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S&P Futures Jump To Five Month High, Dollar Spikes In Bullish Start To New Month

S&P Futures Jump To Five Month High, Dollar Spikes In Bullish Start To New Month



S&P Futures Jump To Five Month High, Dollar Spikes In Bullish Start To New Month Tyler Durden Mon, 08/03/2020 - 08:19

World stocks rose and US futures jumped to the highest level since late February even as U.S. lawmakers struggled to agree on the next round of coronavirus aid while Covid cases around the globe continued to rise, while a squeeze on crowded short positions left the dollar clinging to a tentative bounce.

S&P 500 futures turned higher, reversing earlier losses with Microsoft rising in pre-market trading as it tried to salvage a deal for the U.S. operations of TikTok. Marathon Petroleum jumped after agreeing to sell its gasoline-station business for $21 billion. Still, investors remained jittery amid the lack of a progress on the stimulus package and White House Chief of Staff Mark Meadows not optimistic about a deal.

"Three months to go until the U.S. Presidential election! Surely Congress will want to get something over the line regarding new stimulus in the U.S. driven more by politics than necessarily economics," said Chris Bailey, European strategist at Raymond James.

On Friday, Fitch Ratings cut the outlook on the United States’ triple-A credit rating to negative from stable and said the direction of fiscal policy depends in part on the November election and the resulting makeup of Congress, cautioning that policy gridlock could continue. However, as Reuters notes, those concerns have hardly hit the U.S. technology sector, evident in Friday’s record highs, with Apple overtaking Saudi Aramco to become the world’s most valuable company.

In Europe, stocks were up over 1% with all but four sector indexes advancing, with gains led by automakers, technology and chemicals sub- indexes, which are all up at least 1.7%. Travel and leisure stocks are the worst performers. Technology stocks rallied on positive read-across from peers on the other side of the Atlantic, while automobile shares jumped after the euro area recorded its first manufacturing expansion in one-and-a-half years when the final Eurozone mfg PMI printed at 51.8, above the 51.1 expected.

Spanish stocks, meanwhile, declined on Monday as the country saw the biggest jump in coronavirus cases since a national lockdown was lifted in June, while data showed international tourist arrivals to the country fell 98% year on year in June.  “Second wave virus concerns are building in Australia, Europe etc. but no huge risk-aversion move,” said Bailey.

European gains were also limited by a selloff in big banks’ shares, with index heavyweight HSBC falling 5% to a fresh 11 year low after it warned that its bad debt charges could surge to as much as $13 billion, and France’s Societe Generale reported a 1.26 billion euro ($1.48 billion) second-quarter loss.

Earlier in the session, Asian stocks also gained, led by communications and health care, after falling in the last session. Most markets in the region were down, with Jakarta Composite dropping 2.8% and Singapore's Straits Times Index falling 1.9%, while Japan's Topix Index gained 1.8%. The Topix gained 1.8%, with ISB and ITmedia rising the most. The Shanghai Composite Index rose 1.8%, with Raytron Technology and Piesat Information Technology Co Ltd posting the biggest advances as investor margin debt resumed its climb.

Factory activity data from China showed the fastest pace of expansion in nearly a decade.

That helped China's blue chips rally 1.6%, offsetting worries about U.S.-China relations. Japan's Nikkei meanwhile added 2.2%, courtesy of a pullback in the yen.

"There is going to be a recovery -- we shouldn’t lose track of that as we go through this period,” Anne Anderson, head of fixed income at UBS Asset Management Australia, said on Bloomberg TV. “But returning to where we were before we started is going to be a real challenge and is going to require ongoing monetary and fiscal support. It’s a long way out of here."

Meanwhile, tension between the U.S. and China emerged as another threat to risk appetite. The Trump administration will announce measures shortly against “a broad array” of Chinese-owned software deemed to pose national-security risks, U.S. Secretary of State Michael Pompeo said. Even so, shares advanced in Japan and China, where mainland-listed technology stocks surged on expectations of support from Beijing in response to U.S. moves against Chinese-owned software companies.

In FX, Dollar bears also took some profits as short positions hit an 11 year high, with the Bloomberg Dollar Spot Index heading for its biggest two-day gain in seven weeks, with the greenback rising against all Group-of-10 peers except the Swedish krona and the yen.

but any further gains were capped by the slowing U.S. economic recovery from COVID-19 and real rates breaking below -1% for the first time. 

The real 10Y rate hit a record low amid a marked flattening of the yield curve as investors wager on more accommodation from the Federal Reserve.

The euro and the pound were down only slightly with the dollar at $1.1755 per euro and $1.3065 per pound. Both the currencies recorded their best monthly gain in nearly a decade in July.

“Amid improvements in business sentiment, signals are emerging that the initial boost from pent-up demand is fading and consumer confidence is slipping lower,” economists at Barclays wrote in a note. "Together with concerns about labour market and virus developments, this clouds the outlook and could be exacerbated if U.S. fiscal support is not renewed in time."

In rates, 10-year Treasury yields were higher at 0.5576% after touching the lowest level since March last week. German government bond yields rose slightly to -0.527%. Treasuries bear steepened as month-end support came out of the market and investors looked ahead to Wednesday’s supply announcement where record sales of notes and bonds are expected.  Yields higher by up to 3bp across long-end of the curve with front-end broadly anchored, steepening 2s10s, 5s30s by ~1.5bp each; 10-year yields around 0.545%, cheaper by 1.5bp vs. Friday close while bunds, gilts outperform by ~2bp each. Yields on 30-year U.S. Treasuries are set for the biggest daily increase since June 30 as U.S. equity futures advance and the bond curve bear-steepens.  As Bloomberg adds, a busy week of IG corporate issuance also expected, adding to downside pressure on Treasuries along with delta hedging large option package.

The recent decline in the dollar combined with super-low real bond yields has been a boon for gold, which hit $1,984 an ounce on Monday and seemed on track to take out $2,000 soon.

In other commodities, oil prices eased on concerns about oversupply as OPEC and its allies are due to pull back from production cuts in August while an increase in COVID-19 cases raised fears of slower pick-up in fuel demand. Brent crude futures dipped 46 cents to $43.06 a barrel, while U.S. crude eased 51 cents to $39.76.

On today's calendar, economic data include ISM and Markit manufacturing data. Ferrari is among today’s scheduled earnings.

Market Snapshot

  • S&P 500 futures down 0.1% to 3,260.50
  • STOXX Europe 600 up 0.4% to 357.57
  • MXAP up 0.3% to 165.11
  • MXAPJ down 0.4% to 549.24
  • Nikkei up 2.2% to 22,195.38
  • Topix up 1.8% to 1,522.64
  • Hang Seng Index down 0.6% to 24,458.13
  • Shanghai Composite up 1.8% to 3,367.97
  • Sensex down 1.7% to 36,967.20
  • Australia S&P/ASX 200 down 0.03% to 5,926.09
  • Kospi up 0.07% to 2,251.04
  • Brent Futures down 0.6% to $43.24/bbl
  • Gold spot down 0.2% to $1,972.89
  • U.S. Dollar Index up 0.1% to 93.44
  • German 10Y yield rose 0.4 bps to -0.52%
  • Euro down 0.03% to $1.1775
  • Brent Futures down 0.6% to $43.24/bbl
  • Italian 10Y yield rose 4.2 bps to 0.887%
  • Spanish 10Y yield rose 0.2 bps to 0.342%

Top Overnight News from Bloomberg

  • Factories across the euro area saw a stronger return to growth in July than initially reported, marking the region’s first manufacturing expansion in one-and-a-half years while economies from Germany to Italy beat expectations. In the U.K., although numbers were slightly below flash estimates, manufacturing grew at the fastest pace in almost three years as the nation’s lockdown eased
  • Gold’s spot and futures prices opened the week by hitting records, with the metal for immediate delivery closing in on $2,000 an ounce as the search for haven assets continues amid the coronavirus pandemic
  • Microsoft chief executive Satya Nadella attempted to salvage a deal for the U.S. operations of TikTok by speaking with President Donald Trump by phone
  • Oil edged below $40 a barrel in New York as OPEC and allied producers started to unwind output cuts even as many countries are still struggling to contain the virus

Asian equity markets began the new trading month mixed after last Friday’s positive close on Wall St where the tech sector rallied following earnings from the industry giants including Apple which rose to a fresh record high, but with upside in the region restricted ahead of this week’s risk events and after continued stalemate in US coronavirus relief discussions. ASX 200 (flat) was subdued as gains in commodity related sectors were offset by underperformance in the top weighted financials and with trade hampered by reduced liquidity due to bank holiday in New South Wales, while risk appetite was also weighed by a state of disaster declaration in Victoria with the state capital of Melbourne to be subjected to tougher restrictions including a curfew through to at least September 13th. Nikkei 225 (+2.2%) was the stellar performer as it coat-tailed on recent favourable currency flows and after Q1 Final GDP topped estimates, although there were some notable losses seen in Shinsei Bank and Mazda post earnings, as well as Seven & I on news it is to acquire Speedway convenience stores from Marathon Petroleum in a deal valued around USD 18.9bln. Hang Seng (-0.6%) and Shanghai Comp. (+1.8%) were mixed after PBoC inaction resulted to a CNY 100bln liquidity drain and as participants digested a more than 50% drop in HSBC HY profits, as well as the highest Chinese Caixin Manufacturing PMI reading since 2011. There was also plenty of focus around tech after reports that President Trump is to allow 45 days for ByteDance to negotiate the sale of TikTok to Microsoft and will reportedly take action on Chinese software companies that threaten national security in the approaching days. Finally, 10yr JGBs were lower amid a surge in Japanese stocks and with the BoJ present in the market for JPY 450bln of JGBs predominantly focused on 1yr-3yr maturities, while the central bank recently announced its buying intentions for August in which it maintained the current pace of purchases for all maturities.

Top Asian News

  • Why Investors Keep Losing Money Betting Against the Hong Kong Dollar Peg
  • Goldman, BofA Left Off Ant IPO for Work With Alibaba Rivals
  • SoftBank, Naver to Start Joint Tender Offer for Line on Aug. 4

Mixed trade in the European equity sphere (Euro Stoxx 50 +0.6%) after a similar lead from APAC markets, as participants remain on standby for this week’s key risk events - including US ISM and labour market report alongside any updates on fiscal stimulus talks. Core EU bourses saw some upside in the run-up to the Final Manufacturing PMIs, potentially on optimism for higher revisions, but indices have since remained contained. UK’s FTSE 100 lags the core markets on currency dynamics, and with the Financial sector hit on the back of dismal earnings from HSBC (-5.1%) where Q2 profit slumped and loan loss provisions rose almost seven-fold. Furthermore, SocGen (-3.1%) adds to the woes in the sector after posting a surprise loss due to pandemic impact on equity trading. Energy names have also lost steam amid price action in the complex, but overall European sectors remain mixed with no clear risk tone to be derived. The sectoral breakdown sees Travel and Leisure at the bottom as second wave fears materialise in the sector. Elsewhere of note, AI company Shanghai Zhizhen Network Technology is suing Apple for around USD 1.4bln over virtual assistant patent violations, WSJ reported.

Top European News

  • U.K. Manufacturing Grows as Sector Starts Long Road to Recovery
  • Euro-Area Factories Returned to Growth Amid Severe Jobs Cuts
  • Real Estate Stocks Fall on Lockdown Concerns, Negative Sentiment

In FX, mixed macro impulses for the Franc as Swiss CPI was considerably firmer than forecast, but the manufacturing PMI fell short of expectations and the key 50.0 mark to leave Usd/Chf eyeing 0.9200 and Eur/Chf even closer to 1.0800 following yet another rise in weekly bank sight deposits. Moreover, the cross has rebounded amidst Eurozone manufacturing PMIs that beat consensus and underpinned EU stocks alongside economic recovery hopes. Conversely, the COVID-19 escalation in Melbourne, Victoria has prompted a state of disaster amidst tougher restrictions and a curfew in the capital until September 13, at the earliest, on the eve of the RBA policy meeting – full preview of the event available on the headline feed – to the detriment of the Aussie that is holding just above 0.7100 vs the Greenback compared to last Friday’s 0.7200+ new ytd peak.

  • USD - The Dollar has handed back some of its pre-month end gains after the DXY rebounded further from fresh 2020 lows (92.546) to 93.708 and is now pivoting 93.500, with additional support coming via M&A flows due to deals amounting to Usd 16.4 bn and Usd 21 bn for US companies from German and Japanese rivals respectively. Ahead, the final Markit manufacturing PMI, ISM equivalent and construction spending before a duo of Fed speakers (Bullard and Evans).
  • JPY/GBP/NZD - All intiailly firmer against the Buck, or off worst levels to be more precise, as the Yen regains composure following its aggressive reversal from the low 104.00 area to 106.40+, while Sterling revisited 1.3100 from not far off 1.3050 even though the final UK manufacturing PMI was revised down a tad and the coronavirus outbreak in Northern England has reached ‘major incident’ proportions in Greater Manchester. Elsewhere, the Kiwi is benefiting from the aforementioned Aussie travails to an extent given Aud/Nzd pulling back below 1.0750 to keep Nzd/Usd more buoyant on the 0.6600 handle despite reports that hedge funds are implementing bearish positions ahead of the RNBZ later in August.
  • EUR/CAD/SEK/NOK - Some traction for the Euro within 1.1796-42 parameters vs the Greenback in wake of the better than prelim/anticipated Eurozone manufacturing PMIs, but no confirmed breach of resistance in the form of the 100 HMA (1.1779), while the Loonie is sub-1.3400 amidst another downturn in crude prices that is also hampering the Norwegian Krona relative to its Swedish counterpart after the manufacturing PMI reclaimed 50.0+ status and retail sales picked up pace. Indeed, Eur/Nok is hovering around 10.7500 in contrast to Eur/Sek testing 10.3100 vs highs of 10.7860 and 10.3515 respectively.
  • EM - The Yuan is keeping its head above 7.0000 on the back of China’s Caixin manufacturing PMI exceeding forecast at 52.8 for the strongest print since January 2011 and the Rouble is consolidating off recent lows circa 74.0000 awaiting the latest CBR MPR, but the Rand is lagging near 17.3000 after a steep decline in SA tax receipts for the fy through end July.

In commodities, WTI and Brent front-month futures remain subdued in early European trade with little by way of fresh fundamental catalysts, but with that being said, OPEC+ are poised to ease the magnitude of the agreed-upon cuts this month which will see an additional 1.9mln BPD of supply entering the market – this was reflected by the Russian oil and gas condensate output for the first half of August. It is also worth bearing in mind that the extra supply comes against the backdrop of rising second-wave fears which have prompted some cities to re-enter lockdown, whilst others deferred their reopening plans. Elsewhere, spot gold remains uneventful after testing support at USD 1970/oz (vs. fresh high 1987.94), with the yellow metal decoupled from Dollar dynamics (for now) as prices remain near record highs. Spot silver sees similar lacklustre action sub 24.50/oz. Turning to base metals, Dalian iron ore futures rose in excess of 4% to hit 12-month highs on a firm demand outlook. Conversely, copper touched a three-week low despite the strong Chinese factory data, with some citing second wave fears.

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 51.3, prior 51.3
  • 10am: ISM Manufacturing, est. 53.5, prior 52.6
  • 10am: Construction Spending MoM, est. 1.0%, prior -2.1%
  • Wards Total Vehicle Sales, est. 14m, prior 13.1m

DB's Jim Reid concludes the overnight wrap

A happy August to you all. This morning’s EMR is brought to you by the powers of paracetamol and ibuprofen as I played my one and only game of cricket this season over the weekend. It was President’s Day and I’m the President of my club so I couldn’t really avoid coming out of semi-retirement for a game I played pretty much every summer weekend from around 1983 to 2011. Running, diving, throwing, bowling, eating a big tea all took a big toll out of me.

My performance certainly wasn’t as good as markets were in July, unless the dollar was my benchmark. Craig (who is still in a state of shock after Arsenal won the FA Cup final on Saturday) has already published July’s performance review this morning (link here) where the highlights were a bumper month for Silver and Gold and a poor month for the dollar. Silver (c.+35%) had its best month since December 1979 and the dollar the worse for a decade. US equities had a good month in spite of rising virus caseloads due to a strong earnings season relative to expectations, especially in tech towards the end of the month. YTD Silver, Gold and the NASDAQ have been the three best performers while at the bottom of the leaderboard Brent, WTI and European Banks are all down at least 30%.

In terms of how August is faring so far, it’s been a mixed start in Asia with the Nikkei (+1.95%) and Shanghai Comp (+1.08%) both posting decent gains, the Hang Seng (-0.95%) down and the Kospi and ASX little changed. Meanwhile, yields on 10yr USTs are up +1.3bps and futures on the S&P 500 are down -0.08%. In terms of data releases, China’s June Caixin manufacturing PMI came in at 52.8 (vs. 51.1 expected) which was the highest reading since Jan 2011 while Japan’s final manufacturing PMI reading was confirmed at 45.2 (vs. 42.6 in preliminary read). We also got Japan’s final annualized 1Q GDP print this morning, printing at -2.2% qoq (vs. -2.8% qoq expected).

In terms of weekend news, US Secretary of State Michael Pompeo has said that the White House will announce measures against “a broad array” of Chinese-owned software deemed to pose national-security risks. This follows President Trump saying on Friday that he intends to ban music-video app TikTok from the US. Meanwhile, on the fiscal stimulus negotiations in the US, there are reports that Democrats and Republicans continue to remain far apart on the plan to restore a $600-per-week jobless benefit that expired last week. Negotiations will continue today.

Looking at coronavirus numbers for the weekend, growth rates for new cases slowed in the US to an average of 1.13% per day (vs. average growth of 1.70% over last 5 weekends). The same was true for the most populous states like Texas, Florida, California and Arizona. The fatalities growth rate also slowed in Texas (1.35% vs. 1.89%) and Arizona (0.96% vs. 2.45%) but continues to remain high in Florida (1.75% vs. 1.34%) and California (1.13% vs. 0.73%). Meanwhile, the White House coronavirus task force head Deborah Birx said the pandemic is in a “new phase” as it spreads across U.S. rural and urban areas. In Asia, Australia’s Victoria state declared a state of disaster and has ordered Melbourne’s residents to stay home except for work, medical care, provisions or exercise. The city is now under curfew between 8 p.m. and 5 a.m and the new restrictions will be in force for six weeks. The state reported 671 new cases in the past 24 hours. Please see the regular case and fatalities table in the PDF for more. Finally, the latest on a possible vaccine is that the Serum Institute of India received approval for conducting phase two and three clinical trials of the Covid-19 vaccine candidate developed by the University of Oxford and AstraZeneca in the country.

Looking ahead to this week now, the release of PMIs from around the world (today and Wednesday mostly) will set the tone, before the July US jobs report on Friday rounds out the week. On the central bank front, we will hear the monetary policy decision from the Bank of England and Governor Bailey’s ensuing press conference on Thursday. The market also enters the second half of Q2 earnings season, which has already seen a record number of beats in the S&P 500.

Going through in more detail now, the majority of manufacturing PMIs are out on today, before services and composite PMIs come out on Wednesday for the most part. There’ll also be the ISM manufacturing index from the US (today). The key here will be to see how differentiated PMIs are given that some governments around the world are cautiously easing restrictions with others needing to tighten. For the countries where we already have a flash PMI reading, they generally showed that the recovery has more momentum in Europe than in the US. Many of the flash European levels were the strongest in at least two years, while both manufacturing and services PMIs in the US failed to meet expectations. As ever caution is required as these are diffusion indices which simply monitor whether activity is better or worse than the previous month. Remember that the US was never as shutdown as Europe so momentum was always likely to be more in the latter’s favour regardless of the recent rise in cases.

In terms of payrolls on Friday, markets are generally expecting a third straight month of gains, though likely at a slower rate than we saw in June. DB are looking for a further +900k gain in the headline, below consensus estimates at +1.578m. This follows last month’s blowout +4.8m increase. Our economists also see the unemployment rate falling to 10.5% from 11.1%, in line with the median estimate. This data will give some insight into how the renewed spread of the coronavirus through the US, especially in the South and West have affected the US economy. The rest of the key data can be found in the day by day week ahead guide at the end.

On the central bank front, one highlight will be the Bank of England meeting and Governor Bailey’s ensuing press conference on Thursday. While our DB economists are not expecting any change to the policy rate this meeting, there is a chance for a dovish surprise on the overall commentary and tone. Focus will be on the central bank’s economic projections, the ongoing review of the effective lower bound, and the path of QE. See their preview here .

Elsewhere in central banks, India and Brazil are also releasing their policy decisions on Wednesday and Thursday, respectively. The two countries have the highest confirmed coronavirus caseloads outside the US, and are expected to lower interest rates in light of the continued economic impact of the pandemic. Following the FOMC last week and the lifting of the blackout period, we will hear from the Fed's Bullard, Evans, Mester and Kaplan.

Earnings will continue to be in focus, with 133 companies reporting from the S&P 500 and a further 95 from the STOXX 600. Among the releases include HSBC, Heineken, Siemens, Berkshire Hathaway, and Ferrari today. Then tomorrow markets will hear from Bayer, Diageo, Fidelity, BP, Walt Disney and Activision Blizzard. Wednesday will see Deutsche Post, Allianz, Humana, Bayerische Motoren, Regeneron Pharmaceuticals, CVS Health, MetLife and Fiserv release earnings. Following that, Thursday includes Merck, AXA, Siemens, adidas, Bristol-Myers Squibb, Novo Nordisk, Becton Dickinson & Co, Zoetis, T-Mobile, Illumina. Finally on Friday, Standard Life Aberdeen, Norwegian Cruise Line, Royal Caribbean Cruises and Ventas. So another busy week.

To review last week now, global equity markets were bifurcated with US stocks outperforming after beating low earning expectations, particularly in tech. The S&P 500 rose +1.73% (+0.77% Friday) led primarily by the mega cap tech stocks which reported towards the end of last week. With Apple, Facebook, and Amazon in particular surprising on earnings, the tech-focused Nasdaq outperformed this week as the index rose +3.69% (+1.49% Friday). Over 60% of the S&P have now reported and the index has seen a record of just under 85% of companies beat EPS estimates. Remember that the issue with this earnings season was that analysts didn’t increase their estimates in June as macro surprises beat. This left a great set up for earnings versus expectations.

Risk assets in Europe did not fare as well with European equities down -2.98% (-0.89%) over the 5 days, pushing the index down -1.11% for July. It was the first monthly loss since March as cyclical sectors led the declines following more concerns on the economic outlook and small rises in cases across the continent.

Even as US equities rose, core sovereign bonds fell with US 10yr Treasury yields falling -6.1bps (-1.8bps Friday) to a record closing low of 0.528%. Similarly, UK 10yr gilts rose +1.6bps on Friday to be just off Thursday’s all-time closing lows to fall -4.0bps overall on the week to 0.10%. German bunds fell -7.6bps to -0.52%, while a souring risk appetite saw wider peripheral spreads to bunds in Italy (+9.2bps), Spain (+6.3bps), Portugal (+7.1bps) and Greece (+9.7bps). The dollar fell over -1.0% on the week for the second week in a row, and has not seen a weekly rise since mid-June when economic data and US cases started getting worse again. With yields and the greenback falling, gold continued its breakneck rally. The metal rose +3.88% (+0.98% Friday) to another all-time record of $1975.86/oz.

On Friday, we received Q2 GDP data from the majority of Europe. This came following Thursday’s data out of the US, Germany and China. We learned that Euro Area quarterly GDP fell by -12.1%, right in-line with estimates and the largest decline on record. France GDP shrank -13.8% (vs. -15.2% expected), with the construction sector seeming to be hit the hardest after falling about -24% in the second quarter. Italy similarly showed a slightly ‘better’ GDP print than expected, coming in at -12.4% (vs. -15.5%). Unlike France and Italy, Spain’s data came in under projections with the economy contracting -18.5% (vs. -16.6% expected). In other data, German retail sales fell -1.6% MoM, better than the expected -3.3% drop, but somewhat expected given the +12.7% rise last month. In the US, July MNI Chicago PMI surprised by rising into expansionary territory at 51.9 vs 36.6 last month and well above the 44.0 estimate. Finally, the preliminary July University of Michigan survey showed sentiment fall -0.7pts to 72.5, just below estimates of 72.9. The slight drop in sentiment was driven by a -2.7pt move lower in current conditions even in light of a slight rise in expectations.

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Did The Israeli-Palestinian Conflict Just Sink Ukraine As A Warhawk Darling?

Did The Israeli-Palestinian Conflict Just Sink Ukraine As A Warhawk Darling?

By most accounts from the front and according to the strategic…



Did The Israeli-Palestinian Conflict Just Sink Ukraine As A Warhawk Darling?

By most accounts from the front and according to the strategic information currently on hand, the war in Ukraine is all but over and Russia has essentially won.  Russia continues to occupy at least 20% of Ukrainian lands and has solidified its lines.  As expected, Ukraine's much hyped counteroffensive was hot air and it is clear that their ability to field combat ready soldiers has been greatly diminished.  Without an offensive capable military, Ukraine has nothing left except whatever mid range arms NATO gives them to harass Russian forces to minimal effect.  All Putin has to do is bide his time until the money and weapons run out.  

But even worse still for Zelensky and friends is the fact that the propaganda machine driving western sentiment and monetary support is quickly dying.  Admissions of “war fatigue” among Americans and Europeans are beginning to surface and majority support for further funding has ended.  Without a clear outline of what victory in Ukraine actually looks like, and with many in the west facing stagflationary crisis, enthusiasm has floundered.  It should also be noted that the war in Ukraine never garnered any meaningful American support for the deployment of troops, and for good reason.

No one wants to jump headlong into WWIII.

With Ukraine becoming the ugly girl at the school dance, the attention of establishment warhawks (Neo-cons and Democrats) has swiftly shifted over to Israel, much to the dismay of Zelensky.  The Ukrainian leader warned in an interview with a France 2 broadcaster:

"There is a risk that international attention will turn away from Ukraine, and that will have consequences...”

Zelensky has desperately tried to associate Ukraine with Israel as if the two nations are engaged in the same fight.  He even went as far as to insinuate that Vladimir Putin was the mastermind behind the destabilization of the Middle East and insisted that NATO funding packages for Israel should be tied to funding packages for Ukraine. 

Let's not forget how disjointed and strange a Ukraine/Israel association would be, given Ukraine's Nazi leanings.  This is the same government that actually invited a real life Nazi SS officer to be applauded by Canada's parliament as a war hero just last month.  The disconnect may be the reason why the Israelis rejected military aid to Ukraine for so long.     

The Biden Administration is running with the multi-war package idea, asking Congress to approve additional funding for Ukraine, but attaching it to a plan which would include funding for Israel, Taiwan, and US border security.  In other words, if conservatives want the border to be protected, they must agree to spend hundreds of billions of dollars on two ongoing war fronts as well as a third potential front with China.

It is highly unlikely according to officials on both sides of the aisle that this will succeed.  But, when the establishment piles on a host of different projects into a single funding plan, it is usually because this allows them to enter into false negotiations.  That is to say, there are certain projects they actually want and others they don't care about.  They cut the funding programs they never intended to keep so that congress can feel like they gained something in the bargain.  The question is, which war do they really want to fund, knowing they will not get congressional approval for both?

Israel is better placed to become the new warhawk darling, given the country garners more sentiment from US and European conservatives who are increasingly wary of Ukraine.  The far-left support of Ukraine and their rabid anti-Russia propaganda has left many conservatives suspicious of the entire affair.  Leftists are revealing a similar zealotry in favor of Palestinian intifada, which might convince people on the right to support Israel by default.   

Right or wrong, it's easier to find Republicans that favor Israel simply on religious grounds than it is to find those that care about Ukraine, and this seems to be the key to the future of the establishment agenda – A conservative majority must be onboard for any new war endeavor to last.  Ukraine's failures have proven that.

There may be an overestimation, however, in terms of how many conservatives are open to funding yet another foreign quagmire.  Fears of Islamic extremism are justified, but not necessarily enough to compel Americans to ignore their own mounting problems at home.  Selling them on a plan to commit US funds and even military forces to Israel might be more difficult than the establishment thinks.

Tyler Durden Mon, 10/16/2023 - 02:45

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Equifax fined more than £11m by the FCA

This action follows incidents going back to 2017, when, according to the FCA, the company’s parent, Equifax Inc. (EFX), was subject to one of the largest…



This action follows incidents going back to 2017, when, according to the FCA, the company’s parent, Equifax Inc. (EFX), was subject to one of the largest cybersecurity breaches in history. The findings showed that hackers accessed the personal data of approximately 13.8 million people in the UK during this breach.

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Information such as names, dates of birth, phone numbers, login details, and partial credit card details were among the data accessed. The FCA maintains Equifax could have prevented this cyber attack if it treated its relationship with the US-based parent company as outsourcing.

Jessica Rusu Source: LinkedIn

Equifax did not discover the breach in UK consumer data safety until 6 weeks after Equifax Inc. became aware of the issue. The FCA said the company, which received notification only minutes before the parent company announced the incident, could not cope with the influx of queries and complaints. The regulator’s chief data, information and intelligence officer, Jessica Rusu, added:databreach

Cyber security and data protection are of growing importance to the security and stability of financial services. Firms not only have a technical responsibility to ensure resiliency, but also an ethical responsibility in the processing of consumer information. The Consumer Duty makes it clear that firms must raise their standards.

The post Equifax fined more than £11m by the FCA appeared first on LeapRate.

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Are Cold War Treaties Beginning To Crumble?

Are Cold War Treaties Beginning To Crumble?

Authored by RFE/RL Staff via,

The CTBT, signed in 1996, aimed to reduce the threat…



Are Cold War Treaties Beginning To Crumble?

Authored by RFE/RL Staff via,

  • The CTBT, signed in 1996, aimed to reduce the threat of nuclear war and the spread of radioactive material.

  • Despite the US not ratifying it, most signatories, including Russia and the US, have adhered to its terms.

  • Tensions and increased weapon development hint at Russia's potential decision to withdraw, further eroding international arms control frameworks.

The Anti-Ballistic Missile Treaty. The Intermediate-Range Nuclear Forces Treaty. The Treaty on Open Skies. New START.

For years, the pillars of international arms control have been crumbling: agreements signed by Washington, Moscow, and others during and after the Cold War aimed at reducing the threat of nuclear war, costly arms races, or overall military tensions.

The Comprehensive Nuclear-Test-Ban Treaty may be the next to go.

Signed in 1996, the treaty was a major step to preventing the spread of nuclear weapons technology and keeping a lid on the arsenals of the world's biggest nuclear powers. Along with earlier treaties, the agreement, known as the CTBT, also aimed to reduce the spread of radioactive material that was blasted into the atmosphere and the oceans during the frenzied days of the Cold War.

Here's the problem: The treaty never went into effect because a number of countries, including the United States, never ratified it.

Still, most signatories -- including Russia and the United States, whose arsenals are by far the biggest in the world -- have abided by the ban.

Now, however, Russia is making noises about backing out and "de-ratifying" the treaty.

Here's what you need to know about the CTBT and its potential unraveling:

How'd It Come About?

The United States and the Soviet Union, as well as Britain, conducted hundreds of nuclear tests between 1945, when the world's first atomic bomb was detonated in the U.S. state of New Mexico and 1961, when Soviet officials detonated the world's most powerful weapon, the Tsar Bomba. France joined the nuclear testing club in 1960; China, in 1964.

The fallout, literal and figurative, from the testing led to a partial ban on atmospheric, oceanic, and space tests in 1963; underground tests continued to be allowed.

In 1974, India tested its first nuclear device, further expanding the nuclear club. A 1980 test by China became the last atmospheric test by any country anywhere.

Moscow's final test -- underground -- occurred in October 1990 on the remote Arctic archipelago called Novaya Zemlya. Britain, the United States, France, and China all conducted their final tests in the years that followed, prior to 1996, mainly underground.

What's It Do?

The CTBT basically bans all tests that result in a fission chain reaction, essentially a nuclear explosion.

Signed in 1996, the treaty was sent out to 187 signatory countries for ratification, but it has never come into effect because of a group of holdout countries.

Russia signed and ratified the treaty in 2000. The United States signed, but the U.S. Senate refused to ratify, citing concerns about verifying other countries' compliance with the ban. Despite nonratification, the United States has complied with the moratorium. China signed but didn't ratify.

Neither India, nor Pakistan, nor North Korea -- all of which have conducted open nuclear tests since 1996 -- is a member.

The treaty does allow for states to conduct subcritical, or zero-yield tests. Those involve explosives and nuclear materials but do not result in a fission reaction, the reaction that gives atomic weapons their terrible power. Both the United States and Russia are known to have conducted such tests.

Despite not ratifying the treaty, the United States does provide $33 million annually in funding for a system set up to monitor possible nuclear tests, as well as the Vienna-based organization charged with overseeing it.

What's The Problem Now?

As relations between Washington and Moscow have worsened, major treaties between them have also frayed or collapsed entirely.

Washington unilaterally pulled out of the Anti-Ballistic Missile (ABM) treaty in 2002, angering Moscow. Washington for years accused Moscow of trying to cheat on the Intermediate-Range Nuclear Forces (INF) treaty until it effectively collapsed in 2019. In 2021, Russia withdrew from the Treaty on Open Skies, which allows countries to conduct surveillance flights over one another's territories in order to observe weapons and military sites.

Both countries have adhered to New START, which capped the number of warheads and "delivery vehicles" each could possess.

New START's extension, by both Russia and the United States in early 2021, was a lone bright spot in the continuing erosion of arms control.

But the agreement expires in 2026 and cannot be extended. Unless a successor treaty can be agreed upon and ratified, there will be no limits on the countries' arsenals after that year. Tensions over Ukraine have kept the two sides from even sending inspectors to one another's countries, as stipulated for in New START.

Both countries have also moved to modernize and upgrade their arsenals. But in a sign of deepening distrust, the U.S. State Department suggested in a 2022 report that Russia had not adhered to the standard of "zero-yield" testing.

So Russia Wants To Pull Out Then?

For more than a decade, the Kremlin has increased spending not only on conventional weapons and force strength but also on modernizing and expanding its strategic arsenal.

In 2018, Putin boasted that Russia was developing new weapons like an unmanned, nuclear-capable, underwater torpedo, and a hypersonic "glide" missile. He also bragged of the development of a nuclear-powered cruise missile -- the Burevestnik, which has had major problems.

In recent years, researchers have been monitoring a surge of activity on the Novaya Zemlya archipelago: satellite imagery showing an uptick of construction at one or possibly two settlements that researchers had identified as sites for a possible test of a nuclear device or the trouble-plagued Burevestnik.

A top Russian nuclear researcher called for Russia to resume testing, and on October 5 Putin announced a successful test of the Burevestnik, though he provided no details.

Putin also opened to the door to Russia resuming nuclear testing, saying it could "de-ratify" the CTBT. A week later, on October 12, the speaker of the State Duma, the lower house of parliament, introduced legislation to withdraw ratification.

The prospect of Russia withdrawing prompted alarm bells, including from the CTBTO, the Vienna-based organization charged with monitoring compliance.

What Happens Next?

Even if "de-ratification" ends up happening, as is likely in the Kremlin-controlled parliament, that does not necessarily mean Russia will start blowing up uranium or plutonium again, on Novaya Zemlya or otherwise.

"I think that withdrawal of ratification is a strictly political step -- leveling status with the U.S.," said Nikolai Sokov, a former Russian Foreign Ministry official and arms control expert.

"I think the main motive is the perception that 'Russia tried too hard in the past and made too many concessions' and now 'We're not interested in arms control more than other countries.'"

Leonid Slutsky, head of the Duma's foreign affairs committee, emphasized that Russia would not be withdrawing its signature under the treaty or "withdrawing from the voluntary moratorium on nuclear testing."

"We are withdrawing the ratification, thus restoring legislative parity with the U.S. Congress," he told the newspaper Kommersant.

"It was especially important for [the CTBTO] to hear that revoking ratification does not mean that Russia intends to resume nuclear tests and implies that Russia will continue to fully participate in the work being done for the Treaty's entry into force," Mikhail Ulyanov, Russia's ambassador in Vienna, told the state news agency RIA Novosti.

Still, it's not a good sign, experts say -- all the more so, given the demise of other treaties.

Russia or any major nuclear power backing out of the CTBT "would be a huge blow to the [global nonproliferation] regime and would undoubtedly lead to a cascade of nuke testing by other states," Lynn Rusten, a former U.S. arms control negotiator, told RFE/RL.

There could also be other nonproliferation or arms control treaties that are at risk, since, according to Sokov, the Kremlin has initiated a review of all similar agreements.

One strong candidate for "de-ratification" or a downgrading of Russia's involvement, he said, is the 1992 Chemical Weapons Convention, which obligates members to destroy their stocks of chemical weapons.

Russia's compliance with that treaty has been in question since the near-fatal poisonings of former Russian intelligence agent Sergei Skripal in England in 2018 and opposition activist Aleksei Navalny in Siberia in 2020.

In both cases, Western scientists identified a powerful Soviet-era nerve agent and suggested that Russia had maintained a secret, undeclared chemical weapons program.

Tyler Durden Mon, 10/16/2023 - 02:00

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