Monday 31 July 2017

The Summer Doldrums 2017.

Baltic Dry Index. 933 -09.     Brent Crude 52.78

"It has always struck me as the world's great fortune that the two great superpowers were the United States and the Soviet Union, who managed the Cold War with meticulous care in retrospect. Imagine the European diplomats of 1914 or 1938 armed with nuclear weapons. It is easy to believe they would not have been as cautious."
George Friedman

We have reached month-end in what would normally be the summer doldrums silly season for news. This year complacency and hopium dominate our markets, from Asia to America, with even the dying EUSSR joining in via the ECB’s never-ending bond buying program keeping the EU’s zombie banks barely alive.

But it is far from a normal summer doldrums. War drums are beating over North Korea, whose latest ICBM test, seems to put most of continental America within nuclear bomb range. America is about to set off a trade war with China over steel dumping, but whose collateral damage hits Canada and Germany. America is about to impose further sanctions on Russia, but whose real target is Germany, and intended to replace Russian natural gas in Europe, with USA supplied liquified natural gas. A USA – EU trade war looms over Russia. US proxy wars continue in Yemen, Iraq, and Syria. Afghanistan drags on and on. A new conflict seems intended for Qatar, with countries from Turkey to Iran, and the Saudis and UAE, picking sides.

In America itself the “deep state” plus “Clintonistas,” seditionist civil war to bring down President Trump, continues apace. Could a foreign Asian adventure end the seditionist civil war?

This is far from a normal sleepy summer. The summers of 1914 or 1939 come to mind. Crude oil pricing seems to agree.

July 31, 2017 / 6:10 AM

China stocks extend gains, Hong Kong hits 25-month high

SHANGHAI, July 31 (Reuters) - China stocks extended gains on Monday morning, bolstered by strength in heavyweight blue-chips in the material sector that forecast robust mid-year earnings.

The CSI300 index rose 0.5 percent, to 3,740.85 points at the end of the morning session. The Shanghai Composite Index gained 0.6 percent, to 3,272.24 points, its highest in three and half months.

The market had a muted reaction to official figures released on Monday that showed China's July factory growth cooled slightly as export orders eased.

Sector performance was mixed.

Consumer firms and materials led the advance, with the materials index surging 2.3 percent to a nearly three-year high after sector leaders forecast robust mid-year profits. Banking and real estate stocks lagged.

"We continue to recommend consumer, financial and cyclical firms with solid performance and low valuations," Haitong Securities wrote in a report.

The official Purchasing Managers' Index (PMI) stood at 51.4 in July, down from the previous month's 51.7, but still well above the 50-point mark that separates growth from contraction on a monthly basis.

Asia Raw-Material Producers Gain; Oil Nudges $50: Markets Wrap

By Garfield Clinton Reynolds
Asian raw-material producers advanced after a surge in commodity prices bolstered optimism the global economy can gather momentum. Oil extended last week’s strongest rally this year.

BHP Billiton Ltd., Rio Tinto Ltd. and Nippon Steel & Sumitomo Metal Corp. underpinned gains on the MSCI Asia-Pacific Index, which is on track to rise for a seventh month. Equity gauges in Japan, South Korea and Australia fluctuated. Oil added to gains from Friday, which came as inventories for crude and gasoline shrank. Copper’s rally has further to go, Citigroup Inc. said last week after the metal reached a two-year high while top producer Chile raised its price forecasts.

Investors are assessing economic numbers from the world’s top three economies. China’s official factory gauge, the manufacturing purchasing managers index, slipped to 51.4 in July, compared to the 51.5 median forecast in a Bloomberg survey of economists and 51.7 in June, amid government efforts to curb financial risks. The U.S. economy expanded 2.6 percent in the second quarter, indicating the world’s largest economy is growing steadily. Meanwhile, Japan’s industrial output for June rose 1.6 percent from the previous month, rebounding amid solid global demand.

Asian stocks have rallied this year as evidence emerged of a resilient global economy. The MSCI Asia Pacific Index is set for a 3.7 percent gain in June, the biggest since January. It advanced 0.3 percent as of 12:55 p.m. in Tokyo, with a subindex of commodity producers up 1.1 percent, the biggest gain among industry groups.

Corporate earnings remain of interest, with HSBC Holdings Plc, Apple Inc., Tesla Inc., Berkshire Hathaway Inc. and Toyota Motor Corp. slated to unveil results throughout the week.

Here are some key events coming as the week gets going:

China Bets Trump Won't Resort to Strike Against North Korea

Bloomberg News
China is betting that U.S. President Donald Trump won’t make good on his threats of a military strike against North Korea, with Beijing continuing to provide a lifeline to Kim Jong Un’s regime.

Secretary of State Rex Tillerson singled out China and Russia as “economic enablers” of North Korea after Kim on Friday test-fired an intercontinental ballistic missile for the second time in a matter of weeks. While Tillerson said the U.S. wants a peaceful resolution to the tensions, the top American general called his South Korean counterpart after the launch to discuss a potential military response.

China on Saturday condemned the latest test while calling for restraint from all parties, a muted reaction to Pyongyang’s progress on an ICBM capable of hitting the U.S. mainland. Despite Kim’s provocations, analysts said Beijing still sees the collapse of his regime as a more immediate strategic threat, and doubts Trump would pull the trigger given the risk of a war with North Korea that could kill millions.

“The military option the Americans are threatening won’t likely happen because the stakes will be too high,” said Liu Ming, director of the Korean Peninsula Research Center at the Shanghai Academy of Social Sciences. “It’s a pretext and an excuse to pile up pressure on China. It’s more like blackmail than a realistic option.”

Relations between the world’s biggest economies have soured after an initial honeymoon between Trump and President Xi Jinping. The U.S. last month sanctioned a regional Chinese bank, a shipping company and two Chinese citizens over dealings with North Korea, which could be a precursor to greater economic and financial pressure on Beijing to rein in its errant neighbor.

Trump has expressed periodic public frustration with Beijing over the pace of its efforts to curtail Kim. Late Saturday he again linked China’s actions to the broader U.S.-China trade relationship.

“I am very disappointed in China,” he said in a series of Twitter posts. “Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!”

Hours later, Xi called on China to speed up its military modernization, telling troops at an army parade that “the world isn’t safe at this moment.”

We end for the day with Russia. Tired of the American War Party’s non-stop anti-Russian propaganda, President Putin abandons hope for a reset and orders some harsh retaliation. With no more Mr. Nice Guy in Moscow or Washington, what could possibly go wrong?

July 30, 2017 / 7:06 PM / 6 hours ago

Putin says U.S. must cut 755 diplomatic staff, more measures possible

MOSCOW/WASHINGTON (Reuters) - President Vladimir Putin said the United States would have to cut its diplomatic staff in Russia by 755 people and that Moscow could consider additional measures against Washington as a response to new U.S. sanctions approved by Congress.

Moscow ordered the United States on Friday to cut hundreds of diplomatic staff and said it would seize two U.S. diplomatic properties after the U.S. House of Representatives and the Senate overwhelmingly approved new sanctions on Russia. The White House said on Friday that U.S. President Donald Trump would sign the sanctions bill.

Putin said in an interview with Vesti TV released on Sunday that the United States would have to cut its diplomatic and technical staff by 755 people by Sept. 1.

"Because more than 1,000 workers - diplomats and support staff - were working and are still working in Russia, 755 must stop their activity in the Russian Federation," he said.

The new U.S. sanctions were partly a response to conclusions by U.S. intelligence agencies that Russia meddled in the 2016 U.S. presidential election, and to punish Russia further for its annexation of Crimea from Ukraine in 2014.

Russia's response suggested it had set aside initial hopes of better ties with Washington under Trump, something the Republican president, before he was elected, had said he wanted to achieve.

A federal law enforcement investigation and multiple U.S. congressional probes looking into the possibility that Trump's campaign colluded with Russia have made it harder for Trump to open a new chapter with Putin. Russia denies it interfered in the election and Trump has said there was no collusion.

Moscow said on Friday that the United States had until Sept. 1 to reduce its diplomatic staff in Russia to 455 people, matching the number of Russian diplomats left in the United States after Washington expelled 35 Russians in December.

June 28, 1914 - Archduke Franz Ferdinand, heir to the Austrian throne, and his wife, visit Sarajevo in Bosnia. A bomb is thrown at their auto but misses. Undaunted, they continue their visit only to be shot and killed a short time later by a lone assassin. Believing the assassin to be a Serbian nationalist, the Austrians target their anger toward Serbia.
July 23, 1914 - Austria-Hungary, with the backing of Germany, delivers an ultimatum to Serbia. The Serbs propose arbitration as a way to resolve dispute, but also begin mobilization of their troops.
July 25, 1914 - Austria-Hungary severs diplomatic ties with Serbia and begins to mobilize its troops.
July 26, 1914 - Britain attempts to organize a political conference among the major European powers to resolve the dispute between Austria-Hungary and Serbia. France and Italy agree to participate. Russia then agrees, but Germany refuses.
July 28, 1914 - The Austro-Hungarian Empire declares war on Serbia.
July 29, 1914 - Britain calls for international mediation to resolve the worsening crisis. Russia urges German restraint, but the Russians begin partial troop mobilization as a precaution. The Germans then warn Russia on its mobilization and begin to mobilize themselves.
July 30, 1914 - Austrian warships bombard Belgrade, capital of Serbia.
July 31, 1914 - Reacting to the Austrian attack on Serbia, Russia begins full mobilization of its troops. Germany demands that it stop.
August 1, 1914 - Germany declares war on Russia. France and Belgium begin full mobilization.
August 3, 1914 - Germany declares war on France, and invades neutral Belgium. Britain then sends an ultimatum, rejected by the Germans, to withdraw from Belgium.
August 4, 1914 - Great Britain declares war on Germany. The declaration is binding on all Dominions within the British Empire including Canada, Australia, New Zealand, India and South Africa.
August 4, 1914 - The United States declares its neutrality.
August 4-16, 1914 - The Siege of Liege occurs as Germans attack the Belgian fortress city but meet resistance from Belgian troops inside the Liege Forts. The twelve forts surrounding the city are then bombarded into submission by German and Austrian howitzers using high explosive shells. Remaining Belgian troops then retreat northward toward Antwerp as the German westward advance continues.
August 6, 1914 - The Austro-Hungarian Empire declares war on Russia.
August 6, 1914 - French and British troops invade the German colony of Togo in West Africa. Twenty days later, the German governor there surrenders.
August 7, 1914 - The first British troops land in France. The 120,000 highly trained members of the regular British Army form the British Expeditionary Force (BEF) commanded by Field Marshal John French.
August 7-24, 1914 - The French desire to score a quick victory ignites the first major French-German action of the war. The French Army invades Alsace and Lorraine according to their master strategy known as Plan XVII. However, the French offensive is met by effective German counter-attacks using heavy artillery and machine-guns. The French suffer heavy casualties including 27,000 soldiers killed in a single day, the worst one-day death toll in the history of the French Army. The French then fall back toward Paris amid 300,000 total casualties.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, yet more reasons to worry about a stock market crash, with or without a US attack on North Korea.
The industrious Michael Lebowitz of 720Global performed an invaluable service last week by assembling “22 Troublesome Facts” behind his reluctance to follow the bullish herd. Most have helpful source links, too.

Here’s a small sampling:
• The S&P 500 cyclically adjusted price-to-earnings (CAPE) valuation has only been higher on one occasion, in the late 1990s. It is currently on par with levels preceding the Great Depression.
• Total domestic corporate profits (w/o IVA/CCAdj) have grown at an annualized rate of just .097% over the last five years. Prior to this period and since 2000, five-year annualized profit growth was 7.95%. (Note: Period included two recessions.)
• Over the last 10 years, S&P 500 corporations have returned more money to shareholders via share buybacks and dividends than they have earned.
• At $8.6 trillion, corporate debt levels are 30% higher today than at their prior peak in September 2008.
• At 45.3%, the ratio of corporate debt to GDP is at historical highs, having recently surpassed levels preceding the last two recessions.

So, US corporations are simultaneously more indebted, less profitable, and more highly valued than they have been in a long time. Furthermore, they are intentionally making themselves more leveraged by distributing cash as dividends and buying back shares instead of saving or investing that cash. Yet investors cannot buy their shares fast enough. Maybe this will end well… but it’s hard to imagine how.
By John Mauldin | Jul 29, 2017

Technology Update.
With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards?

Robust catalyst to split water into hydrogen, oxygen produced

Date: July 26, 2017

Source: Rice University

Summary: A single, robust catalyst that splits water into hydrogen and oxygen has been developed with Earth-abundant materials that approach the efficiency of more expensive platinum, according to scientists.
Splitting water into hydrogen and oxygen to produce clean energy can be simplified with a single catalyst developed by scientists at Rice University and the University of Houston.

The electrolytic film produced at Rice and tested at Houston is a three-layer structure of nickel, graphene and a compound of iron, manganese and phosphorus. The foamy nickel gives the film a large surface, the conductive graphene protects the nickel from degrading and the metal phosphide carries out the reaction.
The robust material is the subject of a paper in Nano Energy.

Rice chemist Kenton Whitmire and Houston electrical and computer engineer Jiming Bao and their labs developed the film to overcome barriers that usually make a catalyst good for producing either oxygen or hydrogen, but not both simultaneously.

"Regular metals sometimes oxidize during catalysis," Whitmire said. "Normally, a hydrogen evolution reaction is done in acid and an oxygen evolution reaction is done in base. We have one material that is stable whether it's in an acidic or basic solution."

The discovery builds upon the researchers' creation of a simple oxygen-evolution catalyst revealed earlier this year. In that work, the team grew a catalyst directly on a semiconducting nanorod array that turned sunlight into energy for solar water splitting.

Electrocatalysis requires two catalysts, a cathode and an anode. When placed in water and charged, hydrogen will form at one electrode and oxygen at the other, and these gases are captured. But the process generally requires costly metals to operate as efficiently as the Rice team's catalyst.

"The standard for hydrogen evolution is platinum," Whitmire said. "We're using Earth-abundant materials -- iron, manganese and phosphorus -- as opposed to noble metals that are much more expensive."

The new catalyst also requires less energy, Whitmire said. "If you want to make hydrogen and oxygen, you have to put in energy, and the more you put in, the less commercially viable it is," he said. "You want to do it at the minimum amount of energy possible. That's a benefit of our material: The overpotential (the amount of energy required to trigger electrocatalysis) is small, and quite competitive with other materials. The lower you can get it, the closer you come to making it as efficient as possible for water splitting."

The monthly Coppock Indicators finished June

DJIA: 21,350 +196 Up. NASDAQ:  6,140 +235 Up. SP500: 2,423 +166 Up.

Saturday 29 July 2017

Weekend Update 29/07/17 America in NK Range. Front Stabbing!

When I was six, the Korean War broke out, and all the classrooms were destroyed by war. We studied under the trees or in whatever buildings were left.

Ban Ki-moon

We open the weekend with North Korea testing another ICBM. One that can easily reach much of America. War on the Korean peninsula gets closer, just don’t tell anyone on Wall Street.

Kim Jong Un Says Entire U.S. in Range of North Korea's ICBM

By Heesu Lee and Kanga Kong
29 July 2017, 03:16 GMT+1
North Korean leader Kim Jong Un claimed he could strike the entire continental U.S. after test-firing the regime’s second intercontinental ballistic missile within a month.

Friday’s unusual late-night launch drew condemnation from the U.S. and its allies, with the top American general calling his South Korean counterpart to discuss a potential military response. President Donald Trump said the test was a reckless and dangerous action, saying in a White House statement the U.S. “will take all necessary steps” to protect its territory.

“We have demonstrated our ability to fire our intercontinental ballistic rocket at any time and place and that the entire U.S. territory is within our shooting range,” the state-run Korean Central News Agency said on Saturday, citing Kim. It said the test was part of the “final verification” of the Hwasong-14 missile’s technical capabilities, including its maximum range.

The ICBM test, which follows the first launch on July 4, raises tensions between the world’s major powers, with the U.S. accusing China and Russia of providing Kim cover to pursue his nuclear ambitions. Trump has previously expressed frustration at the pace of China’s efforts to rein in its neighbor and ally, which it supports with food and fuel sales.

----China opposes North Korea’s launch and its violations of Security Council resolutions, Foreign Ministry spokesman Geng Shuang said in a statement on Saturday in the People’s Daily newspaper. He called on all parties to show restraint to preserve stability in the region.

The Pentagon said the missile tested on Friday flew 1,000 kilometers, while South Korea’s Joint Chiefs of Staff said it reached an altitude of about 3,700 kilometers -- almost 1,000 kilometers higher than the first test. Japan said the missile flew for about 45 minutes -- six minutes longer than previously -- and landed in its exclusive economic zone.

The test showed North Korea’s progress in developing a missile capable of hitting U.S. cities such as Denver or Chicago, according to Melissa Hanham, a researcher at the James Martin Center for Nonproliferation Studies in California. Initial data suggested that if such a projectile were launched toward the U.S., it could travel about 10,000 kilometers (6,200 miles).


In China news, this year it’s time to get gold, and plenty of it. No not the paper gold they peddle in New York on Comex, nor the iffy gold London peddles in London vaults. Chinese people are smart enough to want to get the real thing. Still they might want to test a few of the bars coming from the west for tungsten. Better safe than sorry, as they say.

Chinese Demand for Gold Bars Climbs by Half on Hunt for Havens

Bloomberg News
28 July 2017, 07:00 GMT+1
Demand for gold bars in China, the world’s biggest bullion market, soared by more than half in the first six months of the year as investors sought a haven from financial and geopolitical risks.

Sales climbed 51 percent to 158.40 metric tons from a year earlier, the China Gold Association said in a press statement sent via Wechat on Friday. Overall gold consumption climbed almost 10 percent to 545.2 tons, including 330.8 tons for jewelry sales, while industrial demand and other uses increased 9 percent.

Investor concerns earlier this year over the depreciation of Chinese currency and instability in the stock market, as well as worries about the slowdown in property prices, spurred demand for gold. Imports from Hong Kong climbed last month as gold retreated on the global market, according to data from the Hong Kong Census and Statistics Department compiled by Bloomberg.

“Physical gold is playing an increasingly important role in Chinese residents’ investment portfolio,” the association said. “Gold is broadly favored by investors as a store of wealth as global markets become more fragile, with the Federal Reserve raising interest rates and increasing geopolitical uncertainty.”

Demand for all of 2017 may exceed 1,000 tons, the highest level in four years, as bar sales surge, Zhang Yongtao, the association’s secretary-general, said in an interview in May. Domestic output, including production from imported feedstock, fell 6 percent to 241.5 tons in the first half, amid more stringent environment rules and depletion of mine resources, the group said Friday.

Up next, yet another warning about the great Wall Street stock market bubble. Thanks to a Fed far behind interest rate normalisation, it’s still party time on Wall Street. The punch bowl is still full to near the brim with gallons of low interest rate hooch.

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

Chuck Prince, Citigroup CEO said in an interview with the FT in Japan. July 2007

Wall Street isn’t ready for a 1,100-point tumble in the Dow industrials

Published: July 28, 2017 9:15 p.m. ET
Wunderlich’s Hogan says stock-market investors are out of practice for a steep drop
The U.S. stock market has been on such a parabolic march higher that Wall Street investors may have forgotten what a typical, sharp downturn feels like.

Indeed, much has been made about the lack of volatility. The CBOE Volatility Index VIX, +1.78% otherwise known as the “fear gauge,” had been flirting with its lowest close on record, implying that market expectations for a sharp, sudden fall are near rock bottom, as the Dow Jones Industrial Average DJIA, +0.15% S&P 500 index SPX, -0.13% and the Nasdaq Composite Index COMP, -0.12%  scale new heights. (The Dow notched a fresh record on Friday to end the week 1.2% higher.)

The recent level of complacency permeating the market has pundits talking about the lack of 5% falls in the market—an occurrence that isn’t unusual in a normal market environment. However, a 5% tumble, while normal, isn’t that common either. It has occurred at least 75 times over the course of the blue-chip index’s, according to WSJ Market Data Group, using data going back to 1901. The Dow, however, hasn’t experienced a 5% decline since 2011, and before that a 5% drop hadn’t happened since 2008, when there were 9 such drops (see chart below):

At this point, with the Dow just 200 points shy of 22,000, a 5% selloff would equate to a 1,100-point, one-day slide in the gauge. Is the market ready for that sort of sudden jolt lower, given the optics of a quadruple-digit downturn and how it might rattle investment psyche?

Art Hogan, chief market strategist at Wunderlich Securities, doesn’t think so.

“I would say no because we’re out of practice. Your usual standard garden-variety volatility just hasn’t been around, and we haven’t seen it for 12 months,” Hogan told MarketWatch.

“Quiet markets have been the norm and not the exception and I think a major pullback is going to feel a whole lot larger for lack of experience and the numbers are larger,” he said.

In USA v EUSSR trade war news, The USA lashes out, Russia retaliates, the EUSSR vacillates. No one wins.

The case in which it may sometimes be a matter of deliberation how far it is proper to continue the free importation of certain foreign goods, is, when some foreign nation restrains by high duties or prohibitions the importation of some of our manufactures into their country. Revenge in this case naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours. Nations, accordingly seldom fail to retaliate in this manner.

Adam Smith. The Wealth of Nations, 1776.

July 28, 2017 / 10:25 AM

Russia hits back over sanctions, orders U.S. diplomats to leave

MOSCOW (Reuters) - Russia told the United States on Friday that some of its diplomats had to leave the country in just over a month and said it was seizing some U.S. diplomatic property as retaliation for what it said were proposed illegal U.S. sanctions.

Russia's response, announced by the Foreign Ministry, came a day after the U.S. Senate voted to slap new sanctions on Russia, putting President Donald Trump in a tough position by forcing him to take a hard line on Moscow or veto the legislation and anger his own Republican Party.

President Vladimir Putin had warned on Thursday that Russia had so far exercised restraint, but would have to retaliate against what he described as boorish and unreasonable U.S. behaviour.

Relations between the two countries, already at a post-Cold War low, have deteriorated even further after U.S. intelligence agencies accused Russia of trying to meddle in last year's U.S. presidential election, something Moscow flatly denies.

The Russian Foreign Ministry said on Friday that the United States had until Sept. 1 to reduce its diplomatic staff in Russia to 455 people, the same number of Russian diplomats it said were left in the United States after Washington expelled 35 Russians in December.

It said in a statement that the decision by Congress to impose new sanctions confirmed "the extreme aggression of the United States in international affairs."

"Hiding behind its 'exceptionalism' the United States arrogantly ignores the positions and interests of other countries," said the ministry.

"Under the absolutely invented pretext of Russian interference in their domestic affairs the United States is aggressively pushing forward, one after another, crude anti-Russian actions. This all runs counter to the principles of international law."

It was not immediately clear how many U.S. diplomats and other workers would be forced to leave the country.

An official at the U.S. embassy in Moscow, who declined to be named because they were not allowed to speak to the media, said there were around 1,100 U.S. diplomatic staff in Russia. That included Russian citizens and U.S. citizens.

---- The Russian Foreign Ministry said it was also seizing a Moscow dacha compound used by U.S. diplomats to relax from Aug. 1 as well as a U.S. diplomatic warehouse in Moscow.

July 27, 2017 / 7:27 AM

EU must retaliate if hurt by U.S. sanctions on Russia - German business group

BERLIN (Reuters) - Europe must be prepared to respond in kind if the United States' proposed new sanctions against Russia end up hurting its companies, an influential German industry association said on Thursday.

U.S. lawmakers reached an agreement on Wednesday paving the way for the U.S. Senate to pass a bill as early as this week to impose the new sanctions on Russia and bar President Donald Trump from easing them without Congress' approval.

The European Union fears the new U.S. restrictions could be an obstacle to its companies doing business with Russia and threaten the bloc's energy supply lines, but the 28-country bloc is divided over how to respond.

The head of the German Committee on East European Economic Relations said potential damage to European energy sector companies with business interests in Russia could justify counter-sanctions.

"It's the last thing we want, but we must keep the option open," Michael Harms told a news conference in Berlin.

"The sanctions they want against pipeline projects seem designed to boost U.S. energy exports to Europe, create U.S. jobs and strengthen U.S. foreign policy."

Unlike the United States, whose growing production of shale gas has slashed its reliance on energy imports, much of Central Europe depends on imports of Russian gas through a vast latticework of pipelines.

In rump EUSSR news, France doesn’t trust Italy, one inch. Anyone know why? Meanwhile Italy kowtows to China. Brexit can’t come soon enough.

July 27, 2017 / 6:36 PM / 18 hours ago

French shipyard move "incomprehensible" says angry Italy

ROME (Reuters) - France's decision to nationalise the STX France shipyard to prevent an Italian firm taking majority control was "grave and incomprehensible", Rome's economy and industry ministers said in a statement on Thursday.

Economy Minister Pier Carlo Padoan and Industry Minister Carlo Calenda said there was no good reason why Italy's state-owned shipbuilder Fincantieri (FCT.MI) could not have taken a majority stake in STX France.

"Nationalism and protectionism are not an acceptable basis for establishing relations between two great European countries," the pair said in a statement. "To work on joint projects you need reciprocal trust and respect."

Paris announced earlier on Thursday it would nationalise STX France after Fincantieri rejected a French offer this week of 50-50 ownership. The shipyard is being sold because of the collapse of its South Korean parent.

French Economy Minister Bruno Le Maire said the government had stepped in to protect the country's strategic interests. The minister, who said the 50-50 ownership deal remained on the table, is due to travel to Rome on Tuesday to discuss the issue.

Calenda and Padoan said they did not understand why a South Korean company had been allowed to buy a two-thirds stake in STX France and not an Italian firm.

July 28, 2017 / 11:11 AM

Exiled Uighur group condemns Italy's detention of its general secretary

BEIJING (Reuters) - A prominent Uighur exile was detained briefly by police in Italy, his organisation said on Friday, calling on the European Union to investigate whether China had pressured Italian authorities to take action.

Uighurs are a largely Muslim people who live in China's far western region of Xinjiang, where hundreds of people have died in the past few years, mostly in unrest between its 10 million Uighurs and the ethnic majority Han Chinese.

China has blamed much of the unrest on separatist Islamist militants, though rights groups and exiles say anger over tightening Chinese controls on the religion and culture of Uighurs is more to blame.

On Wednesday, Italian police asked Dolkun Isa, the general secretary of the Munich-based World Uyghur Congress, to accompany them for an identification check.

At the time, he was walking with colleagues to the Italian Senate building, where he was to have spoken on the restrictions facing Uighurs in China, Radio Free Asia (RFA) said.

Isa told RFA he demanded to know why he was being detained and the officers had said they acted on a request from China. Reuters could not independently verify the statement.

---- Italian police did not immediately comment, but the Italian Radical Party, which invited Isa to Italy, confirmed he had been detained.

According to RFA, Isa, a German national since 2006, alerted German authorities of his detention by cellphone while Italian police took him to a nearby police station.

Police released him several hours later, saying they would verify his information against a database of the global police agency Interpol, RFA said.

In November, Interpol elected a senior Chinese public security official, Meng Hongwei, as president, prompting concern amongst rights groups that China could use the position to its advantage.

We close with the Trump White House. Abandon hope all ye who enter here. No one seems to trust anyone else in the building, and President Trump just hired a “front stabber” who got right on with the job. It’s a funny old 21st century world. Entertaining, amusing to watch, but as styles of government go, Neroesque comes to mind. What could possibly go wrong? Like the Chinese, I think I’ll get a little physical gold.

July 28, 2017 / 10:32 PM

Trump replaces chief of staff Priebus with retired General Kelly

WASHINGTON (Reuters) - President Donald Trump replaced his beleaguered White House chief of staff, Reince Priebus, after only six months on the job on Friday, installing retired General John Kelly in his place in a major shake-up of his top team.

Trump announced the move in a tweet a day after his new communications director, Anthony Scaramucci, accused Priebus of leaking information to reporters in a profanity-laced tirade.

Kelly, 67, a retired four-star Marine Corps general, is currently secretary of the Department of Homeland Security and will assume the chief of staff post on Monday. He was hired with the goal of bringing more discipline to the White House, a senior White House official said.

Trump issued his decision just as he landed aboard Air Force One after a visit to Long Island and hours after Republican efforts to repeal Obamacare failed in the Senate.

Priebus was on the plane with the Republican president and made no comment. Reporters had noticed no sign of stress from Priebus during the day.Priebus told CNN he had been talking to Trump for some time about exiting the White House, and is the latest in a long line of officials to leave or not take a job at the White House.

"The president has a right to hit a reset button. I think it's time to hit the reset button," Priebus said in a televised interview from the White House. "He intuitively determined that it was time to do something different, and I think he's right."

Trump had lost confidence in Priebus, privately questioning his competence after major legislative items failed to pass the U.S. Congress, a Trump confidant said.

Scaramucci's Rant Should Terrify Trump Voters

A president needs to attract talented people. His new communications director will make that task even harder.
by Ramesh Ponnuru 28 July 2017, 12:30 GMT+1 28 July 2017, 12:50 GMT+1

“Colorful language,” he called it. That’s how the new White House communications director, Anthony Scaramucci, described remarks of his that Ryan Lizza quoted in the New Yorker on Thursday.

"Degraded" seems to me a better adjective. To speak that way in private is a flaw. To speak that way in the capacity of a public official -- a communications official at that -- is to further coarsen our culture.

But obscene language wasn’t the worst thing about the interview. It wasn’t even one of the worst four things about it. In no particular order:

He showed a bizarre obsession with trivial leaks. Part of the job description of the White House communications director is to oppose leaks that could cause trouble for the administration. But another part is to discriminate based on the seriousness of the leak -- with the most serious ones being those that threaten national security.

In this case, the leak was that the president was having dinner with the First Lady, Scaramucci, Sean Hannity and a former Fox News executive. Scaramucci told Lizza it was his patriotic duty to tell him who shared this information.

The information Scaramucci gave him, if it’s true, was far more significant: He told Lizza that White House chief of staff Reince Priebus is about to be canned. If Scaramucci didn’t want to be quoted, or quoted by name, he was leaking that information. (He has suggested that Lizza somehow broke his trust.)

It’s true that leakiness on the scale this White House experiences is a serious problem for its functioning. It’s also true that no White House can work well if it goes to war over small items of gossip.

He didn’t make even a cursory attempt to make sure what he said was true. Scaramucci accused Priebus of having illegally leaked a story about his finances. But the reporter behind the story noted that the information was available to the public, and not sourced to Priebus. A communications director should want to be credible with reporters. Accusing a colleague of a felony, and quickly having that accusation proven false, does not build that reputation.

He undermined his colleagues. One reason this White House is right to be concerned about all the leaks is that so many of them are part of a toxic culture of back-biting. The tone is set from the top: We have a president who won’t fire Attorney General Jeff Sessions, but will complain bitterly about him in tweets and interviews.

I don’t feel sorry for Sessions. Plenty of evidence about Trump’s character -- his impulsiveness, his pettiness and his lack of loyalty -- was available to Sessions when he chose to play a major role in helping make him president.

Priebus, too, had both eyes open when he took his current job. As did Stephen Bannon, another target of Scaramucci. But when the president treats his subordinates this way, and allows other aides to treat them this way, he makes it harder to attract qualified people to work for him.

In this quotation Adam Smith cites a number of examples involving the Dutch, where retaliation in a trade war can force the offending nation to withdraw its new tariff or restriction and return to free trading. However, he is also aware that this is not always going to happen because that creature, the “insidious and crafty animal, vulgarly called a statesman or politician” can continue the trade war knowing that he will not have to bear the brunt of the costs, these being passed onto “other classes” in the society.