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S&P Futures Surge As Chinese Stocks Explode Higher

S&P Futures Surge As Chinese Stocks Explode Higher



S&P Futures Surge As Chinese Stocks Explode Higher Tyler Durden Mon, 07/06/2020 - 07:54

After two consecutive weeks of cautious Sunday sessions entering the new week, overnight futures blasted out from the gate, surging more than 1%, sparked by fresh animal spirits out of China, after the country's state media stoked bullish enthusiasm. S&P futures were up 35 points, rising to 3,165 and finally breaking above the 3,150 zone that has proven to be stern resistance over the past month. The dollar index fell for a fifth day and Treasuries dipped even as surging coronavirus cases delayed business re-openings across the United States, while precious metals and oil rose.

MSCI’s All-Country World Index rose 0.7% to its highest since June 6 after the start of European trading, with investors putting their faith in an economic recovery powered by historic government stimulus.

European stocks also jumped, with the STOXX 600 index rising 1.64%. Banks and autos lead gains in early European trading, with the sectors up 4.5% and 3.5% respectively, as both industry groups trade at the highest level since June 10. The gains come amid an overall bullish market Monday with global stocks higher, led by gains in China after the country’s influential state media stoked enthusiasm in the market. Stocks exposed to China, like carmakers, industrials, energy firms and luxury goods makers rose strongly, while banks also rallied. U.K. homebuilders rallied after a report that the government is considering a temporary increase in the threshold at which buyers pay stamp duty. 

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.6% to its highest since February, with the bullish sentiment spilling into other markets. China's Shanghai Composite surged 5.7% on top of a 7% gain last week to the highest level in five years. Even Japan’s Nikkei, which has lagged with a soft domestic economy, managed a rise of 1.8%.

A front-page editorial in China’s Securities Times on Monday said that fostering a “healthy” bull market after the pandemic is now more important to the economy than ever, as there now appears to be a full-blown race between the US and China who has a bigger stock bubble.

Similar to the US daytrading euphoria, Chinese social media has exploded with searches for the term “open a stock account,” with bullish sentiment also lifting the yuan. The Shanghai Composite Index closed up 5.7%, the biggest advance since 2015.

In Hong Kong, Jefferies chief global equity strategist Sean Darby said the positive sentiment towards Asian markets was the result of better than expected regional economic data and elevated liquidity levels.  “All of the global monetary policy indicators are flashing green right now. It is very loose and that should mean markets which have underperformed should do well,” Darby told Reuters. “The dollar has also been weaker over the past five days so emerging markets, led by China, normally do well on that back of that.”

Among the reasons investors cited for the buying was improving economic data - UBS noted Citi’s Economic Surprise Index for the U.S. has risen to its highest level on record. The index measures how well economic data releases are faring relative to consensus forecasts.

“We advise against regarding uncertainty as a reason for exiting markets. Instead, we see ways for investors to cope with uncertainty - including averaging into markets - or even take advantage of volatility,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Ironically, the surge comes just hours after JPMorgan said the risk-reward in 2H Is ‘Unattractive’ (which in turn comes just two weeks after the bank upgraded US stocks to Overweight), and after Goldman Sachs cut estimates for U.S. growth this quarter and said consumer spending appears likely to stall this month and next. Still, economists led by Jan Hatzius said other economies have proved it’s possible to resume activity and changes in behavior such as wearing masks will help too.

“The willingness of investors to look through the current disruption to an anticipated recovery this quarter is imperiled by still rising virus infection rates,” said Michael McCarthy, a markets strategist at CMC Markets Plc in Sydney.

Meanwhile, confirming that away from markets the reality is getting more concerning by the day, two U.S. aircraft carriers conducted exercises in the disputed South China Sea on Saturday, the U.S. Navy said, as China also carried out military drills that have been criticised by the Pentagon and neighbouring states.

The risks, combined with unceasing stimulus from central banks, have kept sovereign bonds supported in the face of better economic data. While U.S. 10-year yields edged up to 0.7% on Monday, well off the June top of 0.959%. Germany’s benchmark 10-year Bund yield edged up, pulling further away from recent five-week lows in the face of rallying equity markets.

Analysts at Citi estimate global central banks are likely to buy $6 trillion of financial assets over the next 12 months, more than twice the previous peak.

In FX, major currencies were largely rangebound with the dollar index down 0.3% at 96.894, having spent an entire month in a snug band of 95.714 to 97.808. The Bloomberg Dollar Spot Index fell a fifth day after a slowdown in the U.S. infection rate and a call by Chinese state media to support a bull market spurred risk appetite. The dollar was a shade firmer on the yen at 107.57 on Monday, while the euro rose above the $1.13 mark. The Norwegian krone and Swedish krona led advances against the greenback among G-10 currencies. The rise in Brent crude underpinned the krone.

The yuan led commodity currencies higher against the dollar on Monday as investors lapped up risky assets on growing expectations of a strong Chinese economic rebound and the United States continued to report a surge in coronavirus infections. “The rally in mainland China equities has been the big catalyst,” said Stephen Gallo, European head of FX strategy at BMO Financial Group. “The only caveat is that China’s economy not driven purely by free-market forces. But if regulators in China are engineering a stronger equity market, it can still feed through to the rest of the world.”

“Risk appetite is higher as reflected in Asian stock markets and the Australian dollar, and the U.S. dollar is down because of that,” said Janu Chan, senior economist at St. George Bank in Sydney. “A global economic recovery, though uneven, is expected to point to a weaker USD over the medium term.”

In commodity markets, oil prices were mixed with Brent crude futures up 1.87% at $43.58 a barrel, while U.S. crude gained 0.84% to $40.99 amid worries the surge in U.S. coronavirus cases would curb fuel demand. Gold traded at $1,776.21 per ounce, just off last week’s peak of $1,788.96. The precious metal continues to benefit from super-low interest rates across the globe as negative real yields for many bonds make the non-interest paying metal more attractive.  Copper is on the cusp of erasing this year’s losses after virus-related disruptions tightened supplies.

Expected data include PMI and ISM Non-Manufacturing Index. Immunomedics reports earnings

Market Snapshot

  • S&P 500 futures up 1% to 3,159.50
  • MXAP up 1.6% to 164.57
  • STOXX Europe 600 up 1.6% to 371.12
  • German 10Y yield unchanged at -0.432%
  • Euro up 0.3% to $1.1285
  • Brent Futures up 1.8% to $43.57/bbl
  • Italian 10Y yield rose 4.3 bps to 1.127%
  • Spanish 10Y yield fell 0.3 bps to 0.443%
  • MXAPJ up 1.7% to 542.15
  • Nikkei up 1.8% to 22,714.44
  • Topix up 1.6% to 1,577.15
  • Hang Seng Index up 3.8% to 26,339.16
  • Shanghai Composite up 5.7% to 3,332.88
  • Sensex up 1.5% to 36,565.50
  • Australia S&P/ASX 200 down 0.7% to 6,014.61
  • Kospi up 1.7% to 2,187.93
  • Brent futures up 1.5% to $43.46/bbl
  • Gold spot up 0.3% to $1,777.41
  • U.S. Dollar Index down 0.3% to 96.93

Top Overnight News from Bloomberg

  • The dramatic moves in Chinese stocks over the past week are inviting comparisons with a bubble that burst spectacularly five years ago.
  • U.S. virus cases increased by 1.2%, less than the seven-day average of 1.8%. A former Food and Drug Administration head said the U.S. needs a better pandemic strategy and should start by stockpiling therapeutic antibodies before authorizing their use.
  • Chinese companies last month shelved the biggest amount of domestic bond sales in almost three years, after a sell-off in government debt pushed up corporate borrowing costs.

Asian equity markets and US equity futures began the week mostly firmer as trade picked up from the holiday lull in which the broad heightened risk appetite consigned the increasing COVID-19 infection rates to the backseat. ASX 200 (-0.7%) and Nikkei 225 (+1.8%) were mixed as the Australian benchmark lagged due to weakness in industrials and the commodity related sectors and with sentiment also subdued by rising infections in the country’s 2nd largest city of Melbourne which prompted the Victoria state government to close the border with New South Wales from tomorrow, while Tokyo stocks coat-tailed on the favourable currency flows and after the decisive victory by Tokyo Governor Koike at the gubernatorial election on Sunday. Hang Seng (+3.8%) and Shanghai Comp. (+5.7%) surged despite the lack of solid fundamental catalysts and amid the ongoing global reproach towards China with Canada suspending its extradition treaty with Hong Kong in the wake of the security law and with the UK set to end the use of Huawei technology in the 5G networks as early as this year due to security issues, while it was separately reported that China is considering retaliatory measures against Britain and Australia in the form of increased tariffs. Nonetheless, this failed to impede the rally in Chinese stocks and the mainland bourse extended to its highest level seen since the beginning of 2018 with financials leading the ascent amid increased IPO activity and after the latest PBoC survey showed the loan demand index surged to 75.8 in Q2 vs. Prev. 66.0 in Q1. Finally, 10yr JGBs were lower amid similar weakness in T-notes as havens were shunned by the heightened risk appetite, which saw prices retreat further away from resistance near 152.00, but with downside also stemmed by the BoJ’s presence in the market whereby it upped purchases of 5yr-10yr maturities.

Top Asian News

  • China Stokes a Stock-Market Mania, Risking Repeat of 2015 Bubble
  • Hong Kong Stocks Enter Bull Market After $1.1 Trillion Rebound
  • Chipmaker SMIC Eyes China’s Biggest Share Sale in a Decade
  • World’s Largest Listing of 2020 Comes From China: ECM Watch
  • Tokyo Finds 102 Virus Cases as It Tries to Avoid Mass Curbs

European stocks kick the week off on a firm footing [Euro Stoxx 50 +1.9%] albeit off highs, but nonetheless supported by the stellar Chinese performance which saw the Shanghai Comp rally over 5% amid a number of factors including commentary from Securities Times which suggested that fostering a "healthy" bull market is now more important to the economy than ever.  The article said investors could look forward “to the wealth effect of the capital markets”. This coupled with Friday’s announcement of easing margin financing rules stoked gains in the Mainland whilst Hong Kong’s Hang Seng ended the day in bull market territory – some 21% off March lows. Gains in Europe are broad-based with the SMI (+0.8%) somewhat lagging amid its heavy exposure to the health sector – which lags amid inflows into cyclicals. Sectors are all in positive territory with cyclicals outpacing defensives on the constructive risk tone, whilst the detailed breakdown paints a similar picture; Travel & Leisure names piggyback on the risk appetite and reside among the winners.  In terms of individual movers, UK housing names were bolstered at the open on the back of reports the Treasury is said to plan to increase the property tax threshold to as high as GBP 500,000. As such, Persimmon (+5.7%), Barrat Development (+6.7%) and Taylor Wimpey (+5.0%) hold their positions as the top Stoxx 600 gainers. GSK (+1.3%) and Sanofi (+0.8%) performs better than the overall Health sector amid reports the Cos are close to agreeing a GBP 500mln deal to supply the UK government with 60mln doses of its COVID-19 vaccine, should it work in human trials due to begin in September. Commerzbank (+6.0%) derived support from reports Co. is said to be mulling cuts to its foreign business as part of its revised strategy - which would include cutting 450/1000 branches, 10k job cuts in total and cuts to the international businesses. Finally, no reprieve for Wirecard (-17%) as FT reported the Co’s European and American core businesses have reportedly been lossmaking for years, with profits appearing to have largely existed on paper, according to the KPMG confidential appendix of the special audit.

Top European News

  • German Factory Orders Rise Less Than Forecast After Lockdown
  • Banks Are Ditching London Offices and Not Just Because of Covid
  • Rolls-Royce Seeks Pension Halt to Save Cash in Virus Crunch
  • Cerberus Urges Orderly Process After Commerzbank CEO Ouster

In FX, broad USD weakness after the long US holiday weekend amidst a pronounced upturn in risk sentiment on the back of bullish Chinese stock market remarks in the Securities Journal overnight that has boosted the YUAN from a fractionally softer PBoC midpoint fix through a key Fib (7.0441) to test 7.0300 in both onshore and offshore terms. The DXY has lost grip of the 97.000 handle in response and is hovering just above a 96.818 low awaiting final Markit services and composite PMIs, the non-manufacturing ISM and employment trends.

  • NOK/EUR/AUD - The major beneficiaries of heightened risk appetite, also manifest in firm crude prices, and general Greenback weakness, as Eur/Nok nudges down towards 10.6000 and Eur/Usd extends above several chart resistance levels, like the 100 and 200 HMAs plus a Fib retracement (1.1241, 1.1243 and 1.1157 respectively) to retest 1.1300. Meanwhile, the Aussie has revisited near 1 month peaks around 0.6980 in the run up to the RBA policy meeting on Tuesday and potential reaction to the renewed COVID-19 outbreak in the state of Victoria.
  • NZD/CHF - Both firmer vs their US counterpart as the Kiwi holds near 0.6550 and Franc close to the upper end of a 0.9462-14 range in advance of NZIER’s Q2 survey, but with Eur/Chf acknowledging latest Swiss bank sight deposit rises more than Fitch’s AAA ratings affirmation between 1.0650-25 parameters.
  • CAD/GBP/JPY - All narrowly mixed, as the Loonie meanders from 1.3520-65 against the backdrop of buoyant oil benchmarks and eyeing the looming BoC outlook survey for some independent direction, while Cable has ventured beyond 1.2500, but unsustainably despite a significant rebound in the UK construction PMI. Elsewhere, the Yen is marginally lagging on less safe-haven demand, albeit vying with the Dollar on risk factors, with the headline pair in a relatively tight 107.77-49 band and hardly reacting to BoJ sources suggesting that the Bank will stick to view for as gradual economic recovery in the latter part of 2020.
  • EM - The Lira remains tethered to 6.8500 even though the Turkish Government has taken more measures to restrict negative positioning in stocks from foreign entities via a short-selling for 6 banks for up to 3 months.

In commodities, WTI and Brent crude futures extended on APAC gains in early hours as the contracts coat-tail on the overall risk appetite across the market as rising COVID-19 cases across the globe are somewhat side-lined, albeit prices have since waned off highs. The fundamental landscape is little changed but from the supply slide of the equation, OPEC’s JMMC is set to meet mid-July ahead of the planned tapering of cuts in August – with the Committee set to advise OPEC as opposed to setting policy. On that front, Saudi Aramco upped the price for its flagship Arab Light grade to Asia by USD 1/bbl from July – alluding to firmer demand in the region. Looking ahead, the week will see the release of the EIA STEO and IEA Monthly Oil Market report ahead of OPEC’s take next week. WTI and Brent futures reside under USD 41/bbl (vs. low 40.20/bbl) and below USD 43.50/bbl (vs. low 42.74/bbl) respectively. Elsewhere, spot gold remains underpinned on Dollar-dynamics around the USD 1775/oz mark ahead of its recent almost-8yr peak at around 1789/oz. Copper prices receive a double boost from the softer Buck coupled with the surge in Chinese stock markets – with the red metal reclaiming USD 2.75/lb to the upside and nursing steep losses posted at the latter end of last week.

US Event Calendar

  • 9:45am: Markit US Services PMI, est. 47, prior 46.7; Markit US Composite PMI, prior 46.8
  • 10am: ISM Non-Manufacturing Index, est. 50, prior 45.4

DB's Jim Reid concludes the overnight wrap

As you may have seen late last week, Torsten Slok is leaving DB to join a good client of the bank. We wish him well in the future and will try to persuade him to vote for DB Research in all the analyst surveys now. I will be taking over responsibilities for sending out DB charts of the day and will also be sending out repackaged chart books soon. If you’ve previously got Torsten’s emails then you’ll be continuing to get them from me. If you didn’t get anything from Torsten and want to be included then please send me an email. I sent my first missive out to 30,000 new people on Friday and it ended up taking me five hours and ended up with my mail account suspended with a third left unsent. So if I don’t reply to anyone today you’ll know why. Off to speak to IT first thing this morning. We think we have a solution. Thankfully the EMR distribution list is handled externally so I don’t have to worry about that.

As the US comes back from the long weekend it’s difficult to make too much of the weekend’s covid-19 new cases and fatality data. The weekend normally sees some under reporting but on a holiday weekend that could be magnified. However in my opinion the trend remains the same. A continued strong rise in new cases but fatalities that aren’t going up anywhere near as much as they did in the first wave even with the appropriate lag. Overall, cases in the US surged by an average of +1.7% over the weekend versus an average of +1.9% in the five days prior while fatalities on average rose by +0.2% as against an average of +0.6% in the five days prior. At a state level, California, Florida and Arizona saw cases rise +2.1%, +5.3% and +3.7% yesterday respectively. In the short-term this surge in cases isn’t good news for the US economy’s reopening pace. However if we continue to see fatalities much lower in this second wave then it should give us more medium-term confidence that we are getting better at treating the virus or protecting the most vulnerable. Let’s see where the data is by mid-week to further reflect on whether we’re correct or not. Our H2 2020 credit outlook (link here) partly rests on this view so we’ll be watching carefully.

In terms of markets this morning we’ve seen big gains for the Shanghai Comp (+4.24%) and Hang Seng (+3.45%). Those moves are being attributed to positive commentary on the stock market from Chinese state media, namely a front-page editorial in the Securities Times which suggested that a “healthy” bull market after the pandemic is now more important to the economy than ever. The Nikkei (+1.67%) and Kospi (+1.72%) are also up however gains have been more modest while the ASX is flat. Yields on 10y USTS are up +2.6bps while futures on the S&P 500 are also up +1.14%.

In other news, ECB President Lagarde said over the weekend that the euro zone faces about two years of disinflation, followed by inflation as the coronavirus crisis accelerates the transformation of the economy towards greater digitization and automation. She added that the ECB will need to keep its monetary policy exceptionally loose, and financial instruments will need to be developed that allow the economic transformation to be funded. Meanwhile, Bank of France Governor Francois Villeroy de Galhau said the country’s economy is picking up faster than expected and that forecasts from the IMF may be too gloomy.

Moving on. As the US comes back after the Independence Day holiday, one of the main data releases this week will be the ISM non-manufacturing index today, along with the services and composite PMIs. The ISM manufacturing release already surprised to the upside at 52.6, its highest since April 2019 and above the 50-mark that separates expansion from contraction. So the question will be whether this momentum has been seen elsewhere in the economy. Otherwise in the US, investors will also be attuned to the weekly initial jobless claims on Thursday. These have been worse-than-expected for 3 consecutive weeks now, and are still running at more than double their pre-Covid record, raising concerns that the pace of improvement in the labour market is slower than had originally been hoped for. This theme may continue with the second virus wave sweeping through the US.

In terms of data elsewhere, the releases are somewhat more backward-looking in Europe now that the PMI releases are out. Today will see the release of Euro Area retail sales for May, while Germany, France and Italy will all be releasing their industrial production data for May through the week. Elsewhere, China will be releasing CPI and PPI data for June on Thursday.

Here in the UK, Chancellor Sunak will be delivering a statement in the House of Commons on Wednesday. It might be a bit early to get full clues as to how policy will change post crisis but markets will look for evidence as to how much fiscal policy will be unleashed going forward. The worry for some so far is that the words are big but the numbers relatively small. So one to watch. Against this backdrop, the UK and the EU will continue their discussions on their future relationship in London this week. That comes after last week’s negotiations, where chief EU negotiator Michel Barnier said that “serious divergences remain”, and on the UK side chief negotiator David Frost said that the talks had “underlined the significant differences that still remain between us on a number of important issues.”

Recapping last week now and also Friday’s news. It was a fairly quiet end to the week for markets with the US out on holiday. However, European equities pared back their gains from earlier in the week to close the 5 days with a +1.98% advance (-0.78% Friday). This was in spite of some fairly positive services and composite PMI data from Europe, with the numbers generally revised up relative to the flash readings, a picture consistent with the fact that the extra data covered a longer period of reopening. In terms of the specific numbers, the composite PMI for the Euro Area was revised up to 48.5 (vs. flash 47.5), while France at 51.7 and Germany at 47.0 also saw upward revisions relative to the flash print. In all these cases, as well as in Spain and Italy, the composite PMIs were at their strongest level since February, though it’s worth noting that only France had a reading above the 50-mark separating expansion from contraction.

Although Europe fell back somewhat, the broader picture of the week was still one of a rotation out of safe havens into risk assets. By the end of the week, the S&P 500 was up +4.02% albeit with futures down just under 0.5% on Friday as the US was closed. Meanwhile core government bonds lost ground, with yields on 10yr Treasuries and bunds up +2.8bps and +4.9bps respectively, as the US Dollar index (-0.27%) and the Japanese Yen (-0.27% vs USD) both lost ground through the week. Peripheral bonds advanced however, with the spread of both 10yr Italian (-8.7bps) and Spanish (-6.1bps) debt over bunds tightening.

One news report that might be worth noting from Friday was a Bloomberg article saying that there was a rift on the Governing Council over the extent to which the ECB’s asset purchases should deviate from the capital key – which is based on countries’ GDP and population size. The deviation from the capital key in the ECB’s Pandemic Emergency Purchase Programme (PEPP) has allowed them to purchase larger amounts of Italian debt than the capital key would suggest, but the article cited officials who said that views differed among the members on this issue. One to watch moving forward.

And finally, we also got some political news out of France, as President Macron named Jean Castex as the new Prime Minister. French presidents have previously ditched their PMs mid-term, so this wasn’t an exceptional move, and marks an attempt at revitalising his presidency following some poor municipal election results in June. Castex was previously in charge of coordinating the 2024 Olympic Games in Paris and managed the government’s lockdown exit strategy, which has been perceived as a success.

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Escobar: Russia-China Partnership Defangs US Empire

Escobar: Russia-China Partnership Defangs US Empire

Authored by Pepe Escobar,

China’s State Council has released a crucial policy paper…



Escobar: Russia-China Partnership Defangs US Empire

Authored by Pepe Escobar,

China’s State Council has released a crucial policy paper titled 'A Global Community of Shared Future: China’s Proposals and Actions' that should be read as a detailed, comprehensive road map for a peaceful, multipolar future.

That is if the hegemon - of course faithful to its configuration as War Inc. - does not drag the world into the abyss of a hybrid-turned-hot war with incandescent consequences.

In sync with the ever-evolving Russia-China strategic partnership, the white paper notes how “President Xi Jinping first raised the vision of a global community of shared future when addressing the Moscow State Institute of International Relations in 2013.”

That was ten years ago, when the New Silk Roads – or Belt and Road Initiative (BRI) - was launched: that became the overarching foreign policy concept of the Xi era. The Belt and Road Forum next month in Beijing will celebrate the 10th anniversary of BRI, and relaunch a series of BRI projects.

“Community of Shared Future” is a concept virtually ignored across the collective West – and in several cases lost in translation across the East. The white paper’s ambition is to introduce “the theoretical base, practice and development of a global community of shared future.”

The five key points include building partnerships “in which countries treat each other as equals”; a fair and just security environment; “inclusive development”; inter-civilization exchanges; and “an ecosystem that puts Mother Nature and green development first," as Xi detailed at the 2015 UN General Assembly.

The white paper forcefully debunks the “Thucydides Trap” fallacy: “There is no iron law that dictates that a rising power will inevitably seek hegemony. This assumption represents typical hegemonic thinking and is grounded in memories of catastrophic wars between hegemonic powers in the past.”

While criticizing the “zero-sum game” to which “certain countries” still cling to, China completely aligns with the Global South/global majority, as in “the common interests of all peoples around the world. When the world thrives, China thrives, and vice versa.”

Well, that’s not exactly the “rules-based international order” in play.

It’s All About Harmony

When it comes to building a new system of international relations, China prioritizes “extensive consultation” among equals and “the principle of sovereign equality” that “runs through the UN Charter.” History and realpolitik, though, dictate that some countries are more equal than others.

This white paper comes from the political leadership of a civilization-state. Thus it naturally promotes the “increase of inter-civilization exchanges to promote harmony” while elegantly remarking how a “fine traditional culture epitomizes the essence of the Chinese civilization.”

Here we see a delicate blend of Taoism and Confucianism, where harmony – praised as “the core concept of Chinese culture” - is extrapolated to the concept of “harmony within diversity”: and that is exactly the basis for embracing cultural diversity.

In terms of promoting a dialogue of civilizations, these paragraphs are particularly relevant:

“The concept of a global community of shared future reflects the common interests of all civilizations – peace, development, unity, coexistence, and win-win cooperation. A Russian proverb holds, 'Together we can weather the storm.'

"The Swiss-German writer Hermann Hesse proposed, 'Serve not war and destruction, but peace and reconciliation.' A German proverb reads, 'An individual’s effort is addition; a team’s effort is multiplication.' An African proverb states, 'One single pillar is not sufficient to build a house.' An Arabian proverb asserts, 'If you want to walk fast, walk alone; if you want to walk far, walk together.'

"Mexican poet Alfonso Reyes wrote, 'The only way to be profitably national is to be generously universal.' An Indonesian proverb says, 'Sugarcane and lemongrass grow in dense clumps.' A Mongolian proverb concludes, 'Neighbors are connected at heart and share a common destiny.' All the above narratives manifest the profound cultural and intellectual essence of the world.”

BRI Caravan Rolls On

Chinese diplomacy has been very vocal on the need to develop a “new type of economic globalization” and engage in “peaceful development” and true multilateralism.

And that brings us inevitably to the BRI, which the white paper defines as “a vivid example of building a global community of shared future, and a global public good and cooperation platform provided by China to the world.”

Of course, for the hegemon and its collective West vassals, BRI is nothing but a massive debt trap mechanism unleashed by “autocrat China”.

The white paper notes, factually, how “more than three-quarters of countries in the world and over 30 international organizations” had joined the BRI, and refers to the sprawling, ever-expanding connectivity framework of six corridors, six routes, an array of ports, pipelines and cyberspace connectivity, among others via the New Eurasian Land Bridge, the China-Europe Railway Express (a “steel camel fleet”) and the New Land-Sea Trade Corridor crisscrossing Eurasia.

A serious problem may involve China’s Global Development Initiative, whose fundamental aim, according to Beijing, is “to accelerate the implementation of the UN’s 2030 Agenda for Sustainable Development.”

Well, this agenda has been designed by the self-described Davos elites and conceptualized way back in 1992 by Rockefeller protégé Maurice Strong. Its inbuilt wet dream is to enforce the Great Reset – complete with a nonsensical zero-carbon green agenda.

Better Listen to Medvedev’s Warning

The hegemon is already preparing the next stages of its hybrid war against China – even as it remains buried deep down into a de facto proxy hot war against Russia in Ukraine.

Russian strategic policy, in essence, completely aligns with the Chinese white paper, proposing a Greater Eurasian Partnership, a concerted drive towards multipolarity, and the primacy of the Global South/global majority in forging a new system of international relations.

But the Straussian neocon psychos in charge of the hegemon’s foreign policy keep raising the stakes. So it’s no wonder that after the recent attack on the HQ of the Black Sea Fleet in Sevastopol, a new National Security Council report leads to an ominous warning by Security Council Deputy Chairman Dmitry Medvedev:

“NATO has turned into an openly fascist bloc similar to Hitler’s Axis, only bigger (...) It looks like Russia is being left with little choice other than a direct conflict with NATO (...) The result would be much heavier losses for humanity than in 1945."

The Russian Ministry of Defense, meanwhile, has revealed that Ukraine has suffered a staggering 83,000 battlefield deaths since the start of the - failed - counteroffensive four months ago.

And Defense Minister Shoigu all but gave away the game in terms of the long-term strategy, when he said, “the consistent implementation of measures and activity plans until 2025 will allow us to achieve our goals."

So the SMO will not be rounded up before 2025 – incidentally, much later than the next US presidential election. After all, Moscow’s ultimate aim is de-NATOization.

Faced with a cosmic NATO humiliation on the battlefield, the Biden combo has no way out: even if it declared a unilateral ceasefire to re-weaponize Kiev’s forces for a new counteroffensive in the spring/summer of 2024, the war would keep rumbling on all the way to the presidential election.

There’s absolutely no way some sharp intellect in the Beltway would read the Chinese white paper and be “infected” by the concept of harmony. Under the yoke of Straussian neocon psychos, there are zero prospects for a détente with Russia – not to mention Russia-China.

Both the Chinese and Russian leaderships know quite well how the Ray McGovern-defined MICIMATT (military-industrial-congressional-intelligence-media-academia-think tank complex) works.

The kinetic aspect of MICIMATT is all about protection of the global interests of big US banks, investment/hedge funds and multinational corporations. It’s not a coincidence that MICIMATT monster Lockheed-Martin is mostly owned by Vanguard, BlackRock and State Street. NATO is essentially a mafia protection racket controlled by the US and the UK that has nothing to do with “defending” Europe from the “Russian threat."

The actual MICIMATT and its NATO extension’s wet dream is to weaken and dismember Russia to control its immense natural resources.

War Against the New 'Axis of Evil'

NATO’s incoming graphic humiliation in Ukraine is now compounded with the inexorable rise of BRICS 11 – which embodies a lethal threat to the hegemon’s geoeconomics. There’s next to nothing the MICIMATT can do about that short of nuclear war – except turbo-charging multiple instances of Hybrid War, color revolutions and assorted divide-and-rule schemes. What’s at stake is no less than a complete implosion of neoliberalism.

The Russia-China strategic partnership of true sovereigns has been coordinating full-time.

Strategic patience is the norm. The white paper reveals the magnanimous facet of the number one economy in the world by PPP: that’s China’s response to the infantile notion of “de-risking”.

China is “de-risking” geopolitically when it comes to not falling for serial provocations by the Hegemon, while Russia exercises Taoist-style control to not risk a kinetic war.

Still, what Medvedev just said carries the implication that the hegemon on desperation row could even be tempted to launch WWIII against, in fact, a new “axis of evil” of three BRICS nations – Russia, China and Iran.

Secretary of the [Russian] National Security Council Nikolai Patrushev could not have been more crystal clear:

“In its attempts to maintain its dominance, the West itself destroyed the tools that worked better for it than the military machine. These are freedom of movement of goods and services, transport and logistics corridors, a unified system of payments, global division of labor and value chains. As a result, Westerners are shutting themselves off from the rest of the world at a rapid pace.”

If only they could join the community of shared future – hopefully on a later, non-nuclear, date.

Tyler Durden Sat, 09/30/2023 - 23:30

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“More Deceit”: Gaetz Rages Over McCarthy-Ukraine Side Deal To Pass Stopgap

"More Deceit": Gaetz Rages Over McCarthy-Ukraine Side Deal To Pass Stopgap

Update (2155ET): Following the Senate’s passage of the Continuing…



"More Deceit": Gaetz Rages Over McCarthy-Ukraine Side Deal To Pass Stopgap

Update (2155ET): Following the Senate's passage of the Continuing Resolution, Rep. Matt Gaetz took to Twitter, where he was enraged over a side deal made between Speaker Kevin McCarthy and the Democrats for Ukraine funding, which Gaetz says he "didn't tell House Republicans" about until after the vote. 

Gaetz was responding to Punchbowl News' Jake Sherman, who related a message from House Democratic leadership.

"When the House returns, we expect Speaker McCarthy to advance a bill to the House Floor for an up-or-down vote that supports Ukraine, consistent with his commitment to making sure that Vladimir Putin, Russia and authoritarianism are defeated. We must stand with the Ukrainian people until victory is won."

Nine Senate Republicans voted against the bill; Marsha Blackburn (R-Tenn.), Mike Braun (R-Ind.), Ted Cruz (R-Texas), Bill Hagerty (R-Tenn.), Mike Lee (R-Utah), Roger Marshall (R-Kan.), Rand Paul (R-Ky.), Eric Schmitt (R-Mo.) and J.D Vance (R-Ohio).

*  *  *

Update (2109ET):  The Senate has voted 88-9 to pass the House's Continuing Resolution stopgap funding bill, which stripped out funds for Ukraine, includes $16 billion for disaster relief, and will keep the US government running for another 45 days.

Among the Senate "Yea" votes was Michael Bennet (D-CO), who was absolutely flipping his lid over the lack of Ukraine funding earlier in the day.

The bill, which passed the House earlier in the day by a bipartisan vote of 335-91, was passed with just three hours to go before a shutdown.

Just before the vote, Sen. Majority Leader Chuck Schumer (D-NY) vowed to keep fighting for more US taxpayer dollars for Ukraine, saying that he and Senate Minority Leader Mitch McConnell (R-KY) have "agreed to continue fighting for more economic and security aid for Ukraine."

"We support Ukraine’s efforts to defend its sovereignty against Putin’s aggression," said Schumer - to which McConnell said he's "confident" that the Senate can pass more "urgent assistance to Ukraine later this year. But let's be clear," that the "alternative," a shutdown, "would not just pause our progress on these important priorities, it would actually set them back."

*  *  *

Update (1755ET): After an afternoon of theatrics from Rep. Jamal Bowman (D-NY), it appears that the stopgap legislation to keep the government running through November 17 will now pass at the 11th hour.

According to the Wall Street Journal, the bill to keep the government funded past 12:01 Sunday includes $16 billion in disaster relief, but does not include Ukraine funds.

The House voted 335-91 for the funding measure, which includes $16 billion in disaster relief but omits aid for Ukraine. It also excludes border-security measures sought by Republicans. The margin exceeded the two-thirds majority needed to clear the bill through the House, which considered the legislation under special procedures requiring a supermajority of votes. All but one Democrat voted in favor of the measure, while nearly half of Republicans voted against it. -WSJ

While White House officials say President Biden supports the measure, the Senate has reportedly been lax in quickly taking up the measure late Saturday, raising the possibility of further malarkey.


*  *  *

(Update 1655ET): So let's get this straight. In the home stretch of negotiations over the House's GOP stopgap bill - while Democrats were actively trying to stall the vote so they could actually read it - a widely reported phenomenon, Rep. Jamal Bowman (D-NY) pulls the fire extinguisher.

His excuse is that he wasn't actually trying to stall the the vote, and that he's essentially an idiot...

"Congressman Bowman did not realize he would trigger a building alarm as he was rushing to make an urgent vote. The Congressman regrets any confusion," said a spokesperson.

Yes. Because this happens all the time.

MSNBC breathlessly repeats the Simple Jack defense.

House Speaker Kevin McCarthy capitalized on the incident, comparing Bowman to a January 6th insurrectionist.

As we noted below... Bowman used to be a public school principal before he was elected to Congress, who rallied against standardized testing, at a private school he founded that has a 27% literacy rate, so... maybe?

Then again, he would be no stranger to fire drills, no?

*  *  *

House before the House finally approved a 'clean' stopgap funding bill to avert a government shutdown (which has since been sent to the Senate for consideration before the midnight funding deadline), Socialist Rep. Jamaal Bowman (D-NY) was caught pulling the fire alarm in a House office building Saturday in order to try and delay a vote on ta House GOP stopgap spending bill.

The incident in the Cannon Building was caught on camera and confirmed by several witnesses, Politico reports.

"This is the United States Congress, not a New York City high school. To pull the fire alarm to disrupt proceedings when we are trying to draft legislation to AVERT A SHUTDOWN is pathetic…even for members of the socialist squad," Staten Island GOP Rep. Nicole Malliotakis wrote on X, formerly Twitter.

"Rep Jamaal Bowman pulled a fire alarm in Cannon this morning," House Administration Committee Chairman Bryan Steil wrote on X. "An investigation into why it was pulled is underway."

According to Bowman spox Emma Simon, "Congressman Bowman did not realize he would trigger a building alarm as he was rushing to make an urgent vote. The Congressman regrets any confusion."

In other words, he's claiming to be too stupid to have known what he did - and don't believe your lying eyes!

Granted, Bowman used to be a public school principal before he was elected to Congress, who rallied against standardized testing, at a private school he founded that has a 27% literacy rate, so...

Needless to say, the memes are already flying.


Meanwhile, the House cleared the 'clean' stopgap bill without funding for Ukraine or the border, by a vote of 335-91. One Democrat and 90 Republicans voted against the measure.

*  *  *

Update: (1335ET): With a government shutdown just hours away, House Speaker Kevin McCarthy has turned to Democrats for help passing a temporary bill, after House Freedom Caucus members dug their heels in over no funds for Ukraine.

"What I am asking, Republicans and Democrats alike, put your partisanship away," said McCarthy. "Focus on the American public."

McCarthy needs a two-thirds majority to pass their Continuing Resolution (CR), which would require a significant number of Democrats - who have strongly supported more Ukraine aid - to cross the aisle.

The House GOP bill would be a 'clean' Continuing Resolution, which won't include Ukraine funding or border assistance.

"We will put a clean funding stopgap on the floor to keep government open for 45 days for the House and Senate to get their work done," said McCarthy following a meeting. "We will also, knowing what had transpired through the summer, the disasters in Florida, the horrendous fire in Hawaii, and also the disasters in California and Vermont. We will put the supplemental portion that the president asked for in disaster there too."

"Keeping the government open while we continue to do our work to end the wasteful spending and the wokeism and most important, secure our border," McCarthy said.

If the bill does not pass, Republicans plan to bring up several measures to mitigate the effects of a government shutdown, multiple members said. 

Those include bills to continue paying service members and extending authorization of the Federal Aviation Administration and National Flood Insurance Program, both of which are also set to expire at midnight unless Congress takes action. Republicans are also examining measures to continue pay for border patrol agents. -The Hill

The Democrats, meanwhile, have been using parliamentary tactics to slow down the vote so they can more carefully read the GOP proposal.

Rep. Matt Gaetz (R-FL), one of the key holdouts in the House, called McCarthy's bipartisan appeal "disappointing," and said that McCarthy's speakership is "on tenuous ground."

When asked what his next move will be, Gaetz said "I guess we'll have to see how the vote goes."

What's next?

According to Goldman, there's a 90% probability of a shutdown before the Oct. 1 deadline.

That said, there will be three upcoming catalysts in the next few weeks that may result in passage.

1) All members of the US military are due to be paid on Oct. 13, and a missed pay date would have serious political ramifications; there is a good chance the House will vote to reopen before or shortly after that date; 

2) A few House Republicans have said they might bring a “motion to vacate” that would remove McCarthy as Speaker unless a majority of the House supports him. Whatever the outcome of such a vote, getting past it could set the stage for a reopening; 

3) There are procedural moves (a “discharge petition” is the most frequently discussed) that Democrats can make to pass an extension of spending authority in the House over Speaker McCarthy’s objections. However, this would require support from at least 5 House Republicans (assuming that all Democrats sign on). This will not help avoid a shutdown, but could come into play over the next two weeks, as political pressure to reopen grows (particularly when combined with the first point on military pay). 

In light of the above, Goldman doesn't expect this to last more than 2-3 weeks, and that the Oct. 13 military pay date will become a focal point in the timeline.

*  *  *

Update (2157ET): It looks like the Senate isn't willing to strip Ukraine funds from the continuing resolution. In a Friday night tweet, House Speaker Kevin McCarthy (R-CA) said that the "misguided Senate bill has no path forward and is dead on arrival."

Meanwhile, according to Punchbowl News' Jake Sherman and Josh Bresnahan, McCarthy is floating a CR that would last until Nov. 17 at FY2023 funding levels, which would not include border funds or Ukraine funding.

*  *  *

In an 11th hour Hail Mary in the hopes of averting a government shutdown, House Speaker Kevin McCarthy (R-CA) announced that the only way the House will pass a Continuing Resolution (CR) to fund the government through October is to drop Ukraine funding.

"I think if we had a clean one without Ukraine on it, we could probably be able to move that through," McCarthy told CNN's Manu Raju.

The comment comes hours after McCarthy lost a game of chicken with the House Freedom Caucus, failing to pass a CR which left McCarthy will few options to try and avert a shutdown in less than 36 hours. McCarthy was hoping that the House bill's border security provisions would win over enough holdouts to pass.

Meanwhile, the White House slammed the failed bill over the 'elimination of 12,000 FBI agents,' and 'almost 1,000 ATF agents.'

Of note, House Republicans on Thursday narrowly passed the annual defense spending bill, but only after they removed $300 million in Ukraine aid from the legislation (which then cleared in a separate vote because a bunch of Democrats then voted).

Speaker Kevin McCarthy, who failed twice last week to advance the bill to the floor, finally locked down enough Republican votes to pass the bill after the House stripped $300 million to arm Ukraine from the text.

The separate bill carved out to allocate those funds for Kyiv passed Thursday in a 311-117 blowout bipartisan vote. Republicans had won a close procedural vote earlier in the day to separate the Ukraine money from the Pentagon bill, a move meant to flip a handful of GOP holdouts. -Politico

Democrats framed the optics as Kremlin-friendly, with House Armed Services ranking Democrat Adam Smith saying "The Russians are good at propaganda... It will be played as America backing off of its commitment for Ukraine."

Republicans responded that by carving Ukraine out of the defense bill, it allows opponents of either measure (Ukraine aid or the defense bill) to voice their opinions on each independently.

"Why don’t we make sure this gets through? I mean, I’m just mystified that this is somehow a problem," said House Rules Chair Tom Cole (R-OK), according to Politico. "We guarantee you something you want is going to pass the House and you’re upset about it."

And now, McCarthy says there's no way to avert a government shutdown unless the House, and the Senate, agree to nix Ukraine aid from the 30-day stopgap.

Fire and Brimstone...

On Friday, White House top economic adviser Lael Brainard said that a shutdown would pose an "unnecessary risk" to what he described as a resilient economy with moderating inflation.

Treasury Secretary Janet Yellen then chimed in, warning that all of Bidenomics could be negatively impacted.

"The failure of House Republicans to act responsibly would hurt American families and cause economic headwinds that could undermine the progress we’re making," Yellen said from Port of Savannah, Georgia, adding "A shutdown would impact many key government functions from loans to farmers and small businesses, to food and workplace safety inspections, to Head Start programs for children.

"And it could delay major infrastructure improvements."

Goldman has predicted that a shutdown will last 2-3 weeks, and that a 'quick reopening looks unlikely as political positions become more deeply entrenched.' Instead, as political pressure to reopen the government builds, pay dates for active-duty military (Oct. 13 and Nov. 1) will become key dates to pay attention to.

In addition, they think a shutdown could subtract 0.2pp from Q4 GDP growth for each week it lasts (adding the same to 1Q2024, assuming it's over by then).

What's more, all data releases from federal agencies would be postponed until after the government reopens.

More via Goldman:

What are the odds the government shuts down?

A shutdown this year has looked likely for several months, and we now think the odds have risen to 90%. The most likely scenario in our view is that funding will lapse after Sep. 30, leading to a shutdown starting Oct. 1. That said, a short-term extension cannot be entirely ruled out. In the event that Congress avoids a shutdown starting Oct. 1, we would still expect a shutdown at some point later in Q4.

While there is likely sufficient support in both chambers of Congress to pass a short-term extension of funding—this is known as a “continuing resolution” (CR)—that is “clean” with no other provisions attached, the majority of that support would come from Democrats. The Senate is considering a CR that includes aid for disaster relief and Ukraine. House Republican leaders are under political pressure to pass a CR that includes Republican policy priorities that can pass with mainly or exclusively Republican support. At the moment, neither chamber looks likely to pass the other chamber's CR.

The outlook seemed bleak ahead of the debt limit deadline earlier this year, but Congress resolved it in time; why shouldn’t we expect a last-minute deal once again?

The smaller economic hit from a shutdown puts less pressure on Republican leaders to override the objections of some in their party to reach a deal. Ahead of the debt limit deadline earlier this year, Republican leaders reached a deal over the objections of some in their party because the potential hit to the economy from an impasse would have been unpredictable and severe, and even lawmakers most strongly opposed to a compromise agreed that the debt limit must be raised. By contrast, the economic hit from a shutdown would be smaller and more predictable, as there have already been two protracted shutdowns over the last decade. While most lawmakers on both sides of the aisle would prefer to avoid a shutdown, both sides appear more willing to take the chance it occurs.

*  *  *

Stay tuned...

Tyler Durden Sat, 09/30/2023 - 17:57

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A Climate Of Fear

A Climate Of Fear

Authored by James Gorrie via The Epoch Times,

The medical, media, and political elites’ focus has shifted from facts…



A Climate Of Fear

Authored by James Gorrie via The Epoch Times,

The medical, media, and political elites’ focus has shifted from facts to fomenting and magnifying fear.

In Franklin D. Roosevelt’s first inaugural address in 1933, the new president told a nation in the depths of the Great Depression that “the only thing we have to fear is fear itself.”

Those words were true and rightfully spoken at that time. Roosevelt knew that fear is a powerful emotion that limits our ability to reason, act wisely, and work together. It’s also an emotion that’s contagious and not easily diminished or dissipated.

The Power of Fear to Fragment Society

Unfortunately, Roosevelt’s words are even more applicable today.

On a personal level, decisions made under the emotional duress of fear are rarely the best ones and often the worst. Fear can bring out the best in us, but can often bring out the worst. That’s more likely to occur the more fragmented a society becomes. Fear among different groups of people creates an us-versus-them context in the minds of individuals, or even an “every-man-for-himself” attitude, which pits one group against another or even each of us against each other.

Now elevate that sense of fear to the level of the national electorate. A people or a nation that's paralyzed with fear makes rash decisions based on their fears of what could happen, not necessarily what the current situation truly is. When that happens, a society can quickly degenerate, where our base instincts determine our behavior in a law-of-the-jungle social environment.

Roosevelt knew this, as do our leaders today. The difference is that today, rather than seeking to dispel fear, our political and media elites create it, expand it, and revel in it. Rather than promote hope and strength of character in us, in a Roosevelt- or even a Reagan-like fashion, they traffic in fear and its fellow traveler social division in order to fragment our society.

It’s the old but effective divide-and-conquer strategy, and sadly, it works far too well. The mechanism for divide and conquer is the constant drumbeat of the Big Lie, which is also a tried and true method for controlling society. It was first practiced and perfected by Joseph Goebbels in Nazi Germany using the mass media, but has been successfully used by the USSR and every other communist and dictatorial regime in the world since the 1930s.

Social Media Is Magnitudes More Powerful Than Legacy Media

The difference today is the massive and pervasive presence of social media. Its reach and social saturation throughout society are magnitudes greater than have ever been possible before. What’s more, our political and media elites create and exaggerate fear without even mentioning the word. “Fear” is driven into our collective psyches under the guise of our government keeping us “safe,” while demonizing anyone who challenges that narrative.

The repetition by the media and the pharmaceutical industry of how to stay safe from COVID-19 always involves more drugs and less freedom. That’s by design. The elites that run society know that once enough of our friends, neighbors, coworkers, and others with whom we interact become more fearful than rational, they’re easily manipulated and divided into confrontational groups.

Does that sound like a conspiracy theory?

Yes, it probably does, but it’s also how the Stasi, the East German security agency, turned virtually every neighbor into an informant. The result was that people were fearful of doing anything that could be construed as being against the communist East German government. In light of what we’ve been through the last three years—and what looks to be on the horizon—the conspiracy theory accusation has lost its sting.

From Conspiracy Theory to Fact

Recall, for example, how those who received the COVID-19 vaccine turned against those who remained unvaccinated. The contrast and social division couldn’t have been clearer or more deliberate. Vaccinated people were characterized by the media and government agency spokespeople as selfless, smarter, and better human beings than those who refused the vaccine.

On the flip side, the “anti-vaxxers,” as they came to be called, were publicly derided by the medical, pharmaceutical, media, and government elites. They were accused of being low-intelligence conspiracy theory nuts who wouldn’t or couldn’t “follow the science,” even when they followed the science from experts such as Robert Malone, one of the inventors of the mRNA technology, and other medical doctors in Europe and Asia, including former Pfizer Vice President Dr. Michael Yeadon, all of whom were de-platformed from mainstream media and social media.

In fact, any “alternative” remedy to the experimental and highly dangerous mRNA vaccines, such as ivermectin, was summarily dismissed, even though nations that used ivermectin had the lowest mortality rates. As noted above, many media personalities and even medical experts with contrary opinions were silenced, shamed, and shunted into professional oblivion, being substituted by compliant replacements. That practice continues to this day, with Russell Brand being the latest example of being de-monetized by YouTube.

In light of vaccine injuries and deaths, and the staggering profits that vaccines have delivered to the pharmaceutical industry, the number of people who believe the mainstream media, the government, and in the vaccines, is much smaller today than three years ago.

Conspiracy theory narratives have become conspiracy facts.

The Endgame of Fear

So, what’s the endgame of promoting and enforcing a climate of fear throughout society?

It’s simple. Fearful people are far more compliant and, therefore, are easily controlled, pacified, monitored, and dehumanized. Next thing you know, we’ll all be eating bugs and liking it.

The antidote to fear, of course, is freedom and access to real and contrary information so that each person can make up his or her own mind. The encouragement, enablement, and empowerment of private individuals to exercise informed judgment about their health and their livelihoods are also part of the solution. A vibrant, thinking, and active society of informed individuals isn't nearly as vulnerable to the polarizing climate of fear our elites are foisting upon us.

In short, to live in fear is to live in bondage.

Tyler Durden Sat, 09/30/2023 - 20:50

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