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.

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