban for the West African region. The Obama administration so far has resisted such a step.
However, a day earlier, the CDC and Department of Homeland Security announced separate restrictions for travelers from those three countries — all flights will now have to arrive at one of five designated airports: New York’s JFK, Newark, Dulles, Atlanta and Chicago.
Plane passengers hospitalized due to Ebola concerns
An airline passenger was being evaluated at a hospital in Newark, New Jersey Tuesday due to Ebola concerns, reports CBS New York. Two others were hospitalized after getting off planes into Chicago.
Centers for Disease Control and Prevention spokesperson Carol Crawford said the Newark passenger was « identified as reporting symptoms or having a potential exposure to Ebola » during the enhanced screening process for those arriving in the U.S. from the West African nations of Liberia, Sierra Leone and Guinea.
« (The) CDC or state/local public health officials will contact other passengers on the aircraft should it be determined that there was any risk to the other passengers of exposure to communicable disease, » Crawford continued.
The Record newspaper reported that the passenger was on a flight from Liberia that went through Brussels before arriving at Newark Liberty International Airport Tuesday afternoon. The passenger was held briefly at customs at Terminal C at the airport and was then sequestered from the other passengers from the flight, the newspaper reported.
UPDATE 1-Tekmira starts limited manufacturing of therapeutic for Ebola
Oct 21 (Reuters) – Canadian drugmaker Tekmira Pharmaceuticals Corp has begun limited manufacturing of a therapeutic targeting the Ebola-Guinea virus.
The pharmaceutical company said on Tuesday that the new drug, part of its TKM-Ebola program, would be available by early December but did not specify how many doses it was making.
Tekmira was not available for comment on the therapeutic, including whether it was manufacturing a drug or vaccine.
Tekmira’s investigational new drug application to U.S. regulators for TKM-Ebola remains on partial clinical hold, with the issue expected to be resolved in the quarter.
U.S.-listed shares of the company rose as much as 6 percent in trading after the company gave an update on its Ebola program.
Tekmira has completed the design of a modified RNAi (ribonucleic acid interference) drug that targets the Ebola-Guinea variant, the virus responsible for the worst outbreak on record that has hit hardest Liberia, Sierra Leone and Guinea.
Ebola Outbreak: GlaxoSmithKline Claims It Will Have Vaccine Within Two Months
GlaxoSmithKline has revealed that it is likely to have the world’s first vaccine against Ebola by late 2014.
« I fully anticipate that the initial supply should be available before the year end, » said Andrew Witty, CEO at GSK. « It will give WHO [the World Health Organization] and other agencies a useful tool. »
The British pharmaceutical giant also announced it has appointed Dr Moncef Slaoui, one of the most influential people in the bio-pharma industry, as Chairman of Vaccines.
Dr Slaoui, who has moved from his role as chairman of R&D, has previously engineered the development of several vaccines, including Rotarix against infantile gastroenteritis, and Cervarix against cervical cancer.
Gaza
Gaza: The closest we get to opening a discussion for a two-state solution, the more tension is likely to increase. A Palestinian resident of East Jerusalem drove his car into a crowded light-rail station Wednesday, killing a 3-month-old baby and wounding eight people, two of them seriously, according to Israeli police. The driver was identified as Abd al-Rahman al-Shaludi, a resident of the Silwan neighborhood who, according to police spokesman Micky Rosenfeld, has been previously jailed in Israel for involvement in terrorist activities.
But, the global community should separate between terrorist who’s sole aim is to derail any peace process (Turkeys usually don’t vote for Christmas) and the overwhelming palestinians which have been suffering for too long and deserve that an opportunity for peace got ceased. This is not a hope it’s a forecast. The global community understand very well that it has no chance to ultimately defeat ISIL if it does not solve the issues which are used by terrorists to hire jihadists. At the top of these issues the palestinian situation.
Returning from a Middle East visit, UN Secretary General Ban called for more collaborative work between Palestinian authorities and Israel government for peace.
Yesterday, we were repairing that China has joined the call for creating conditions for peace talks. Although this did not come as a surprised to us, we see in the global call for peace as an additional evidence that Israeli-Palestine problem is heading toward an unique opportunity to settle a renewed peace process. UN Secretary General Ban is pressing both Hamas and IDF to recognise excesses. First, the UN is refocusing the attention to facts we were indicating during the summer, that some Hamas weapons have been hidden in UN sites during Gaza war. This adds more evidence to the fact that Hamas has been using palestinian civilians as shields. Second, the UN is pressing the Israel Defence Forces (IDF) inquiry about the excessive use of force.
We have been expressing worries after the decision to reconstruct Gaza because there is a genuine lack of traceability of funding. Hamas confirmed that some funds are redirected to re-militarize. This is in line with the fact that as Hamas is losing its political capital to Fatah of President Abbas. The organisation announcement is a gesture to regain some of its “lieutenants” defecting to other “hard liner” organisations.
We have been saying for some time that a fight against terrorism and radical Islam required to genuinely rebuild trust which would phrase in 3 steps. First, reopen Palestine Israel peace process. Second, sell the narrative that this process is intend to be a win-win scenario (i.e. peace, jobs, and growth for the 2 countries). Third, reduce the speed of Jihadists hiring because those are getting radicalised by the feeling of “injustice” and a perceived war against palestinian and muslims in general.
Recent Secretary of State Kerry comments that a Palestinian – Israel two-state solutions will help derail ISIL are in line with the convictions we expressed since the start of Gaza war and the “fight for talents” terrorists organisation have been organising. Please see our comments on Iraq & Syria will indicate that the terrorists are loosing battle in the ground but want to keep their narrative alive in order to keep hiring (when the western countries are just realising that defeating ISIL will require defeating its hiring process).
Infant killed, seven wounded as suspected militant rams Jerusalem train station
JERUSALEM, Oct. 22 (Xinhua) — A three-month-old baby was killed and eight other people wounded when a Palestinian rammed a vehicle into a crowd of commuters at a light rail station in east Jerusalem late on Wednesday, police and witness said.
Eyewitnesses said the driver deliberately plowed into pedestrians as they disembarked from the train at Ammunition Hill, a few hundred meters from National Police headquarters, though police had not yet declared the incident a terrorist attack.
Micky Rosenfeld, a police spokesman, said the driver attempted to flee the scene on foot before being shot and captured. He was rushed to a nearby hospital with chest wounds, and was later reported to be in critical condition.
Israel Radio identified him as Abdel Raham al-Shaludi, 20, a resident of the east Jerusalem neighborhood of Silwan. Israeli media said he is a Hamas member who served time in Israeli prison for « security offenses. »
UN tells Israel, Palestinians to stop unilateral actions
UNITED NATIONS, United States, Oct 21, 2014 (AFP) – UN chief Ban Ki-moon urged Israel and the Palestinians on Tuesday to move away from unilateral actions stoking tensions and make the « tough compromises » needed to end their decades-old conflict.
Ban spoke to the UN Security Council after returning from a visit to the Middle East where he saw first-hand the destruction in Gaza wrought by the 50-day war between Israel and Hamas militants.
« Leaders on both sides must overcome their differences and dispense with the unilateral initiatives that serve only to fuel mistrust and polarization, » the secretary general said.
Pakistan for collective action to defeat Islamic State
UNITED NATIONS – A top Pakistani diplomat has called for collective action to defeat the « evil ideology » of Islamic State, which has seized large areas of Iraq and Syria, as he stressed the urgent need for resumption of Middle East peace negotiations.
« The so-called Islamic State does not draw its authority or writ from any religion, » Ambassador Masood Khan, Pakistan’s permanent representative to the UN, told the Security Council on Tuesday.
« We must all, collectively, oppose and defeat its evil ideology of ‘hate, murder and destroy’. We must remain united in our fight against this new face of terrorism and violent extremism, » he said in a debate on the situation in the Middle East.
About the Middle East peace process, the Pakistani envoy said, « Whether it is Palestine or Syria, dialogue and diplomacy need to be pursued with a real sense of purpose and urgency.”
Iraq & Syria
Iraq & Syria: Canada parliament shooting is possibly linked to IS terrorists according to the Canadian governments. This indicates that ISIL risk is much important and the global coalition response is still inadequate. The coalition has focused on the urgency: stoping ISIL from spreading in Middle East. But the coalition should be held accountable for its continuing lack of response to the more important reason behind the jihadists hiring: MISTRUST. We are puzzled by how media is giving airtime to ISIL by spreading the video, message and communiques while moderate muslims have no voice (even when US President made reference to #NotInMyName community in his UN General Assembly speech). From a game theory prospective, we understand very well the reasons behind giving airtime to murders. By spurring the fear, some interests groups could imagine that they can derail the current trends toward good governance. In 2009, we were indicating : to solve today’s problems (financial, economic, ecological crisis), there is no way but improving governance. These interests groups will be defeated not because Terrorism is bad, but because terrorism and ISIL is an unstable equilibrium. Some are justifying this situation because it serves as a wake up call to move forward. We believe that the time has came to accelerate the G-20 initiatives and get rid of bad governance, because terrorism needs “dark” money to flourish and anyone who is link to these channels should be brought to justice.
Last week we were saying that, as soon as Turkey will have assurances that the Kurds will not use the current tension at Kobane to increase the tension over the Kurdish independence, ISIL is likely to start to loose this symbolic battle. We were indicating that Kobane is a must win for ISIL in order to pursue their “marketing campaign” borrowed from Spartacus and David & Goliath.
During the recent days, ISIL was loosing ground in Kobane and diverting its to-become-jihadists attention to Baghdad, Raqa to show how barbaric ISIL can be. These actions intend to keep the “to-become-Jihadists” (like Australian Abdullah Emir – click here-) attention on joining their fight. We have been witnessing that many non-affiliated groups have pledge allegiance to ISIL in order to keep hiring. We have seen for example that Algeria salafists groups have renamed themselves to “Califat fighters” to channel funding, weapons, supports etc. We would not be surprised if ISIL continues to spur disinformation that they can take their fight to the sky or that the have got access to US arms (as indicated by the US thanks message channeled by some extremists twitters.
By winning the communication war and cutting ISIL from attracting young fighters the coalition increases its chances to ultimately defeat ISIL.
We would like to remain our readers that ISIL is three groups: 1) psychopaths – drug addicted fighters who are leading the fight because their illness have reduced their fear of death, 2) Some sunni army groups which have been betrayed by Al-Maliki government (these include Ba’aht party), 3) Some sunni tribes. The “non-psychopaths” are using ISIL as a threat to push the global community to pressure Iraqi government to be more genuinely inclusive and reduce bad governance. We would not be surprised that Iraqi army would spur the information that they would be helping ISIL to take it fight to the sky, but let’s face facts, unless ISIL gets some government support, it’s very difficult to imagine how ISIL could have any chances vis-a-vis US and coalition airforces.
IHS confirmed the estimates we had that ISIL was making ~$2millions per day from oil, before US Strikes. But the combination of the oil facilities strikes and the plummeting oil prices are likely to bring this financial source down. Furthermore there is a genuine need to cut ISIL oil from market through a better oversight and regulation of the oil markets (to avoid money laundering and terrorism financing).
Two factors are important to watch in the coming days: 1) how President Ergodan will change is position when the situation deteriorates, 2) how the coalition will withstand two events (Iran nuclear negotiation and Saudi decision to let Oil prices stabilise at 70-80$). On the first topic, President Erdogan seems to be willing to provide help – sufficient help to keep ISIL away from Turkey where Muslim Brotherhood are reallocating after being “asked to leave” by Qatar. Second, the coalition is strong and seems to have accepted low oil prices.
Injured Kurds smuggle themselves from Syria to Turkey for medical help
Turkey’s border remains closed for Syrian Kurds battling the Islamic State for Kobani. But if wounded in skirmishes and seeking medical help, Kurdish fighters told RT they are forced to smuggle themselves over the Turkish border to avoid arrest.
A Syrian Kurdish commander, who opted not to disclose his name, told RT’s Paula Slier that he was injured on the same day his son was killed.
Erdogan: US airdrop to Kurds in Kobani a mistakeAssociated Press
IRBIL, Iraq (AP) – Lawmakers in Iraq’s largely autonomous Kurdish region Wednesday authorized peshmerga forces to go to neighboring Syria and help fellow Kurds combat Islamic State militants in the key border town of Kobani, providing much-needed boots on the ground.
The unprecedented deployment will almost certainly depend on the support of Turkey, whose president criticized a U.S. airdrop of arms to Kurdish fighters after some of the weapons wound up in the hands of the extremists.
Turkey, which has riled Kurdish leaders and frustrated Washington by refusing to allow fighters or weapons into Kobani, said this week it would help Iraqi Kurdish fighters cross into Syria to help their brethren against the militants, who also are being attacked by a U.S.-led campaign of airstrikes.
But it is not clear how many fighters will be allowed in or whether they will be allowed to carry enough weapons to make an impact.
US State Department Says Weapons Airdrop Mission in Syria Successful, Necessary
WASHINGTON, October 22 (RIA Novosti) – The US State Department spokesperson Marie Harf said Wednesday that Washington thinks the weapons airdrop mission in Syria was necessary to protect the besieged city of Kobani and thus successful, even though part of US’ arms ended up in the hands of Islamic State (IS) militants.
« All military missions incur some risk. But the alternative of doing nothing, of not making sure the fighters pushing back ISIL [IS] on the ground in and around Kobani have the weapons and ammunition they need, and the medical supplies they need, we don’t think is a viable option,” Harf said at the State Department press briefing.
Earlier today, Turkish President Recep Tayyip Erdogan criticized US’ actions, stressing that now it was clear, who Washington’s support was for.
Islamic State onslaught on Yazidis may be attempted genocide – U.N.
(Reuters) – The campaign of Islamic State militants against Iraq’s Yazidi minority may be attempted genocide, U.N. Assistant Secretary-General for human rights Ivan Simonovic said on Tuesday.
« Facts are indicating that actions against Yazidis may amount to attempted genocide, » he told a small group of reporters at the United Nations after returning from a recent visit to Iraq.
Simonovic was speaking as Islamic State, often referred to as ISIL or ISIS, advanced on Iraq’s Sinjar mountain, tightening a siege of thousands of stranded Yazidis, who called on the United States and its allies to act to avert more bloodshed.
Thousands of Yazidis have been shot, buried alive or sold into slavery by Islamic State militants, who regard them as devil-worshippers.
U.S. President Barack Obama authorized air strikes in Iraq in August, citing the duty to prevent an impending genocide of Yazidis at the hands of Islamic State militants after they overran a vast swathe of northern Iraq.
Parliament shooting shocks Canada
OTTAWA — A sudden spasm of violence jolted the government center of Canada’s capital on Wednesday morning, as a gunman killed an honor guard soldier at a war memorial and then opened fire inside the nearby Parliament building, triggering a lockdown and hours of confusion in Ottawa.
The assault shocked a country that rarely experiences gun violence but has witnessed two attacks on members of its armed forces in recent days. Earlier this week, a soldier was killed in a hit-and-run that authorities have called an act of terrorism. In each case, the soldiers were targeted by individuals who had been barred from traveling abroad by Canadian authorities.
“We will not be intimidated. Canada will never be intimidated,” Prime Minister Stephen Harper said Wednesday night in an address to the nation.
Attack on parliament, killing of soldier stun Canada’s capital
(Reuters) – A gunman attacked Canada’s parliament on Wednesday, with shots fired near where Prime Minister Stephen Harper was speaking, and a soldier was killed at a nearby war memorial, stunning the Canadian capital.
The gunman in the parliament building was shot dead, and Harper was safely removed. The killing of the Canadian soldier was the second this week with a possible link to Islamic militants.
Witness accounts indicated the man who shot dead the soldier guarding the National War Memorial in central Ottawa, went on to attack the parliament building minutes later. Canadian police said, however, they could not confirm it was the same person.
The shooting followed an attack on two soldiers in Quebec on Monday carried out by a convert to Islam. U.S. officials said they had been advised the dead gunman in Wednesday’s shootings was also a Canadian convert to Islam.
Canadian police were investigating a man named Michael Zehaf-Bibeau as a possible suspect in Wednesday’s attack, said a source familiar with the matter. U.S. government sources said he was born Michael Joseph Hall but later changed his name.
US: Air strikes ineffective in Syria
The Islamic State militant group still has much of its military power one month after the US-led air attacks began against the extremists in Syria.
Since September 23rd, the United States and other countries have conducted air strikes more than 280 times
About 60 percent of the air strikes took place near the northern Syrian city of Ayn al-Arab where Islamic State militants are intensifying their military activity against Kurdish fighters.
Islamic State video claims group has US military supplies
The Pentagon has said the vast majority of military supplies air dropped near the Syrian city of Kobani reached the Kurdish fighters they were intended to help, despite an online video showing Islamic State (IS) militants with a bundle.
The YouTube video entitled “Weapons and ammunition dropped by American planes that fell into areas of Islamic State control in Kobani” shows fighters inspecting boxes of hand grenades and rocket-propelled grenades. One masked gunman holds up a grenade and says, “Booty for the mujahideen”.
Rear Admiral John Kirby, the Pentagon press secretary, said experts were analysing the video to determine if the bundle was the one the department reported had fallen into the hands of IS or if it was a second bundle in the group’s possession.
Russia
Russia – Ukraine tension take away:
Russia and Ukraine tentative gas deal, reached in Milan, is likely to move ahead according to PM Yatsenuk. But this did not come with less tension, Merkel has been very critical to President Putin, while Germany BND (spies) have reported that MH-17 has been shot down by Pro-Russian rebels.
Yesterday, the head of the State Duma’s Foreign Affairs Committee, Mr. Pushkov, has denied Russia’s involvement in the downing of Malaysian Airlines flight MH17 following the publication of BND report. This communication war is likely to keep any trust about MH17 always challenged.
Chancellor Merkel attitude is in line with our view that she is using Putin threat to push EU to undertake more reforms and more integration, while keeping the threat of Russia isolation very high. Meanwhile, Russia economy continues to tank.
We would like to remain our reader that when it comes to whether Russia will cut gas delivery to Europe, we believe that it’s not a matter of “if” but “when”. Our study of Putin chess game enables us to see that a moment where fear over Ebola will reach the level where any non-lethal flu could become a source of panic and paranoia , would be the genuine timing of cutting gas. This will help populists (supported by Putin) to criticise Europe even more.
Actually, many other political groups are using the strategy of making allegiance to Putin in order to push some domestically driven agenda.
Reports out of Sweden relative to underwater activities indicate that Sweden is shifting away from its “neutral” stands and is heading to put some additional pressure on Putin. Should Sweden change stands as the recent evidence are starting to show, Ukraine tension might increase because it will leave President Putin without any example of neutrality Ukraine should be bind by.
Comments by Swedish PM Lofven “[Sweden] have already say [it] will stay out of NATO” hint that the recent events are bringing the question back to the table (at least from the Russian prospective). The recent “tension” over military planes violating Estonia air space is another example of the fact that the situation is unlikely to settle before the beginning of next year.
Finally, we shared today an opinion which points to the risk that Iran might go nuclear if President Obama is not pressured. The tool we use, Quid, pointed out to this article because a deal with Iran will free the country from sanctions and push oil prices even lower. This is not in the interest of commodity groups nor on the interest of Russia. Unfortunately, while a “AI Robot” quid had a very good question, the writer did not even mentioned this (focusing on old Iran and its old politicians which were using US and Israel as a way to pressure their people to swallow sanctions and an agonising economy).
We continue to see only two possible outcomes: 1) Russia pursue its aggressive attitude and pushed for a separation of Ukraine at the expense of a full-fledge isolation, or 2) Russia opposition start to “challenge” President Putin to return to reforms. The second outcome is unlikely for now because intelligence from the ground is indicating that while the opposition is willing to change the trend, there is a serious lack of appetite to challenge President Putin be in openly or behind the scenes.
We foresee the situation to continue to deteriorate while Oil prices continue to plummet. Russian economy is likely to suffer a lot, while EU narrative is likely to change because the “communication war” which have been spurred by Russia and its supporters in the Western political groups is loosing traction (facts have no religion).
Russia Not Eager to Substitute Exports to Europe With Asia-Pacific: Minister
MOSCOW, October 22 (RIA Novosti) – Russia does not want to increase exports to the Asia-Pacific region at the expense of trade with Europe, Russian Economic Development Minister Alexei Ulyukayev said Wednesday.
« We are looking for a new balance. We do not want the exports to the Asia-Pacific region to increase due to the decline in exports to the European countries, » the minister said at an Export Insurance Agency of Russia conference.
Ulyukayev called Japan, China, South Korea and Association of Southeast Asian Nations (ASEAN) member states potentially important markets for the Russian exports.
« Working with these countries, we will form various mechanisms, including the creation of free trade zones and an increase in investment cooperation, » the minister added.
Estonia: Russian Military Plane Violated Air Space
Estonia on Wednesday summoned Russia’s ambassador over an airspace violation by a Russian military aircraft. Foreign Ministry spokeswoman Mari-Liis Valter said Estonia considers the violation serious. She said the Baltic country « demands an explanation » as to why a Russian Ilyushin-20 surveillance aircraft crossed into its airspace Tuesday afternoon.
Estonia’s military said earlier the plane had entered Estonia’s airspace for around one minute.
NATO said in a statement fighter jets from Denmark, Portugal, as well as non-NATO member Sweden were involved in intercepting the Russian aircraft as it flew over the Baltic Sea.
Chill in Russia-Ukraine gas talks threatens Europe’s winter supplies (+video)
Russian natural gas producer Gazprom has demanded $3 billion in unpaid bills from Ukraine’s heavily indebted government. European consumers rely on Russian gas, some of which is piped through Ukraine.
Ukraine and Russia are still deadlocked in a long-running dispute over natural gas supplies, raising concerns across Europe that Russian gas supplies could be insufficient to heat homes this winter.
Russia said it would only resume gas flows to Ukraine once the government in Kiev settled its debts and agreed to new terms for future deliveries. But Ukraine – with its economy in tatters after a political crisis followed by a separatist uprising by pro-Russian rebels – said it couldn’t afford to pay without assistance from the European Union.
How NATO can respond to Swedish mystery
(CNN) — Recent developments off the coast of Sweden raise many questions, and we do not as yet have answers.
Last week, Swedish media reported that the country’s military was searching for an underwater vessel, possibly a Russian submarine, after an emergency radio transmission allegedly made in Russian (although Russia has denied it has any vessels in Swedish waters).
Now, as the Swedish Navy continues to search for the unidentified undersea vessel that may have penetrated the country’s territorial waters, it’s worth keeping in mind some key facts to help place the issue in perspective.
For a start, anti-submarine warfare is complex and very difficult to execute properly. Especially in the close confines of territorial waters, the advantages tend to accrue to the submarine. The rocky floor of an inland sea like the Baltic can mask acoustic signatures that give watching ships, helicopters and maritime patrol aircraft the ability to track and identify a subsurface contact.
French Investigators Say Ready to Provide Information on Moscow Crashed Jet
MOSCOW, October 22 (RIA Novosti) – French experts are ready to provide technical data about the plane that crashed in Vnukovo Airport to the Moscow-based air disaster investigation body, a representative for the French authority responsible for safety probes into civil aviation incidents (BEA) said Wednesday.
« We will be able to help to decipher the recorders » and ready to provide any « technical details » about the jet to help the investigators, Francois Hochart told Russia’s Channel One.
French experts arrived in Moscow to assist the Interstate Aviation Committee’s inquiry into the plane crash and plan to stay here for four or five days, he added.
The Interstate Aviation Committee, an air disaster investigation authority in Russia and other ex-Soviet states, announced Tuesday it had set up a special commission to investigate the plane crash in Vnukovo and formally notified France of the incident.
Can Obama be stopped or will Iran go nuclear?
If you are worried President Obama will strike an awful deal with Iran, Congress will pass sanctions and override a veto, but Obama will waive sanctions anyway — and you should be worried — consider what former Bush administration official and critic, Jack Goldsmith says: “Without getting into the details, it nonetheless appears that the President can waive most if not all sanctions against Iran for the remaining two years of his term if he is willing to make the requisite findings. If he does so, what are the implications for any nuclear deal with Iran? Answer: The deal will be tenuous.” In fact, no one — not Congress nor his successor would be bound. “The fact that the President does not think he can get Congress on board for any deal with Iran signals to Iran that any deal would be with the President alone, and would last only as long as his waiver authority – i.e. two more years.”
Hong Kong
Hong Kong take away:
Hong Kong protests talks with HK’s government failed while violence out of opponents to Umbrella Revolution. We believe that the situation is likely to continue to ebb and flow between some “tension” and discussions with HK government. These discussions enables the IV-Plenum to move ahead with an agenda which should please the Occupy movement in Hong Kong as well as in other countries: 1) improve governance, 2) crack down on Corruption, 3) introduction of the rule of law and 4) independence of justice. These steps are likely to help President Xi government to start finding a way out of the current “crisis”. Is the speed President Xi considering to be adequate to make the reforms without spurring a crisis sufficient? While we consider the reforms path is pointing to the right direction, we consider that China can accelerate because the new normal is getting understood by the public, the business community though the financial markets are still lagging behind. President Xi might use HK as a platform for political reform experiment. In nutshell, we see Occupy and Umbrella Revolution to be a green shot toward helping government understand that accountability, democracy, and the rule of law need to be strengthened and that there is no way but political reforms.
China’s central authorities fully support HK gov’t: CY Leung
HONG KONG, Oct. 19 (Xinhua) — Hong Kong Chief Executive CY Leung said on Sunday that China’s central authorities are fully aware of Hong Kong’s situation and have expressed confidence in him and the Hong Kong government to tackle the Occupy Central movement.
In a television interview, Leung said the central government has openly expressed serious concern over Hong Kong, and that it is fully aware of what is happening in the city and the reasons behind the events that are unfolding.
He also said that the Occupy Central movement is not entirely a domestic movement, as external forces are involved.
Leung said »there is obviously participation by people, organizations, from outside of Hong Kong, in politics in Hong Kong, over a long time. And this is not the only time when they do it. And this is not an exception, either. »
He noted that no one can now control the movement, which has gotten out of control even for the movement organizer.
Suspected arson attack follows clashes at Mong Kok Occupy zone
Tensions and violence at the Occupy Central sit-in rally site in Mong Kong escalated yesterday as opponents attempted to remove barriers set up by the protesters, followed by a man’s attempt to set fire to their supplies.
Later, fresh scuffles broke out, with protesters clashing with their opponents at various corners of the protest zone. And as a public forum got under way, four bags of what was suspected to be faeces and oil tumbled down onto the audience from a building above.
A total of seven arrests were made.
The alleged arson attempt took place at about 6.45pm, when a middle-aged man turned up with a bag full of flammable substances. Witnesses said he threw three glass jars of thinner at protesters standing near a supply station and whipped out a lighter, but failed to set the supplies ablaze. Protesters overpowered the man and detained him until police arrived.
Apple issues China iCloud security warning
Caution urged after Chinese users report seeing warnings they had been diverted to an unauthorised website when they attempted to sign into their accounts
Apple has posted a new security warning for users of its iCloud online storage service amid reports of a concerted effort to steal passwords and other data from people who use the popular service in China.
“We’re aware of intermittent organised network attacks using insecure certificates to obtain user information, and we take this very seriously,” the computer-maker said in a post on Tuesday on its support website. The post said Apple’s own servers have not been compromised.
Apple’s post did not mention China or provide any details on the attacks. But Chinese internet users have begun seeing warnings that indicate they had been diverted to an unauthorised website when they attempted to sign into their iCloud accounts.
That kind of diversion, known to computer security experts as a “man in the middle” attack, could allow a third party to copy and steal the passwords that users enter when they think they are signing into Apple’s service. Hackers could then use the passwords to collect other data from the users’ accounts.
Talks fail to narrow gap between student leaders and Hong Kong government
The government and student leaders remain poles apart on how the city should elect its leader in 2017, after their televised talks yesterday failed to resolve the issues that triggered the Occupy Central mass sit-ins.
Chief Secretary Carrie Lam Cheng Yuet-ngor said the government would submit a report to Beijing reflecting the latest public sentiment and would consider setting up a platform for dialogue on constitutional development. But that failed to please the five leaders from the Federation of Students.
Lam and fellow officials ruled out the possibility of reversing the National People’s Congress Standing Committee’s August decision imposing tight limits on the 2017 election. They also rejected the students’ demand for public nomination of candidates.
Catalonia
Catalonia: referendum called off, Rajoy opened discussion to give more autonomy to Catalonia, Russia’s RT News is pressing Catalonian to revolt. We were expecting it and we add Catalonia to the numerous subjects were big data has proven its accuracy. However, any delay in negotiation between Catalonia and Madrid could reverse the tied. Unfortunately, many politicians have been used to procrastination and may try to promise reforms without delivering them. This time Spain has to face the reality: all over the world, the public awareness of “moral faults” has increased. Not solving Catalonia problem is giving more argument for the mistrust camp. It suffices that one sees the overwhelming indication that mistrust helps to radicalise the public, to conclude that procrastination would be responsible for public radicalisation. The Elite in Spain does not understand that the old days of the Spanish Monarchy without accountability is ending. They’re better get used to that and move forward.
We were saying “calls for independence referendum is increasing pressure on both Madrid and EU to move forward to offer better conditions and better narrative to the public. We see PM Rajoy taking constitutional actions to deter Catalonia from conducting the referendum, at a moment where more the referendum is gaining support from the independence forces all over the world. Madrid may accept to open discussion to devote additional autonomy to Catalonia in order to reduce the pressure. This story is likely to push EUR existential threat higher short term, but we consider that EUR is likely to rebound by the end of this year, when these threats will be repriced as less likely.” (daily briefing Sept. 30 2014). Catalonia decision to suspend formal campaign is the first step in our constructive scenario. However, Artur Mas uses the threat of going ahead with the referendum, though the constitutional court has specified that’s un-constitutional. This threat is urging PM Rajoy to act which he did in Saturday by opening discussion of some kind of PM Cameron solution to Scotland independence call (i.e. more fiscal autonomy). Catalonia government will decide by October 15 on whether to hold referendum. We see the most likely scenario to be some deal with Madrid which would : 1) help Artur Mas to claim victory – he would have secured more autonomy – and 2) help PM Rajoy to de-escalade the tension over Catalonia. We see the next region to start a fight for more autonomy to be Bavaria (Germany’s most wealthy region which is pushing Alternative fur Deutschland – AfD – anti-EZ party wants to reduce its contribution to other regions – “lazy” EZ members states, in their parlance -. Business interest (Football Clubs) are starting to indicate the cost of a secession. Novo-Russia continue to support Catalonia, as a secession could help justify Crimea. Many have been talking about war in the East, the War against Russia is also taking place in Catalonia. The relations between populists parties in EU and Russia speaks volume. Czar Putin should make no mistake EU is one and indivisible. Populism is a cancer, EU is recovering from it.
Catalans: independence drive will intensify unless Madrid negotiates
LONDON (Reuters) – After scuppering a referendum, Spain risks intensifying Catalonia’s push for independence unless it negotiates over transferring more powers, the region’s economy minister said.
Spain’s government asked the constitutional court last month to declare a referendum planned for Nov. 9 illegal on the grounds it breached the constitution. The court suspended the vote until it ruled on the case, which could take years.
In response, Catalan President Artur Mas has dropped plans for a binding vote and will instead hold a « consultation of citizens » which he said would be within the law.
« Sooner or later there will have to be dialogue or negotiation, » Catalan Economy Minister Andreu Mas-Colell told Reuters in an interview in London. « We are not going to retire.” He hoped the Catalan government would see out its term until late 2016 but said clamour for early elections would grow if the Spanish government refused to discuss greater autonomy for one of its wealthiest regions, with its own language and culture.
Ferguson
Ferguson – Missouri: One word take Replace Catalonia, HK Occupy with Ferguson, keep calm and carry on.
An independent commission will be created to study issues that have surfaced since the fatal police shooting of Michael Brown in Ferguson, Missouri Gov. Jay Nixon said Tuesday. This commission aims de-escalating a situation which could easy surge. The risk of surging is increasing as a newly leaked autopsy of Michael Brown, the unarmed 18-year-old black man shot by a white police officer in Ferguson, Missouri more than two months ago, indicates a gunshot wound to the hand from close range, the St. Louis Post-Dispatch reported.
The Tea Party caucus is using these events as a way to increase the racial tension, while Sen. Rand Paul wants to use the spread of African-American anger vis-a-vis President Obama administration as a way to bring these voters to the GOP. Sen. Rand Paul has used exactly the same strategy with the youth, which suffers the most from the global financial crisis consequences. The administration needs to increase it rhetoric against disinformation, mistrust and pessimism should it want to avoid that the voters turn to those who are placing the most emphasis on pessimism with the help of donors which interest is to keep status quo (at a moment when the US need urgently to undertake structural reforms – immigration, taxes etc. -). Furthermore, not only Tea Party caucus is using this strategy, the moderate Chris Christie whom have suffered from the Bridge scandal, is using the same strategy to change his image.
In general, Ferguson, HK Occupy, Scotland Independence, Catalonia share the same problem: inequality. Many are considering that Inequality will bring a class struggle and some kind of XIX century like revolution. Notwithstanding that depending on where someone seats, we might think that these mass protests (1000 for Ferguson, much more in Catalonia) are sufficient to start a revolution. But like we were saying in our earlier notes, we genuinely believe that Occupy and Anonymous groups have been hijacked by “commodity interest groups” (it suffice to look at the links between investment portfolio’s advise of those groups – Gold and Commodities – and the consequence of a derailed soft power to move toward better governance).
However, unlike in the old “organised revolutions” in LatAM, this time around the social media is in charge and the overwhelming majority wants to use soft power – and Ferguson is part of that – to press institutions to reforms. The chaos and Apocalypses imagined by the 3G group (the most radical group within libertarians and their name stands for Gold, Guns and God) are unlikely to take place. Of course Ebola, and ISIL are genuine threats but 1) the on-going improvement in governance (cf. Australia G-20), 2) the work to reduce disinformation and skepticism (EU, Gaza), 3) military and medical action against the two deadly diseases ISIL and Ebola, are supportive to the positive scenario. Furthermore, there is a win-win scenario which is taking place and which could help: workers, shareholders and consumer to benefit from.
Michael Brown autopsy results may support Ferguson cop’s claim
A newly leaked autopsy of Michael Brown, the unarmed 18-year-old black man shot by a white police officer in Ferguson, Missouri more than two months ago, indicates a gunshot wound to the hand from close range, the St. Louis Post-Dispatch reported.
One of three conducted on Brown, the autopsy by St. Louis County medical examiner’s office found particles « consistent with products that are discharged from the barrel of a firearm” upon a microscopic examination of hand tissue. Yet, the examination found no “powder stipple,” or residue usually left by guns fired at such a close range.
The findings of the autopsy, originally released to county prosecutors and not the public, suggested to outside forensic experts – all not related to the case and interviewed by the Post-Dispatch for their analysis – that Brown’s hand was close to the weapon of the Ferguson police officer, Darren Wilson, at the time of the shot.
“Sometimes when it’s really close, such as within an inch or so, there is no stipple, just smoke,” Michael Graham, a St. Louis medical examiner, told the Post-Dispatch.
The autopsy obtained by the newspaper also said that tissue from Brown’s thumb wound exhibited matter “consistent with products that are discharged from the barrel of a firearm,” Graham said.
An independent autopsy ordered by Brown’s family failed to report such residue, possibly because those examiners did not have access to Brown’s clothing worn at the time of the incident.
US midterms elections
US midterms elections:
November 4th midterm elections is coming with many uncertainties. Should GOP win the Senate, the US administration is likely to find itself stuck with a divided government which could make : debt ceiling, budget negotiation, Fed Transparency Bill negotiation, very hard. Some humorists have called the Tea Party caucus to be the “no-negotiators”. Without leaning toward a liberal Tea Party bashing, we would like to remind our readers of October 2013 debt ceiling talk. These period have created too much fear that the US might default that some Sovereign Wealth Funds (SWF) have been considering challenging the USD reserve currency privilege status. The average polls are giving 55% chance to the GOP to secure a win in the Senate. However, these polls do not track the weak signals narrative nor participation variable (a model we’ve built for Scotland Independence and which has proven a very good results). Koch donors story (politico here) is very interesting because it shows that Oil interest groups are busy trying to reduce the speed at which their wealth is evaporating. $1bn is the amount invested, hope that this investment does not include any link to gestures to destabilise the Homeland security. We are confident that private initiative such as Super Pac of Super Pacs (using public donation to cut interest groups campaign financing) would take over in the short term because Pension Funds and Investors will soon recognise that “Greed is NOT good” and better have a functioning democracy.
We continue to side with the consensus. But we consider that as soon as investors will start looking at the consequence of a GOP Senate majority win we might see some change in the dynamics. We have the opportunity to use a new source of big data information. We will be using it to bring the change in the narrative in the coming 3 weeks. Stay tuned and thanks for your support.
The recent polls which show a GOP turnout advantage, should be taken with a pinch of salt. The reason is that turnout is a very volatile variable and depend on the consequence of not showing in the polls. Countries differ in their reaction function to election. As a general view, the more a country struggles to get rights the more the public is fearing the return of any dark days and go to the polls. The more the media will focus on the fact that GOP are winning (with the consecutive effects) the more the voters might increase their turnout. We believe that this “reversibility of votes” is the “magic” bullet which might help save some efficacy for the second half of President Obama tenure as well as avoid an incredible economic headwinds (see here Ted Cruz agenda for GOP Senate). Should one add Senator Ted Cruz comments, those of Senator Rand Paul (which spur fear about Ebola), we might find ourselves in situation which would have many similarities to Nero burning Rome (click here).
These are the reasons why we are less confident than many commentators in the US that GOP Senate majority is a given.
Some Democrats worry about whether Obama’s campaigning will help or hurt
With Election Day drawing near, the country’s most influential Democrat is finally weighing in on the midterm elections. But the big question for some worried Democrats is whether President Obama could do them more harm than good.
On Tuesday, Republicans were celebrating what they saw was a political gift from Obama in the form of sound bite perfect for an anti-Democratic attack ad. Obama told the Rev. Al Sharpton that even vulnerable Democrats trying to keep their distance from him are all “folks who vote with me. They have supported my agenda in Congress.”
The remark seemed to undercut the efforts of many embattled Democrats to distance themselves from an unpopular president. It was the second time this month that Obama has put himself front and center in the midterm debate, giving Republicans a quote to tie himself to Democrats who are trying hard to keep their distance.
A REPUBLICAN SENATE MEANS CHANGING THE CHAIRMEN
WASHINGTON (AP) — If Republicans win the Senate, the Pentagon should brace for constant grilling from Sen. John McCain, who has found fault with nearly every aspect of President Barack Obama’s national security policies.
McCain would be on tap to serve as chairman of the Senate Armed Services Committee if the GOP wrests majority control from the Democrats in next month’s midterm elections. The senator who lost to Obama in the 2008 presidential election has never suffered fools — or equivocating witnesses — gladly, and he would be certain to use his new perch for tough questioning about Iraq, Syria, Iran, Afghanistan and military spending.
A Republican majority would usher in major changes in committee leadership, with political opposites replacing the current Democratic chairmen and setting a markedly different agenda from the past eight years of Democratic control. The size of a Republican majority would determine committee ratios and budgets; more seats in the Senate translate into a greater advantage on the panels.
Obama, the former Illinois senator, knows what it will mean for the last two years of his presidency.
« If we lose the Senate, for one thing, the way this Senate’s been operating, they could end up blocking all my appointments so that I can’t get the people I want to be in a position to move my agenda forward, » he said in an interview last week on the « Rickey Smiley Morning Show. » »If we lose the Senate, I guarantee you they’re going to try to roll back health care legislation again. »
‘Walmart Moms’ think America is in the ‘crapper’
America is in the « crapper », according to a woman who was part of a recent focus group to gauge how so-called « Walmart moms » are feeling in the run-up to the midterm elections. Held in Charlotte and in New Orleans on Monday, the focus groups revealed women who are fed-up, afraid (of Ebola more than the Islamic State) and detached. They are almost numb to the news because « too much is going on. » And, rather than follow it all like we political reporters do (and often think voters do too), these women have largely tuned out. At least one mom prefers to watch “Doc McStuffins” — she’s a Disney character who fixes broken toys in her playhouse clinic — with her kids. (Editor’s note: The Fix family loves some « Doc McStuffins”.)
Moms view Members of Congress as having “all the power,” more focused on “bickering,” and frequently paid for by lobbyists. Others call Congress “a joke,” that plays politics as “a game.” And even if you “replaced all of them” or elected candidates “with good intentions,” moms fear the same pattern would hold. Senate control doesn’t seem to matter to these moms, although some in Louisiana wondered if Republicans would try to get something done to “prove themselves” if they took control.
More US Republicans Fear Ebola Exposure Than Democrats: Poll
MOSCOW, October 22 (RIA Novosti) – Forty nine percent of the US Republicans say they are afraid of being infected with Ebola, while only 36 percent of Democrats say they are afraid of the deadly virus, according to a Pew Research Center survey.
“Since early October, worries about Ebola exposure have increased across most demographic and partisan groups. But the rise in concern has been particularly striking among Republicans,” read the survey, released on Tuesday.
The latest Pew survey spoke to over 2,000 American adults between October 15-20.
In early October, 16 percent less Republicans said that they were afraid of being exposed to Ebola, while just three percent less of Democrats expressed their concern.
The federal government’s handle of the Ebola endemic has become a heated topic amongst Republicans and Democrats before the 2014 November 4, midterm elections.
After Thomas Eric Duncan, a Liberian native, who traveled to the US and later tested positive for the disease, there died on October 8, a bipartisan debate ignited around whether to issue a travel ban on those coming from Ebola stricken West African countries to the US.
US News
US other news: We share today an interesting paper on why ISIS excels at recruiting American teens. This trend is the most worrying while the terrorists propaganda based, on the Apocalypse and the spread view that “institutions are rotten to the core”, is gaining traction is more forums (libertarians blogs for example). I was puzzled by the number of blogs and how some Hedge Funds have been financing libertarians views although they repeat all of them the same information, data, reasoning etc. This become clearer with the recent rush to sell to small investors energy funds, while the overwhelming data and news are supportive to do the opposite. It’s frustrating that the US SEC does not protect sufficiently investors by requiring to check how these funds are sold. From a 20 years marketing experience in finance, I witnessed at least one case of two deals where the investor has not been given the full information although salesmen knew it. In a world where data are everywhere and the tools to make the sense of it are already very efficient. I do believe that financial institutions have better to be cautious. As we have been saying many times: last time financial institutions suffers multi-billions sanctions, next time (if these do not take the genuine actions to improve governance and marketing practices) it may end up into jail time. I doubt that oil funds salesmen discussed with their clients the situation in Iran negotiation and how this could take the oil into another plunge.
Informations out of North Korea have proven our thoughts right: Kim Jong Un has personally ordered to free the M. Jowle. This is a weak signal that North Korea leadership is willing to soften its stands when its old partners are moving toward a new strategy. We see this development increasing the chances of a reunification with South Korea. This story should accelerate when President XI and PM Abe will meet and reduce the seemingly tension over the disputed regions.
Saudi Arabia jails al Qaeda suspects over plot to hit U.S. forces
(Reuters) – A Saudi court has sentenced 17 people, four of them women, to prison terms of up to 30 years in two separate cases, one of which involving an al Qaeda plot to attack U.S. soldiers in Qatar and Kuwait, the state news agency SPA said.
In a third case, two Saudi citizens were sentenced to death on Monday after they were convicted of attacking a police station with Molotov cocktails in Awamiya in the Eastern province, where many of the country’s Shi’ite Muslim minority live, defense lawyers and Saudi media said.
Sectarian tensions have plunged several neighbors of Saudi Arabia – notably Iraq and Syria – into complex, multi-sided wars drawing volunteer fighters from across the Europe and the Middle East, including Saudi Arabia.
U.S. forces based in conservative Sunni Muslim Gulf states are waging air strikes on radical Sunni Islamist insurgents who have seized large areas of Shi’ite-led Iraq and of Syria, whose government is backed by Shi’ite Iran.
ISIS excels at recruiting American teens: Here are four reasons why (+video)
Three Denver teenage girls skipped school and flew to Germany to join ISIS before being sent home. Why are American teenagers drawn to the Islamic terror group? Appeal to sense of identity, Sophisticated internet propaganda, Appeal to a sense of religious obligation, Female-targeted recruitment
According to CIA estimates, about 2,000 Westerners have traveled to Iraq and Syria (many via Turkey) to join ISIS. Of these, more than 100 have come from the US, at least 500 from the UK, and more than 700 from France, according to estimates from authorities in those countries.
At Berlin Wall, Kerry Warns Against Cold War Redux
Surrounded by relics of the Cold War, U.S. Secretary of State John Kerry and his German counterpart warned Wednesday against a return to the bitter divide between east and west over the current crisis in Ukraine.
Under gloomy skies and a steady rain, Kerry and German Foreign Minister Frank-Walter Steinmeier visited one of the few remaining sections of the Berlin Wall. They emphasized that the West does not seek confrontation with Russia and implored Moscow to move quickly to fulfill the terms of an agreement to end the fighting in eastern Ukraine between the government and pro-Russian separatists.
Ukraine accuses Moscow of aiding the separatists, a charge that Moscow denies.
Ahead of next month’s 25th anniversary of the fall of the Berlin Wall, Kerry and Steinmeier met German high-school students about the age that Kerry was when he lived in divided Berlin after World War II while his father served as a U.S. diplomat.
Kim Jong-un Gave Order to Free American, North Korea Says
SEOUL, South Korea — North Korea said Wednesday that its leader, Kim Jong-un, had personally ordered the release of Jeffrey E. Fowle, an American, after considering requests from President Obama.
Mr. Fowle, an Ohio municipal worker and one of three Americans detained in North Korea, had been held for nearly six months before a United States military plane picked him up Tuesday. He arrived Wednesday in Ohio, where he was reunited with his wife and three children, who rushed to greet his plane when he arrived at Wright-Patterson Air Force Base near Dayton.
Mr. Kim recently reappeared in state-run news media after a six-week absence, ending widespread speculation about his health and his grip on power. With the statement on Wednesday, North Korea appeared to be burnishing Mr. Kim’s image at home as a leader capable of doing a favor for the American president.
Kerry expects ‘deep’ engagement with Congress on Iran talks
(Reuters) – U.S. Secretary of State John Kerry said on a visit to Berlin on Wednesday that the Obama administration planned to fully consult Congress about ongoing negotiations with Iran over its nuclear program.
« I personally believe, as does the president, that Congress has an extremely important role to play in this and Congress will play a role in this, » Kerry said in response to a question about whether U.S. lawmakers might be shut out of the decision-making process.
Investors Pile Into Oil Funds at Fastest Pace in 2 Years
Investors are buying into funds that track oil prices at the fastest rate in two years, betting that crude will rebound from a bear market.
The four biggest oil exchange-traded products listed in the U.S. received a combined $334 million this month through Oct. 20, the most since October 2012, according to data compiled by Bloomberg. Shares outstanding in the funds, including the United States Oil Fund and ProShares Ultra Bloomberg Crude Oil (UCO), rose to 55.3 million, a nine-month high.
Money has flowed into the funds as West Texas Intermediate and Brent crudes, the benchmarks for U.S. and global oil trading, each plunged more than 20 percent from their June highs, meeting a common definition of a bear market. Banks including BNP Paribas SA and Bank of America Corp. have predicted that the rout in the oil market may soon be over.
U.S. defense shares up as arms makers boost profit, margins
(Reuters) – Shares of U.S. weapons makers rose broadly on Wednesday after a spate of third-quarter results showed continued growth in earnings and operating margins despite weaker revenue.
Tensions and violence around the world were also fueling hopes among investors that Congress will ease mandatory budget cuts that are due to resume in 2016, analysts said.
General Dynamics Corp (GD.N) shares were up 3 percent at $127.60 in early afternoon after the maker of tanks, ships and business jets reported that quarterly net profit rose 6.4 percent to $694 million, or $2.05 per share, and raised its earnings forecast by 25 cents a share.
Europe News
EU is suffering from the combination of negative general sentiment (Ebola, ISIL etc.) and the negative press conducted by both populists when Russian media provides very good argument to drive the tensions between creditors and debtors higher. But the trend in EU continue to be supportive and as we were indicating the more markets will recognise the short term risk of US midterms elections, the more constructive they’ll become on EU and EUR. Markets were upset by questions about how quick Greece will exit from the program. The glass half full part of this story is that Greece, a country which once was considered to be doomed with the only hope for it is to become 2001 Argentina (according to some Nobel Prize laureates), is considering the idea of normalisation 5 years after its program. That’s in itself a strong argument which supports looking at the glass half full. France and Germany have started discussion about investment growth project (Juncker plan). We continue to see the most likely solution would be a EIB financed loans guaranteed by either the ESM or by states directly. The discussion are still on-going as EcoMin Macron and FinMin Sapin of France have been visiting the German cabinet on Monday.
Br-exit: Knowing that EU is changing its narrative, UKIP call for an early Br-exit vote doesn’t come as a surprise. Actually, we were expecting it to come earlier because the populist are likely to loose the supports they are having now. Populists parties are using investment advisory businesses to spread their mistrust. A recent study conducted by the AMF (France SEC), showed that 9 web-traders over 10 are loosing money when investing in FX. This is mainly due to the fact that 9 over 10 are investing like they vote: buy Gold, USD and sell EUR because it’s doomed (this is their beliefs not ours). By better regulating the internet retail investment sector, we are likely to see less spread of mistrust. These internet retail websites are widely spreading mistrust and advising ‘moms and pops’ to make easy money when the doom scenario will come. Again our legal have forbidden us from spreading some website adds (because they consider these are non respecting SEC and other regulations). These attract their “victims” by claiming making $8,000 a month by becoming a trader. The 9 over 10 are usually exposed to the next big splash in the markets. This is exactly how our research have found ISIL portfolio to be invested. While the first is betting that our institutions are rotten to the core and are listing to the doom and gloom widely spread, the former is speaking its own books. No one can be held accountable for making wrong investment decisions. However, by stressing the losses many individual investors are likely to change their strategy and diversify their views. This financial market war is likely to leave only those which bet on ISIL success largely exposed to the doom and gloom scenario. Please not the announcement by the UK that “trolls” might face as high as 2years in prison.
But as the pressure on Br-Exit arises, PM Cameron increases the pressure on EU to struck a better deal to campaign for the No to Br-Exit. We were indicating since August 30th EU Council that President Designated Donald Tusk remarks about the fact that Britain should not leave the EU are genuine support for a deal. Amongst UK requests, Shale gas ban seems to become an old issue. Indeed with Oil prices around $80 the shale gas exploration became non-economical. We do believe that EU will lose its stands vis-a-vis of shale gas, just to let the oil majors saying “thanks but we cannot make profit from it”.
UK’s Cameron to object to EU budget plans at leaders’ summit -source
LONDON (Reuters) – Prime Minister David Cameron plans to use a meeting of European leaders this week to lobby against European Union requests for member states to stump up more money, a British government source said.
Cameron is under pressure to take a harder line on Europe before a national election in May next year, in which the rising popularity of the anti-EU UK Independence Party threatens his Conservative Party’s re-election chances.
The British leader has pledged to try and reform the country’s relationship with the EU and then hold a referendum on EU membership in 2017 if he wins next year’s election.
The EU has asked for more money from member states to cover higher spending for the rest of this year, and it is also negotiating its budget for 2015. The UK government objects to both as too high, a position which is likely to add to tensions between Cameron and the EU over its future.
Isis News: Denver Teenage Girls Detained in Germany ‘Planned to Join Islamic State’
Three American teenagers in Germany have been detained while allegedly travelling to Syria to join Isis, according to reports.
The girls, who are from the Denver area, were caught by the FBI after they were trying to « fulfil what they believe is some vision that has been put on a slick media campaign » by the Islamic State (Isis). Two of them are sisters, aged 15 and 17, from Somalia and the 16-year-old is from Sudan, according to authorities.
After being held upon their arrival in Frankfurt airport, the girls – who have not been identified – were sent back to the US. It is unclear whether they will be charged with anything as they are minors.
French riot police clash with migrants seeking UK entry
Oct 22 (Reuters) – French riot police in Calais used teargas on Wednesday to ward off hundreds of immigrants seeking to jump on to trucks bound for Britain in a new escalation of tensions in the northern port town.
It was the second flare-up this week and comes weeks after Britain and France agreed to improve border controls to prevent an estimated 1,500 migrants fleeing humanitarian crises in Africa and the Middle East from crossing the English Channel.
Nato jets intercept Russian aircraft over Baltic amid Sweden sub hunt
Nato scrambled fighter jets twice in two days to intercept Russian military aircraft over the Baltic Sea, it said on Tuesday as Russian military activity in the region was reported to be increasing.
Lieutenant Colonel Robert Gericke said the Russian aircraft were flying in international airspace and had not violated the territory of alliance members.
Two Canadian F-18 Hornet jets were scrambled from the Siauliai base in Lithuania on Monday to intercept a Russian Ilyushin-20 surveillance aircraft, which they shadowed for 15 minutes, Nato said.
Earlier, the Latvian military reported that Nato F-16 jets were dispatched on Tuesday to intercept a Russian Ilyushin-20 over the Baltic Sea. Gericke confirmed that Nato jets had also intercepted a Russian aircraft that day, but could not provide more details.
China News
China: PMI rose in October, adding to signs a resilient labor market and export demand are helping the world’s second-largest economy weather a housing market downturn. This is in line with the rebalancing objective to move away from the old growth drivers and focus on economic reforms. As the economy continue to soft land, we see the Chinese leadership continuing to support governance improvement and crack down on corruption. For example, Australian police have agreed to assist China in the extradition and seizure of assets of corrupt Chinese officials who have fled with hundreds of millions of dollars in illicit funds, the Sydney Morning Herald newspaper reported (see more below).
We believe that Chinese leadership will continue to drive the growth lower but smoothly to avoid triggering a hard landing chock. We see any stimuli to be small and targeted because the government continues to fear that the economic rebalancing has not taken momentum yet although 1) labor intensive manufacturers are relocating in cheaper labor countries, 2) businesses are upgrading their business models [while becoming environmental friendly], 3) President Xi has conducted many trade – investment agreement with Neighbours (after Premier Li did the same in Africa) to secure investment projects which use Chinese manpower – engineers know-how in this domaine, 4) China is gaining more military presence and has fluxed it mussels – e.g. China “Top Gun” intercept by a US fighter jet -, 5) China has signed many RMB agreement which reinforce the currency usage and prepare its full liberalisation – after Free Trade Zones (FTZ) have proven to be a success -, 6) China has undertaken a genuine fight against bad governance and better regulation – many examples in our recent daily briefings of fight against corruption and bad governance-.
While the recent decisions strengthen President Xi power, we foresee the first objective of the Chinese President to be rebalancing the Chinese economy while cooling the pressure which have developed in China (banking, housing etc.).
China Factory Gauge Rises as Workers Weather Slowdown
A Chinese manufacturing gauge rose in October, adding to signs a resilient labor market and export demand are helping the world’s second-largest economy weather a housing market downturn.
The preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 50.4, exceeding the median estimate of 50.2 in a Bloomberg News survey, which was also the level of September’s final reading. Numbers above 50 indicate expansion.
Chinese policy makers are trying to avoid a deeper slowdown after gross domestic product expanded 7.3 percent in the third quarter from a year earlier, the weakest pace in more than five years. While the government has relaxed home-purchase controls and pumped liquidity to lenders, the economy also got support from a pick-up in exports in September.
“The momentum of the rebound in September is continuing into the fourth quarter,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “The growth target is still about 7.5 percent, so targeted easing will carry on.”
China Home Sales Decline, Yet Developers Building More Than Last Year
The price tag on a new home in China is on the decline right along with volume, and as good as that may sound to those who want to see the housing bubble popped, investors are concerned that the decline does not bode well for the economy in the short and medium term.
New home sales fell at nearly the same pace in the first 9 months of the year while investment rose more slowly, the National Bureau of Statistics said Tuesday. Property investment growth was 12.5% in September compared with 13.2% year over year growth posted in August.
Government source hints at tougher line on Occupy protests if deadlock persists
Hawks may trump doves in debate on tactics to deal with protests if deadlock remains, they say
Hong Kong’s government yesterday increased pressure on Occupy protesters, warning that « hawks » favouring tough action to clear sit-in sites would gain the upper hand if the deadlock between officials and student leaders was not resolved soon.
The warning came a day after unprecedented talks between top officials and student leaders failed to persuade the protesters to end the occupation that has paralysed parts of the city for more than three weeks.
« If the conciliatory approach doesn’t work, doves within the government would be sidelined while hawks would gain the upper hand, » one person familiar with the situation said.
« We are worried that the administration would eventually use force to disperse protesters and a certain degree of bloodshed would be unavoidable. »
Tensions rose at the Occupy protest sites, with a new application for a court order to eject the crowd on Harcourt Road in Admiralty and a man splashing a flammable solvent at Mong Kok protesters.
Neither the government nor the Federation of Students have announced plans to seek a second round of talks to end the protests, triggered by restrictive rules for the 2017 chief executive election laid down by Beijing in August.
Apec finance chiefs meet as global worries persist
The global economic recovery is beset by « downside risks », China’s vice-premier told Asia-Pacific finance ministers Wednesday, a day after growth in the world’s second-largest economy hit a five-year low.
The meeting in Beijing of ministers from the Asia-Pacific Economic Cooperation (Apec) forum precedes the group’s annual summit next month, when Chinese President Xi Jinping is to host counterparts including US President Barack Obama, Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe.
« Now global economic recovery remains difficult, with downside risks still existing, » China’s Vice-Premier Zhang Gaoli said in a speech formally starting the finance meeting.
The Asia-Pacific faced challenges including what he described as « policy adjustment of major developed economies », apparently a reference to the US Federal Reserve winding down its vast bond-buying programme put in place to help fight the global financial crisis.
His comments came a day after China, a major driver of global growth, said gross domestic product expanded 7.3 percent in the third quarter, its slowest pace since the depths of the worldwide downturn.
China, US aircraft makers plan to convert cooking oil into jet fuel
Two aircraft manufacturers plan to convert used cooking oil in China into an alternative source of jet fuel.
On Wednesday, the Chicago-based Boeing Co and the Commercial Aircraft Corp of China (COMAC) opened the China-US Aviation Biofuel Pilot Project, a demonstration facility in Hangzhou, Zhejiang province.
A main goal of the project is to gauge the technical and economic impact of biofuels derived from waste cooking oil, also known as « gutter oil ».
Gutter oil has long been a public health concern in China because of its widespread use in restaurants. Used cooking oil is often considered unsafe because of the contamination potential.
The companies will be able to clean contaminants from waste oils and convert it into jet fuel at a rate of 160 gallons (650 liters) per day, using a technology developed by Hangzhou Energy & Engineering Technology Co.
« Biofuels are nothing new today, and there are several avenues being pursued, » Brian Foley, president of Brian Foley Associates, told China Daily. « It’s encouraging that companies are exploring different avenues, in addition to algae and some other tests that have been done. »
Australia News
Australia: As we were expecting, Australia CPI remains low and enables RBA to stay put (due to the fear of a housing bubble, which the central bank is dealing with through macro prudential tools). However, Australia continues to be seen, by markets, as a derivative to the old Chinese model (i.e. commodity provider). This view explains the high beta between Australian assets and commodity prices (or China demand for commodities). Banks shares are suffering from the combination of the increase perception of increase in risks and additional macro prudential constants to curb housing prices frothiness. Small business defined the “goldilock range” for AUDUSD to be [.90-.94]. This level is much higher than RBA own assessment (based on PPP models). We have been criticising PPP models because they do not factor any structural changes.
These assume that neither China nor Australia are conducting their rebalancing agenda. We do believe that the current weaknesses offers genuine opportunity to benefit from the other drivers to the Australian economy which are not related to commodities. We see the current Australian Dollar weakness to continue at least until the USD start to weaken again when markets will realise that it has beaten too much on a quick rate normalisation. Meanwhile, from our previous daily briefing, we have gathered sufficient support to the view that the drivers of the Australian GDP are moving toward: 1) education, health and finance services provider to Asian neighbours, 2) innovation and digital sector, 3) energy resources export to Japan (the later contributes to our constructive view that the current negative Japan Energy Trade deficit will rebalance in the medium term – reducing Japanese Government bonds solvency risk – ).
Slower Australian Inflation Signals RBA to Keep Record-Low Rates
Australia’s core inflation slowed last quarter as the removal of a carbon tax cut power bills, giving the central bank scope to keep record-low interest rates.
The trimmed mean gauge of prices rose 0.4 percent from the second quarter, below the median forecast of a 0.5 percent gain and less than a revised 0.7 percent increase three months earlier, government data released in Sydney showed today.
Historically slow wages growth and falling electricity prices provide flexibility for Reserve Bank of Australia Governor Glenn Stevens as he tries to reinvigorate domestic industries and encourage hiring. Policy makers have left rates at 2.5 percent for the past 14 months as they aim to steer a transition in the economy and extend 23 years of growth.
Consumer prices up 0.5% as fruit prices surge
A surprise jump in fruit prices has helped drive consumer prices 0.5 per cent higher in the September quarter as the weaker Aussie dollar increased the cost of imported produce.
House prices, property rates, and vehicle charges also increased, partly offset by falls in prices for electricity, petrol and telecoms equipment and charges.
The Consumer Price Index (CPI) reading for the three months to the end of September leaves the headline 12-month inflation rate at 2.3 per cent, according to the Australian Bureau of Statistics.
The quarterly figure, while slightly higher than market forecasts, is unlikely to change the Reserve Bank of Australia’s view on interest rates, economists said.
Govt, Labor in talks on renewable energy
Federal Labor and the government have begun talks on shoring up the renewable energy sector, initially agreeing to protect the small-scale solar industry and industries such as aluminium.
But the two parties differ on what the renewable energy target should look like.
The RET is a bipartisan target which requires 20 per cent of Australia’s energy use to be sourced from renewable energy by 2020.
The legislation, agreed by Labor and the coalition, specifies the 20 per cent target as 41,000 gigawatt hours.
But following a review by businessman Dick Warburton, the government says changes in Australia’s energy use mean the 41,000 gigawatt-hour figure is likely to represent much more than 20 per cent by the end of the decade.
This will push up the cost of energy and hurt businesses and consumers.
Industry Minister Ian Macfarlane and Environment Minister Greg Hunt on Wednesday began formal talks with Labor on a « common sense solution ».
Mr Macfarlane said the basis of the talks was keeping the RET at a « real 20 per cent » – which puts the actual target at an estimated figure of between 26,000 and 28,000GWh.
Aust ready for outbreak, health boss
The federal health department has declared Australia ready to respond to a regional Ebola outbreak.
The assurance comes after the government’s chief medical officer, Chris Baggoley, sparked concern about Australia’s preparedness, apparently contradicting prior government assurances a strategy is in place should the epidemic reach the Asia-Pacific.
The government has resisted calls to send health workers to West Africa to help fight the deadly disease, citing the lack of a proper evacuation plan and a need to be ready to provide assistance in the Asia-Pacific.
Professor Baggoley told a senate hearing on Wednesday health staff were yet to be given specialist training for treating Ebola, and it would take two weeks to get them « skilled up ».
Greens senator Richard Di Natale, a former public health professional with experience in infectious diseases, accused the government of sitting on its hands while the situation spiralled out of control.
« What have we been doing? This thing has been going on for months, » he told reporters.
Foreign fighter law to be passed next week
The federal government says it will seek to pass legislation that cracks down on foreign fighters by the end of next week, amid widespread condemnation of a video message from an Australian teenage jihadist.
Prime Minister Tony Abbott on Wednesday confirmed the government had accepted all 37 recommendations of a report by the Joint Parliamentary Committee on Intelligence into the foreign fighters legislation, which makes it a criminal offence to travel to terrorism hot spots designated by the government.
Mr Abbott told the parliament it was hoped the laws would be passed by the end of the current sitting fortnight, which ends next Thursday.
The committee which examined the bill called for shorter sunset periods for new powers and greater oversight of preventative detention orders, control orders and stop search and seizure powers.
The development came as senior political figures joined a chorus of condemnation over an Islamic State propaganda video which features 17-year-old Sydney teen Abdullah Elmir threatening Australia, talking about beheadings and specifically referring to Mr Abbott.
« That video is chilling and it’s a reminder of the threat we face by radicalised young people, » Liberal MP Josh Frydenberg, the parliamentary secretary to the prime minister, said on Wednesday.
« That is why the government has acted swiftly, but also thoughtfully and in a considered way to introduce new legislation and to resource our intelligence and law enforcement agencies better, so that we can meet this challenge and protect the local community. »
Japan News
Japan: Although two cabinet ministers resign over scandal, creating more questions about Abenomics, we do not see this derailing PM Abe objectives. Recent decision to crack down on tax dodgers is another piece of evidence that Japan is heading toward reforms and improving governance. Furthermore, as Japan trade deficit deteriorate (cf. our comments on this in Economics news) increase the pressure to reform.
North Korea decision to free Jeffrey Fowle, a US Citizen, is a positive indication that the relations with NK are improving in what we see as first genuine steps toward a reunification solution which would involve China, South Korea and Japan. We see the next China – Japan summit (discussed by FinMin Aso in Finance APEC Summit) as instrumental for reducing the tension between the two countries and to move ahead with reunification talks.
Japan logs record trade deficit for April-Sept.
TOKYO (Kyodo) –Japan logged a record deficit of 5,427.1 billion yen in goods trade for the first half of fiscal 2014, against a backdrop of continuous rises in fossil energy imports amid the prolonged halt in nuclear power plant operations, the government said Wednesday.
The deficit expanded 8.6 percent from a year earlier to the largest amount for the April-September period since comparable data became available in 1979, as the value of imports increased 2.5 percent to 41,324.0 billion yen, the Finance Ministry said in a preliminary report.
Imports of liquefied natural gas and petroleum products gained 8.7 percent and 7.6 percent, respectively, the ministry said.
Exports also rose 1.7 percent to 35,896.9 billion yen, with those of metal processing products surging 26.8 percent and automobiles climbing 2.6 percent, it added.
The results underscored how the net outflow of money from Japan has continued with utilities bolstering fossil fuel-based power generation as an alternative to stalled nuclear power in the wake of the March 2011 Fukushima nuclear emergency.
Japan prosecutors set to rule on possible Fukushima indictments
TOKYO (Reuters) – Japanese prosecutors must decide this week whether to charge Tokyo Electric Power Co executives for their handling of the 2011 Fukushima disaster, in a process that could drag the operator of the stricken nuclear plant into criminal court.
The judicial review is unlikely to see Tepco executives go to jail, legal experts say, but rehashing details of the meltdowns and explosions that followed an earthquake and tsunami will cast a harsh light on the struggling utility and will not help Prime Minister Shinzo Abe’s unpopular effort to restart Japan’s nuclear reactors.
The Tokyo’s District Prosecutors Office last year declined to charge more than 30 Tepco and government officials after investigating a criminal complaint from residents, who said officials ignored the risks to the Fukushima Daiichi plant from natural disasters and failed to respond appropriately when crisis struck.
But a special citizens’ panel opened another legal front in July, asking prosecutors to consider charges of criminal negligence against three executives over their handling of the world’s worst nuclear disaster since Chernobyl in 1986.
Aso proposes Japan-China summit to top official
Japan’s Finance Minister Taro Aso has proposed to a high-ranking Chinese official that the 2 countries’ leaders hold a summit at an international conference next month.
Aso made the call during a 5-minute exchange with China’s Vice Premier Zhang Gaoli before a meeting Wednesday in Beijing of the 21 members of the Asia-Pacific Economic Cooperation forum.
Japan casino bill delayed again; resort opening could miss Olympics: sources
TOKYO (Reuters) – Japan’s plan to open up to casino gambling has been delayed again, three people familiar with the process said, dealing a blow to one of Prime Minister Shinzo Abe’s policy priorities and to hopes the first resort will open in time for the 2020 Tokyo Olympics.
Pro-casino lawmakers have given up debating a casino legalization bill this month and now aim to start discussions in November, two people directly involved in the process and one person briefed on the deliberations said on Wednesday.
Companies such as Las Vegas Sands Corp and Caesars Entertainment Corp are vying to win the first licenses to operate casinos in Japan, a market that brokerage CLSA estimates could generate annual revenue of $40 billion.
Authors of the casino bill previously planned to start discussions around this week and vote on the bill in November. The delay will make it harder to enact the law by the end of this session of parliament on Nov 30, the sources told Reuters.
Japan to send officials to DPRK for update on investigation
BEIJING, Oct. 23 (Xinhuanet) — Japan has announced it will send a diplomatic team to the DPRK for talks with Pyongyang later this month. The aim of the dialogue will be to get an updated account of the DPRK’s investigation into the fate of Japanese citizens who were abducted decades ago to train spies.
« From the 27th to the 30th of this month we have decided to dispatch the Foreign Ministry’s Asia and Oceania Affairs director-general Junichi Ihara and other staff to Pyongyang. Additionally, during that period from the 28th to the 29th they will meet with a special investigative group for discussions, » said Japanese Chief Cabinet Secretary Yoshihide Suga.
NKorea tries on the charm to avoid being referred to Int’l Criminal Court for rights abuses
UNITED NATIONS (AP) — For an envoy of the North Korean government, which virtually bans the average citizen’s contact with the outside world, Kim Ju Song looks breezily connected. A tablet computer is propped on his table in the United Nations’ bustling delegates lounge. He hands out his name card with a Gmail address and mobile number and suggests a « coffee meeting to exchange views. »
The young adviser to North Korea’s foreign ministry is on an unusual mission that’s almost certainly doomed to fail: Persuading the world that his country’s dreadful human rights situation isn’t so bad after all.
Faced with the threat of a referral to the International Criminal Court, Pyongyang is trying on the charm.
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