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Is Geopolitics The Big Market Risk We’re Missing?

Is Geopolitics The Big Market Risk We’re Missing?

Authored by Bill Blain via MorningPorridge.com,

“Address all your skill and the valour of my soldiers to exterminate the treacherous English and walk all over General French’s contemptible…

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2 years ago

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Is Geopolitics The Big Market Risk We're Missing?

Authored by Bill Blain via MorningPorridge.com,

“Address all your skill and the valour of my soldiers to exterminate the treacherous English and walk all over General French’s contemptible little army…”

Markets are up and down, and the noise is focused on Covid, Central Banks, Inflation and Tech stocks. But… perhaps the big risks lie elsewhere. Where are Geopolitics headed? Faceoffs in Ukraine and Taiwan have the potential to completely derail markets.

Looking at bond and stock prices there is a rising sense markets might finally have peaked. Some of the conviction underlying strength, the likely support of central banks, and the buy-the-dip games of last year, feel like it’s evaporated. There are plenty of opinions and concerns about the inflation/stagflation threat, worries about globalisation and what the pandemic might or might not still do to us. It’s easy to figure why markets are nervous today, but they might just as well be ecstatic tomorrow if these fears and tensions subside – which will likely prove the case when Covid is beaten!

As always, I take the middle road: “Things are never as bad as you fear, but seldom as good as you hope”. Now is a time for patience – waiting the current misty market front to pass through, and for the path ahead to become clearer, which post pandemic (which I hope is sooner than we expect) the situation may look very good again.

But, But and But again…. When things look good… look for bad…

One aspect that doesn’t seem to be getting quite as much focus and attention as it probably should is Geopolitics – and the specific risks global tension zones could suddenly turn hot, specifically Taiwan and Ukraine. Speaking to clients yesterday – everyone had a multiplicity of views on stocks, covid, credit, bonds and inflation, but no one was really talking about the destabilisation risks of global tension and conflict.

And that’s probably a mistake as things look likely to come to head soon in Ukraine and the South China Seas.

Maybe we discount the geopolitical threats because we like to focus on the threats we understand and can predict. We can make a decent stab at explaining predicted inflation – considering every little detail like CPI, the pace of innovation and long-term demographics, to put together well constructed arguments. We can look logically at individual stocks and sectors and make educated assumptions on business models, profits and fundamental returns. We can look at volatility and bond yields and come up with risk assumptions about correlations across markets.

But watching Europe, the US, China and Russia and trying to predict how they will behave – especially in today’s fraxious market – is like watching a game of poker in a darkened room.

You have some idea of who holds what cards, but no idea on how they might play them. We can make all kinds of assumptions about the motivations, the relative military and political strengths, and the weaknesses of each player – we really don’t know what makes them tick, what their respective appetites for risk might be, their ultimate objectives, or what they are prepared to do to achieve them.

So, this morning, I shall go off-piste on one my irregular jaunts into an area where I have no particular knowledge or experience of – although I might have some pretty good contacts. Weigh the risks and what the potential scenarios mean.

Actual hostilities would doubtless absolutely challenge markets – triggering a massive flight to quality: buy Gold and Treasuries. In such an environment you can forget about Crypto-currencies. People will want real assets. Power for computers may become dicey, and the Russians might just press the destruct button to discombobulate crypto markets/shams in order to ferment domestic dissent in the West from furious meme-stock traders who will think they’ve been robbed!

Hot wars are always a classic sell the fact moment, before turning into a potential buy moment as the news develops, if/when peace is achieved or, hopefully, the west triumphs.

But will it actually happen? Nobody really expects conflict… do they? That’s exactly what we thought in August 1914 and March 1938. Conflicts can take years to quietly fester and brew, but can turn hot in an instant on a miscalculation.

It would be a mistake to think the chances of conflict are purely down to current personalities. Distrust of Russia has characterised the West for centuries – they may be European, but they are very very different. (Personally, on the individual level Russians are great fun and I like them, but they can be very dark..) The Chinese are a very different prospect, but their 4000 years of continuous history illustrates that no Emperor or Dynasty ever sits easy on throne – whatever President Xi may think he has acheived.

Let’s try and think about the threats…

I read about the Chinese building full-scale mobile mock-ups of a Gerald Ford class US Aircraft Carrier and escort vessels in the vastness of Xinjiang’s Taklamakan desert. They are there so the Chinese can send a clear “do not interfere in Taiwan” warning. These targets will be taken out by China’s 1000 mile range DF-21D “ship-killer” missiles as a demonstration of their power projection. The Chinese believe their missiles are an effective way to deny the US from supporting for Taiwan. That matters, if conjecturally, China’s was able to “manufacture” an incident where suborned domestic politicians called for Chinese “peace-keepers” to protect the populace from an Anti-China coup. China would make the usual noise about it being a domestic issue and warn others to stay away.

But, the US Navy may disagree the missiles are an effective area-denial weapon. Taking out a number of undefended mock-ups in a desert is terribly clever, but the US Navy’s Carrier task forces are very well defended. They are working on anti-ballistic missile systems (ABM) to take down the missiles during their 15 minute flight, and can probably already disrupt the telemetry and systems guiding the missiles. Then the missiles have to get through F-18 fighters ABM screen, the Arleigh Burke class air defence destroyers and their ABM systems, and the final phalanx systems.

The Chinese will probably have to swamp each task force with multiple missiles to ensure “mission kills” (sinking carriers is actually very difficult – as the US Navy found when they sank the USS Kitty Hawk to become a reef.) But each carrier has a crew of 6000 – and the American’s will be loath to risk them.

The danger is an attack on a task force steaming to the defence of Taiwan could rapidly escalate. Neither side would be minded to back down. The missiles 15 minute flight gives the US time to warn off Beijing and threaten to launch a first Nuclear strike. The Chinese simply don’t have the warheads to match an American attack – although they are rapidly building more. Missiles in the South China Sea could turn hot in moments.

Meanwhile, the Ukraine is a major challenge to the West and Russia. There is an article in the Washington Post well worth reading if your want the background: “Russia’s rifts with the West keep growing. How did we get there.” It reads like something out of the inglorious summer of 1914.

Sit back and analyse it and both sides have backed each other into a corner. If the West sits back and lets Putin “intervene/invade” where would that leave Nato’s credibility? Putin has little alternative to look big to maintain his strong-man image. Historically, Ukraine is the road to Moscow, and its inconceivable it could end up in the hands of Nato.  He wants Ukraine back in the Russian fold and a key part, alongside Belarus, of Moscow’s security buffer.

Last week’s abortive revolution in Kazakhstan may have caught Putin by surprise, but if it was a manufactured warning from the West not to interfere in Ukraine by reminding Russia just how week some allied nations are, then it was a mistake. Its already served as an opportunity for Putin to stamp it out with Russian troops, rally his close states, forcibly reminding them who is charge, and committing them to his narrative.

Putin has repeatedly said he has no intention of invasion, successfully convincing the West he will. America has no boots on the ground, but is making a great deal of noise about the sanctions and “very angry letters telling Vladmir how angry they are” if he were to cross the border. And if Putin invades, his armies may well be tested. Ukraine’s military are not expected to last long. On the other hand, in December the Russians staged a dramatic paradrop assault exercise on the Ukraine border – but what Nato Analysts saw was a Russian Airforce short of transports and logistical support.

Long-term it may even be in the West’s interest to let Putin in – although the short-term credibility costs would be huge. The conspicuous domestic wealth of the west, and relative lack of popular support for authoritarian Putin dependent regimes in the satellite states (Belarus and Kazakhstan, and Ukraine if it’s taken) could prove a major cost and challenge for Russia in the future. And there is no way Russia can afford these costs if it’s under renewed American sanction.

Clearly any serious examination of the geopolitics of today’s market can’t be done in a couple of pages in the Morning Porridge, but I hope it makes you think. I haven’t even mentioned the raw materials and commodities dimension in regard to China, or the potential alliance that seems be forming between Putin and his “new best friend” Xi.

And I haven’t mentioned the potential no-see-um: Iran… What if Iran, encouraged under the radar by Xi and Putin, decides to go rogue in the Middle East? Ouch….

The message is simple – don’t discount the geopolitical background to the current markets.

Tyler Durden Fri, 01/14/2022 - 13:09

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International

Who Owns The Most Satellites?

Who Owns The Most Satellites?

Nearly 7,000 satellites orbit the Earth, serving vital functions such as communication, navigation, and scientific…

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September 28, 2023

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Who Owns The Most Satellites?

Nearly 7,000 satellites orbit the Earth, serving vital functions such as communication, navigation, and scientific research.

In 2022 alone, more than 150 launches took place, sending new instruments into space, with many more expected over the next decade.

But who owns these objects? In this graphic, Visual Capitalist's Bruno Venditti and Miranda Smith utilize data from the Union of Concerned Scientists to highlight the leaders in satellite technology.

SpaceX’s Dominance in Space

SpaceX, led by Elon Musk, is unquestionably the industry leader, currently operating the largest fleet of satellites in orbit—about 50% of the global total.

The company has already completed 62 missions this year, surpassing any other company or nation, and operates thousands of internet-beaming Starlink spacecraft that provide global internet connectivity.

Starlink customers receive a small satellite dish that self-orients itself to align with Starlink’s low-Earth-orbit satellites.

Percentages may not add to 100 due to rounding.

In second place is a lesser-known company, British OneWeb Satellites. The company, headquartered in London, counts the UK government among its investors and provides high-speed internet services to governments, businesses, and communities.

Like many other satellite operators, OneWeb relies on SpaceX to launch its satellites.

Despite Starlink’s dominance in the industry, the company is set to face intense competition in the coming years. Amazon’s Project Kuiper plans to deploy 3,236 satellites by 2029 to compete with SpaceX’s network. The first of the fleet could launch as early as 2024.

The Rise of China’s Space Program

After the top private companies, governments also own a significant portion of satellites orbiting the Earth. The U.S. remains the leader in total satellites, when adding those owned by both companies and government agencies together.

American expenditures on space programs reached $62 billion in 2022, five times more than the second one, China.

China, however, has sped up its space program over the last 20 years and currently has the highest number of satellites in orbit belonging directly to government agencies. Most of these are used for Earth observation, communications, defense, and technology development.

Satellite Demand to Rise Over the Decade

Despite the internet being taken for granted in major metropolitan areas and developed countries, one out of every three people worldwide has never used the web.

Furthermore, the increasing demand for data and the emergence of new, more cost-effective satellite technologies are expected to present significant opportunities for private space companies.

In this context, satellite demand is projected to quadruple over the next decade.

Tyler Durden Thu, 09/28/2023 - 19:20

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International

NIH Doctor Flagged Wuhan Virus Lab Safety Problems As Early As 2017

NIH Doctor Flagged Wuhan Virus Lab Safety Problems As Early As 2017

Authored by Tom Ozimek via The Epoch Times,

A doctor working for the…

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September 28, 2023

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NIH Doctor Flagged Wuhan Virus Lab Safety Problems As Early As 2017

Authored by Tom Ozimek via The Epoch Times,

A doctor working for the U.S. government in 2017 visited the China-based virus research facility that may have leaked the pathogen that causes COVID-19, and sounded the alarm on safety issues at the lab earlier than previously reported, according to documents obtained by The Epoch Times.

Dr. Ping Chen, who worked for the National Institute of Allergy and Infectious Diseases (NIAID), visited the Wuhan Institute of Virology (WIV) in October 2017 and prepared a report for her superiors after her visit.

While a version of her report obtained by a Freedom of Information Act (FOIA) request was fully redacted, Sen. Ron Johnson (R-Wis.) and his team were granted an opportunity to carry out an in-camera review of the report that had some of the redactions removed.

“It is clear to me by talking to the technician that certainly there is a need for training support” at the Wuhan lab, Dr. Chen wrote in the report, parts of which were attached to a letter sent by Mr. Johnson to Department of Health and Human Services (HHS) Secretary Xavier Becerra on Sept. 21.

The letter, which was obtained by The Epoch Times, includes fragments of Dr. Chen's report and suggests that HHS and the U.S. National Institutes of Health (NIH) were aware of safety issues at the Wuhan facility as early as October 2017.

The P4 laboratory on the campus of the Wuhan Institute of Virology in Wuhan, Hubei Province, China, on May 13, 2020. (Hector Retamal/AFP via Getty Images)

Earlier reporting based on two State Department cables and correspondence records obtained by Judicial Watch indicate that NIH was made aware of safety problems at the Wuhan lab in 2018, the year after Dr. Chen's report.

“I think the institute would welcome any help and technical support by NIAID,” Dr. Chen wrote in her 2017 report.

Mr. Johnson wrote in his letter to Mr. Becerra that Dr. Chen's 2017 report partially served as the basis for a Jan. 19, 2018, State Department cable that raised safety concerns about the Wuhan virus lab.

Evidence suggests that SARS-CoV-2, the virus that causes COVID-19, leaked from the Wuhan facility before spreading across the world. According to the so-called lab leak theory, the deadly pathogen that caused the pandemic escaped the Chinese facility, which was conducting risky gain-of-function research on bat coronaviruses that was partially funded by U.S. taxpayer dollars.

Demands

Mr. Johnson demanded that HHS provide a version of Dr. Chen's 2017 report that contains fewer redactions in order to scrutinize its contents more closely and determine how closely it aligned with the cable.

“In the public FOIA document, HHS redacted Dr. Chen’s entire report claiming that it contains privacy and deliberative information,” Mr. Johnson wrote.

“It seems apparent that the only reason that HHS redacted this information was to hide the report’s contents from the American people. Perhaps HHS did not want the public to fully understand the fact that NIH and NIAID officials were aware of safety concerns at the WIV dating as far back as 2017,” he added.

Mr. Johnson also accused NIH and HHS of obstructing his probe.

"HHS and NIH continue to obstruct my oversight efforts," he wrote. "It is unacceptable that HHS and NIH had Dr. Chen's report in its possession and only provided a slightly less redacted version for my staff to review in camera."

He demanded that HHS provide unredacted copies of Dr. Chen's report and all documents and communications relating to the report and to the Wuhan lab.

Mr. Johnson also asked for Dr. Chen to sit before a congressional panel and testify.

He set an Oct. 5 deadline for HHS to comply with his request.

HHS officials didn't immediately respond to a request by The Epoch Times for comment.

Chinese virologist Shi Zhengli is seen inside the P4 laboratory in Wuhan, China, on Feb. 23, 2017. (Johannes Eisele/AFP via Getty Images)

'Preponderance of Evidence' for Lab Leak

In August 2021, a report by Republican lawmakers noted a "preponderance of evidence" that the virus that caused the COVID-19 pandemic leaked from the Wuhan lab.

Chinese officials have denied the lab leak claim, insisting that the virus made a natural jump from animals to humans.

Rep. Michael McCaul (R-Texas) said in testimony before the Coronavirus Select Subcommittee Republicans that evidence points to a lab leak as the likely origin of the virus, saying that "it's time to completely dismiss the wet market as the source of the outbreak" and "the preponderance of the evidence that it came from the lab is very convincing."

U.S. intelligence agencies later said in a report that a natural origin and a lab leak are both plausible hypotheses but that a lack of evidence makes a definitive conclusion either way impossible.

It's a sentiment echoed by Mr. McCaul in his testimony.

"Unfortunately, we may never know for certain because the Chinese Communist Party went to great lengths to cover up this outbreak," he said. "They detained the doctors in order to silence them. They disappeared journalists. They destroyed lab samples. They hid the fact there was clear evidence of human-to-human transmission. And they have refused to allow a real investigation into the origins."

Wuhan Lab Funding Controversy

The U.S. Agency for International Development awarded a total of $1.1 million to the WIV between October 2009 and May 2019, the agency wrote in a May 2021 letter (pdf) to Rep. Guy Reschenthaler (R-Pa.).

Mr. Reschenthaler alleged that the funding was used for a study that used gain-of-function research to create "a hybrid, man-made virus by inserting a spiked protein from a wild coronavirus into a mouse-adapted SARS-CoV backbone, which could infect human airways."

The agency said the funds were channeled through EcoHealth Alliance and were meant for the purpose of advancing research on critical viruses that could pose a threat to humans. It also denied claims that the money was used for gain-of-function research, which seeks to boost viral lethality for the purpose of studying it.

In June 2022, the House Appropriations Committee approved a ban on sending any further funding to the Wuhan Institute of Virology.

More recently, the NIH quietly removed the WIV from a list of foreign facilities that are eligible to receive U.S. taxpayer funds to conduct animal experiments.

Tyler Durden Thu, 09/28/2023 - 19:40

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Government

Murder Crisis Plagues DC As Mayor Begs For More Officers After ‘Defunding Police’

Murder Crisis Plagues DC As Mayor Begs For More Officers After ‘Defunding Police’

How it started. 

How it’s going? 

#NEW – Mayor Bowser…

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September 28, 2023

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Murder Crisis Plagues DC As Mayor Begs For More Officers After 'Defunding Police'

How it started. 

How it's going? 

D.C. Mayor Muriel Bowser, a former supporter of the 'defund the police' movement, urgently calls for increased policing as the nation's capital faces an out-of-control murder crisis. 

"What I can say is this: To me, numbers are just numbers. When we lose one person — whether it's one or 200 — that's too many," Bowser said at a press conference earlier this week. 

Of course, Bowser, like many Democrat mayors, blames firearms as the issue, deflecting any possibility her disastrous social justice reforms only embolden criminals - while punishing law-abiding taxpayers -across the imploding Washington, DC metro area. 

Even the Washington Post can't ignore the murder crisis: 

For the first time in a quarter-century, the year's homicide toll in Washington has surpassed 200 before October — a mark of surging violence that has angered and distressed local leaders, drawn scrutiny from Congress and made some residents question whether they can safely live in the nation's capital.

WaPo added:

The last time D.C. logged its 200th homicide before October was Aug. 12, 1997, in a year that ended with 303 people slain, according to police data. After that, annual totals generally trended downward, staying below 200 from 2004 to 2020, with a low of 88 in 2012. But the killing pace has picked up again, reaching 226 in 2021.

Heading into the 2024 presidential election cycle, Democrats will never admit their social justice reforms have failed. They conveniently blame guns. 

Directly north of D.C. lies another crime-ridden metro area: Baltimore City. And this week, mass looting was seen in Philadelphia. And just north of Baltimore and Philadelphia, New York City's progressive mayor recently warned of financial ruins due to a migrant crisis. 

Democrats have transformed cities into absolute messes. 

Tyler Durden Thu, 09/28/2023 - 20:00

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