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The World’s Most Bearish Hedge Fund Just Did Something It Hasn’t Done In 8 Years

The World’s Most Bearish Hedge Fund Just Did Something It Hasn’t Done In 8 Years

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The World's Most Bearish Hedge Fund Just Did Something It Hasn't Done In 8 Years Tyler Durden Sat, 10/17/2020 - 16:30

At the start of 2012 Horseman Global did something which virtually none of its peers dared or would dare to do: it took its formerly 100% equity net long exposure to deep net short, launching an 8 year period in which the fund would be bearish month after month on stocks, yet as the monthly P&L table below shows, it also manged to generate impressive annual returns over this same period (with the exceptions of 2016 and 2019) despite constant central bank intervention pushing stocks relentlessly higher, largely thanks to the Fund's significant bond long position.

Yet after a dismal 2019, in which fund CIO Russell Clark finally met his match in Powell as it full-on fought the Fed and the Fed won, resulting in a 35% drop last year, things changed dramatically at Horseman, which has since rebranded itself as Russell Clark Investment Management.

First, as we reported back in April, the fund suddenly ditched its long-running bet on deflation, with Clark saying he used the opportunity offered by the Covid-19 crisis "to exit deflationary positions. We have sold all our government bonds, and I am now trying to short assets that have benefited from very low interest rates, wages and commodity prices, namely commercial property, restaurants and utilities (and potentially private equity)."

And yet, the fund was still net bearish on stocks, because as Clarke explained, "if inflation appears, then US markets are in big trouble. For me, the 1970s and stagflation beckons. Short bonds and long commodities look right, with a bias to shorting US equities. I see inflationary assets outperforming deflationary assets."

Fast forward six months later, when things aren't working out quite as expected because in a year that had seen wild swing in the fund's P&L, September proved to be the worst month of 2020 for Clark, with the fund losing 9.25%, and cutting its return for the year by more than half to 8.75%. Worse, it also meant that the AUM for the Russell Clark Investment Management strategy had dropped to just $100 million, from $150MM at the start of the year. 

... and was less than 20% of what it was at the start of 2019, which with a -34.9% return, would end up the worst year on record for Clark (in May of 2019, Bloomberg profiled Clark saying he is "betting it all on a market crash", which did in fact materialize... unfortunately several months too late to help the hedge fund CIO).

But what we find most notable is that sometime in the past few months, Horseman, pardon Russell Clark, underwent a historic position and sentiment shift and after 8 years of being net short, the fund is now back on the bullish bandwagon with a 23.2% net long position (with no exposure to bonds).

So what happened?

Well, as is customary, Russell first gives a big picture view of what is going on in the hedge fund world, where it is hardly a secret, nothing works any more as central banks flipped the market on its head in their nuclear bomb response to the covid pandemic, and handed it to 16-year-old Robinhood daytraders on a silver platter. Needless to say, that made chasing momentum and consensus positioning critical, and crushed any contrarians who shied away from the herd. Sadly for Clark, he was among them, and the result has been a rollercoaster for both the fund, and Clark's investment positioning, with the fund manager claiming that Covid-19 not only "allowed central banks to short circuit the natural de-leveraging process", but also "literally turned the world upside down" making it extremely difficult for Clarke to "develop new ideas."

Your fund lost 9.25% this month, from the long book and the currency book.

My big thing, for what it is worth, is finding something that no one else knows about and then building a fund around that. Ideas like Ireland was not going to default on its bonds, or iron ore prices were going to fall, shale oil drillers will never make any money or mall REITS are shorts. Simple ideas, which you can then build structures around, that both make money and fill an investment need for clients. For that reason, I have tended to shy away from consensus ideas and momentum, unless it explicitly fits in with that big idea.

In the last couple of years, the big idea was that clearinghouses were mispricing risk, market products that sold volatility would cause volatility to spike, and that this should result in a lot of financial bankruptcies and a significantly lower stock market. Covid-19 caused this to come to fore, but also allowed central banks to short circuit the natural de-leveraging process that would have occurred as a result. Usually I have a few ideas on the go, so that I can naturally move from one idea to another, but Covid-19 literally turned the world upside down, and so I have had to push myself harder than usual this year to develop new ideas.

So what is the one unifying idea behind Clark's latest trades? As he says, "now the simple idea is that inflation is coming. All the inflation indicators that I look at; things like the Australian dollar, the Nikkei, Japanese Government Bond yields, the Transport index, Chinese Yuan and the CRB Raw Industrial Index, all say inflation but the loss in the fund this month says otherwise."

In terms of specific trades, Clark had focused on the nat gas market whose rebalancing he thought was "signalling inflation."

And certainly, there are signs of change there – but I can’t help noticing that it is Asian bond yields that are rising, not US bond yields, which is where you would think a rebalancing natural gas market would affect first."

Perhaps there is a better place to bet on rising prices: Food.

Towards the end of the month, I revisited my presentations and noticed that Chinese pork prices have been very strong and are at 6 times that of the US. Can Chinese food prices really cause inflation in the rest of Asia? The answer is probably yes, but whether that will be bad inflation or good inflation is hard to tell. Naturally, high food prices are negative for consumption, but Asia has more farmers than anywhere else in the world, and high crop prices have tended to create consumption booms in places like India, Indonesia, and the rest of ASEAN. If China starts to increase imports of food from Asia, it could be very economically beneficial.

Still, as Asian bond yields have made it clear, "higher food price will cause bond yields to rise" according to Clark who adds that "food and food prices have been at the heart of every major Chinese revolution and crisis for the last 150 years. For that reason, I expect Chinese rates to stay high, and for the Chinese Yuan to keep appreciating."

In short, Clark "started the month thinking that oil and gas prices were going to drive inflation, and ended the month thinking it will be food inflation." He is hardly alone, because as he noted, food exporting currencies are performing "surprisingly well, and food related stocks trading much better than oil and gas names."

One key anchor to the fund's new food inflation obsession comes from none other than Warren Buffett according to Clark, who explains as follows:

To answer one final question, how do I know that no one knows about food inflation? Well I just read a long article in The Economist, trying to understand why Warren Buffett bought the Japanese trading houses. The Economist had no idea of course. Japanese trading houses are the number one companies to benefit from food inflation in Asia. That is, I believe, why. If you don’t believe me, start googling about businesses that export pork, bananas or any other major food. We are moving to a portfolio that is long food, short bonds.

One small caveat: last week we wrote "Food Shortage Simulation Predicts 400% Increase In Food Prices By 2030", so to say that "no one knows about food inflation" may be a bit of a stretch.

Finally, Clark's latest dramatic portfolio reassessment means that "starting late September, and continuing in October", Clark is "moving our commodity longs to food related names." This is likely good news for the fund's remaining LPs as it also means is that Clark "can focus the fund down to fewer names on both the long side and short side, as I now have a better idea of what is going on, which should reduce volatility going forward."

Two final observations: while the fund is net long some of the most inflation-sensitive sectors such as financials, basic materials, industrials and energy, it remains short the covid-impacted industries such as restaurants and transports; and while we assume the tech short is just a bet on mean reversion, the substantial short in utilities is just another way for the fund to go short Treasuries.

Finally, in terms of geographic positioning, one can summarize Clark's latest view simply as "long Asia, short the US."

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NFT market slump shows it’s maturing toward ‘genuine utility,’ execs argue

Decentraland Foundation executive director Yemel Jardis believes as people become more educated about NFTs, the focus will shift from speculative trading…

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Decentraland Foundation executive director Yemel Jardis believes as people become more educated about NFTs, the focus will shift from speculative trading to genuine utility.

A steep collapse in the price of nonfungible tokens (NFTs) shouldn’t be seen as a sign of distress but rather a signal the technology is maturing, according to Web3 executives.

“I wouldn’t say the NFT market has regressed,“ Decentraland Foundation executive director Yemel Jardi told Cointelegraph. “Rather, it’s maturing."

Jardi’s comments come after a September report from dappGambl that analyzed over 73,000 NFT collections and concluded that as much as 95% of the NFTs studied had no value, as prices, sales volume and transactions have slid over the past year.

Jardi stressed that markets are cyclic and it is natural for there to be periods of adjustment.

He attributed sliding NFT floor prices partly to “speculative trading” and said the value of NFTs should instead be anchored to their utility.

“As people become more educated about NFTs, their use cases and their utilities, the market will stabilize and the focus will shift from speculative trading to genuine utility and innovation.”

Anjali Young, co-founder of the tokenized community-management platform Collab.Land, isn’t surprised about the anti-NFT sentiment either.

“Any innovation — especially this one with financial impact, cultural value and status — will attract questioning during its downs,” she said.

Young believes many projects have stumbled since marketplaces such as OpenSea removed mandated royalty fees in late August.

Despite this, Young claimed that NFTs are “here to stay” and expects they will be more frequently used for loyalty programs, rewards, advertising and proof of authenticity in the coming months.

Tama Churchouse, chief operating officer of Cumberland Labs, recently opined that NFTs aren’t “dead,” arguing that recent developments in the space show there are still signs of life.

While the NFT market has primarily been dominated by digital art, Jardi said that nonfungible tokens remain an important tool for the broader digital landscape, as ownership of tangible assets can be denoted to users in novel ways.

Jardi believes governments and institutions will leverage NFTs in the future for various use cases. On Oct. 9, the Chinese-state-owned newspaper China Daily announced plans to launch a platform for trading digital collectibles.

Related: Mainstream NFT adoption will be driven mostly by their utility

The entertainment sector is another huge market for the NFT industry to capture, according to Scott Lawin, CEO of sports token platform Candy Digital.

Lawin told Cointelegraph that 24% of Major League Baseball fans who entered stadiums with mobile tickets in 2022 redeemed their complimentary commemorative digital ticket provided by Candy as a form of memorabilia.

“Those are all utilities of NFTs in real time,” Lawin added.

On the brand side, Adidas, Bud Light, Gucci, Prada and other companies dipping into the NFT space have seen a recent uptick in the number of active users on their Discord channels, Young said.

The NFT market capitalization currently stands at $5 billion, according to data from Forbes Digital Assets. The Yuga Labs-owned CryptoPunks and Bored Ape Yacht Club collections are the two largest, with market caps of $710 million and $400 million, respectively.

Magazine: NFT Collector: William Mapan’s Distance sells out, NFT float in Macy’s Parade, Nouns DAO forks

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How About Hunter? Justice Department Adds FARA Charge To Menendez Prosecution

How About Hunter? Justice Department Adds FARA Charge To Menendez Prosecution

Authored by Jonathan Turley,

The Justice Department this week…

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October 15, 2023

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How About Hunter? Justice Department Adds FARA Charge To Menendez Prosecution

Authored by Jonathan Turley,

The Justice Department this week hit Sen. Bob Menendez (D-NJ) with a superseding indictment including a new but all-too-familiar charge: being an unregistered foreign agent under the Foreign Agents Registration Act (FARA).

 

I cannot recall another sitting member of Congress being criminally charged as a foreign agent.

Yet even if this is the first such case, the charge has been freely used by the Justice Department in all but one case: Hunter Biden.

The indictment accuses Menendez of being a foreign agent on behalf of Egypt.

Also charged under the law is Menendez’s wife, Nadine, and Egyptian American businessman Wael Hana.

After they discussed various foreign policy priorities at one dinner, Nadine is quoted as asking her Egyptian counterparts, “What else can the love of my life do for you?”

The government alleges that the couple agreed to have Menendez “use his power and authority to facilitate such sales and financing to Egypt.” In addition to other benefits, the government alleges that Hana promised to put Nadine on the payroll of his company in a “low-or-no-show job.”

The indictment further alleges that the senator disclosed “nonpublic information about the United States’s provision of military aid to Egypt” during a dinner with Hana in 2018.

It also claims that the senator “secretly edited and ghost-wrote” a letter “on behalf of Egypt” trying to convince other senators to release a hold on $300 million in aid to the country.

The inclusion of the FARA charge against Menendez, his wife and his associate only highlights the absence of any such charge against President Biden’s son Hunter.

For years, some of us have raised the glaring contradiction in how the Justice Department has approached the Hunter Biden case with its treatment of past defendants like Donald Trump associate Paul Manafort.

The Justice Department has been quick to indictment Manafort and others on FARA charges, but continues to prevaricate over such a charge for the president’s son.

Indeed, when Menendez was charged, I wrote about the striking similarities in the cases, including the gifts and benefits showered on both men.

They remain similar in every way except the charges.

FARA covers anyone acting as “agent of a foreign principal,” including but not limited to (1) attempting to influence federal officials or the public on domestic or foreign policy or the political or public interests in favor of a foreign country; (2) collecting or disbursing money and or other things of value within the United States; or (3) representing the interests of the foreign principal before U.S. Government officials or agencies.

It is sweeping.

So is the definition of what a “foreign principal” encompasses, including “a foreign government, a foreign political party, any person outside the United States (except U.S. citizens who are domiciled within the United States), and any entity organized under the laws of a foreign country or having its principal place of business in a foreign country.”

It is easy to see why FARA charges have been quickly brought in cases ranging from Manafort to Menendez. It is less clear why such charges remains strikingly absent from the Hunter case.

In Hunter’s case, he was selling what associate Devon Archer called the “Biden brand” and asking, to paraphrase Nadine Menendez,  “What else can [my dad] do for you?”

The House committees have confirmed not only millions transferred to Hunter and other Biden family members, but direct contacts made by Hunter with federal officials and agencies in relation to his foreign clients.

Archer described how Burisma executives told Hunter that they were worried about the anti-corruption investigation of Ukrainian Prosecutor-General Viktor Shokin.

Archer testified that Hunter immediately “called D.C.” in response to the plea.

Shokin was later fired at Vice President Joe Biden’s demand.

In shaking down a Chinese source for more money, Hunter reportedly sent a WhatsApp message that reminded him that “The Bidens are the best at doing exactly what Chairman wants.”

The message was to Gongwen (“Kevin”) Dong, a CEFC China Energy executive with close ties to the Chinese government, and included a threat that “I am sitting here with my father and we would like to understand why the commitment made has not been fulfilled … I will make certain that between the man sitting next to me and every person he knows and my ability to forever hold a grudge that you will regret not following my direction. I am sitting here waiting for the call with my father.”

Throughout his open influence-peddling, emails show Hunter was fully aware of the risk of being charged under FARA.

The problem with FARA is that it would require the Bidens to publicly acknowledge their work as foreign agents and, by extension, their massive influence-peddling operation.

In one message, Hunter addressed his work for the Chinese CEFC energy company and warned:

“No matter what it will need to be a US company at some level in order for us to make bids on federal and state funded projects. Also We [sic] don’t want to have to register as foreign agents under the FCPA which is much more expansive than people who should know choose not to know. James has very particular opinions about this so I would ask him about the foreign entity.”

“James” is his uncle Jim Biden, who has also been regularly accused of corrupt influence-peddling tied to Joe Biden.

In the message, Hunter gets it.

The law is indeed “expansive.”

His uncle clearly gets it.

The question is why the Justice Department gets it in every case except those with targets named Biden.

For many, the question is not whether Hunter has acted as an agent of foreign principals but whether the Justice Department is acting as an agent of the principal Biden.

Tyler Durden Sun, 10/15/2023 - 18:40

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Egypt Mulls Allowing Refugees Entry As Over 600,000 Gazans Move South; FBI Warns Of Hamas Attacks On US Soil

Egypt Mulls Allowing Refugees Entry As Over 600,000 Gazans Move South; FBI Warns Of Hamas Attacks On US Soil

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After giving the northern…

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Egypt Mulls Allowing Refugees Entry As Over 600,000 Gazans Move South; FBI Warns Of Hamas Attacks On US Soil

Summary:

After giving the northern Gaza strip an evacuation ultimatum on Friday, Israel has so far withheld from launching a "significant" ground operation, with some speculating that requests from the US to evacuate all US citizens out of Palestine ahead of the invasion is what is holding Israel back. Meanwhile, Iran’s foreign minister on Saturday said that if Israeli “war crimes & genocide” are not stopped, the war might expand to other parts of the Middle East if Hezbollah joins the battle, and that would make Israel suffer “a huge earthquake.” Meanwhile, Axios reported that Tehran has sent Jerusalem a message through the UN that it will intervene if the campaign in Gaza continues, and particularly if it launches a ground offensive.

This was followed by news Sunday morning that the US has been backchanneling with Iran in recent days to warn against escalating the conflict in Israel (after all, Biden can't afford to lose those sanctioned Iranian oil exports whose re-embargo would promptly send the price of oil above $100).

Another reason why Israel may be waiting: the Pentagon confirmed that it has ordered a second carrier strike group to the eastern Mediterranean Sea after a first carrier strike group, led by the USS Gerald R. Ford, arrived off the coast of Israel last week.

Background:

On Saturday, the Israeli army said it’s making preparations for “significant ground operations” in Gaza, with the Israel Defense Forces saying in a statement that the next phase of the war can include a coordinated land, sea and air assault.

Israel has called up a record 300,000 reservists and has been pounding Gaza after the unprecedented incursion in which more than 1,000 Hamas fighters swept across the border and attacked Israeli military posts, bases and settlements. More than 1,300 Israelis died, mostly civilians, and up to 150 people were abducted and taken into Gaza. More than 1,900 Palestinians have been killed in the Israeli bombing campaign as fears mount of major casualties once Israel sends troops into the crowded coastal strip, home to 2.3 million people. Israel on Friday gave 24 hours for more than 1 million Palestinians to evacuate their homes in Gaza.

Separately, Israel confirmed for the first time that there were intelligence indications of something happening in Gaza two hours before the attacks last week. The head of Shin Bet, Israel’s internal security service, spoke with military personnel about the reports, said Tzachi Hanegbi, head of Israel’s National Security Council. “Both sides assessed that this is something other than it turned out to be,” he said.

Meanwhile, Hamas, which has been designated as a terrorist group by the US and the European Union, said Israeli air strikes killed another nine of its hostages in the past 24 hours, raising the total to 26. Many governments, including the US and European countries, are rushing to evacuate citizens in anticipation of an Israeli incursion into Gaza, though the Rafah border crossing out of Gaza to Egypt was reported to be closed to foreign nationals Saturday.

On the diplomatic front, Joe Biden’s team has voiced anxiety about Israel’s 24-hour evacuation demand, a deadline that the European Union and the United Nations called unrealistic. On Friday, Biden said people shouldn’t “lose sight of the fact that the overwhelming majority of Palestinians had nothing to do with Hamas” something Biden tweeted on Sunday morning.

The US Embassy in Israel said it’s “working on potential options for departure from Gaza.” US citizens living in or visiting Gaza may be allowed to leave on Saturday, according to a US official. The embassy said it’s facilitating more chartered evacuation flights from Tel Aviv’s Ben Gurion Airport and urged US citizens and immediate family members to use them “while they are available.” The US government also said it is assisting US nationals and their immediate family members with a valid travel document to depart Haifa via sea for Cyprus on Oct. 16, according to a statement on the US Embassy in Israel website.

The State Department in Washington authorized the departure of non-emergency embassy personnel on Friday, citing an “unpredictable security situation.” With commercial flights to Israel disrupted, European countries such as France and Germany also have been providing planes to get their citizens out of the region.

Latest Developments:

Israel Says More Than 600,000 Gazans Have Moved South

More than 600,000 Gazans from Gaza City and its surroundings have relocated southward, following instructions from the Israeli Defense Forces, IDF Spokesman Daniel Hagari says. 

Bloomberg notes that this is Hagari added this exodus is despite efforts by Hamas, which rules the Gaza Strip, to keep them in the north to serve as human shields.

Hagari urged those remaining in the north to evacuate for their safety.

* * *

Egypt Weighs Letting in Foreigners and Palestinians From Gaza

Egypt is coming under intense pressure to allow refugees to cross the border and escape an Israeli bombing campaign and expected ground invasion.

But, as WSJ reports, for Cairo, opening the border is a tough call.

Egypt plays a unique role with Hamas, mediating its conflicts with Israel while also helping squeeze the U.S.-designated terrorist group with a blockade on goods and travel out of the Gaza Strip. It has been reluctant to allow the tensions and troubles of Gaza to enter its own country in the form of large numbers of refugees.

The US is confident Egypt’s border with Gaza will be opened to allow in crucial humanitarian aid, Blinken told reporters in Cairo. 

“Rafah will be open,” the top US diplomat said after meeting President Abdel-Fattah El-Sisi.

“We’re putting in place with the United Nations, with Egypt, with Israel a mechanism by which to get assistance in.”

A US envoy, David Satterfield, will be in Israel on Monday to work out practical details. 

* * *

FBI Director Warns of possible copy-cat attacks

“Here in the U.S. we cannot and do not discount the possibility that Hamas or other foreign terrorist organizations could exploit the conflict to call on their supporters to conduct attacks on our own soil,” Wray told reporters on Sunday.

The FBI has been sharing intelligence about possible violence with state and local law enforcement, he said, though officials said most of the threats haven’t proved credible.

It's just a good job the US' southern border is so secure!

* * *

Iran’s foreign minister on Saturday called on Israel to stop its attacks on Gaza, warning that the war might expand to other parts of the Middle East if Hezbollah joins the battle, and that would make Israel suffer “a huge earthquake.” Hossein Amirabdollahian told reporters in Beirut that Lebanon’s Hezbollah terror group has taken all war scenarios into consideration and Israel should stop its attacks on Gaza as soon as possible. Meanwhile, the Axios news site reported that Tehran has sent Jerusalem a message through the UN that it will intervene if the campaign in Gaza continues, and particularly if it launches a ground offensive. The report cited two diplomatic sources with knowledge of the matter. The report said Amirabdollahian made the comments when he met Saturday with UN Middle East envoy Tor Wennesland in Beirut, a meeting that led to intense criticism from Israel. A short while later, Iran’s mission to the UN warned in a tweet that if Israel’s “war crimes & genocide” are not stopped immediately, this could have “far-reaching consequences” and the situation could “spiral out of control.”

* * *

US Warned Iran in Back-Channel Talks on War: The US has held back-channel talks with Iran in recent days to warn the country against escalating the conflict in Israel, as Israeli forces prepare an expected ground assault in response to last weekend’s surprise attack by Hamas. “We have means of communicating privately with Iran, and we have availed ourselves of those means over the past few days to make clear privately that which we have said publicly,” White House National Security Advisor Jake Sullivan said Sunday on CBS News’s Face the Nation. Sullivan said the US couldn’t rule out that Iran might intervene in the conflict, and was monitoring both the possibility of direct involvement by Tehran and proxy activity by Hezbollah across the border with Lebanon.

* * *

Israeli army awaits "political" green light for Gaza invasion:  The Israeli army is awaiting a "political decision" on the timing of a major ground offensive on the Gaza Strip, military spokesmen said Sunday as civilians stepped up desperate efforts to flee northern Gaza. Military spokesmen Lt. Col. Richard Hecht and Rear Adm. Daniel Hagari told separate briefings on Sunday that "a political decision" will set off any action against Hamas. "We will be holding discussions with our political leadership," Hecht told one briefing.

Prime Minister Benjamin Netanyahu told troops near the Gaza border on Saturday that "more is coming." But he did not say when any ground operation would start. Military spokesmen have told reporters that any invasion would aim to eradicate Hamas' militant network and leadership so that it cannot stage more attacks. The Israeli military has particularly singled out Yahya Sinwar, the chief of Hamas in Gaza who they blame for the Oct. 7 attacks. "That man is in our sights," Hecht said on Saturday. "He is a dead man walking and we will get to that man."

* * *

Rockets were fired at Tel Aviv and southern Israel overnight, and the Israel Defense Forces attacked targets in and around the northern part of Gaza. It was not immediately clear how much damage, if any, was caused in the rocket attacks. One Israeli died on Sunday in a Hezbollah attack on Israeli army posts near the border with Lebanon. Subsequent reports indicate that more rockets had been fired into northern Israel from Lebanon.

* * *

Moroccans Push to Sever Israel Ties in Mass Protest:  Tens of thousands of protesters took to the streets of Rabat, Morocco’s capital, demanding King Mohammed VI to severe ties with Israel which were restored in 2020. The marchers denounced as “barbaric” ongoing military intervention by Israel in Gaza and demanded the closing of its liaison office in the Moroccan capital. 

* * *

Blinken Meets With Saudi Crown Prince:  Blinken travelled to Riyadh on Sunday for an hour-long talk with Saudi Crown Prince Mohammed bin Salman that the top US diplomat deemed “very productive.”   MBS highlighted Riyadh’s diplomatic outreach “to calm the situation,” the official Saudi Press Agency reported.

* * *

Blinken Will Return to Israel on Monday:  US Secretary of State Antony Blinken will return to Israel on Monday for further consultations with senior officials there, his spokesman said. The top US diplomat was previously in Israel on Thursday as part of a frenetic tour of the region that included stops in Qatar, Jordan, Bahrain and the United Arab Emirates as well as Saudi Arabia, as the Biden administration tries to limit the threat of a spreading conflict in the Middle East.

* * *

Blinken Urges China to Use Its Influence:  US Secretary of State Antony Blinken urged Beijing to use its influence to prevent other state or non-state actors from attacking Israel and widening its war with Hamas, the State Department said. Blinken spoke with Foreign Minister Wang Yi before departing from Riyadh, where the top US diplomat was attempting to shore up support for Israel among Arab nations, said State Department spokesman Matthew Miller. He met with Saudi Arabia’s Crown Prince Mohammed bin Salman, the State Department said.

* * *

Israel, Hezbollah exchange fire, heightening fears of a second front opening:  Cross-border fire erupted between Israel and Lebanon early Sunday, killing at least one person on the Israeli side of the border. Both the Israeli military and the Lebanese militant group Hezbollah acknowledged the fighting. Hezbollah says it fired guided missiles toward an Israel army post in Shtula from Lebanon, according to the militant group’s Al-Manar TV. The Israeli military said earlier it was targeting southern Lebanon after initial report of a shooting near the Lebanese border.  

The group said in a statement the attack was in retaliation for Israeli shelling that killed Reuters videographer Issam Abdallah on Friday and two Lebanese civilians on Saturday. Israel has responded by targeting the outskirts of the town of Ait el-Shaab, the Israeli military said. The Israel Defense Forces also banned civilians from going within two-and-a-half miles of the Lebanese border. In addition, the Reuters news service reports, Israel disrupted GPS electronic location services in the northern border area and at the Gaza front, according to Reuters. Israel's Magen David Adom rescue service said a 40-year-old man was killed in the attack from Lebanon, without elaborating or giving his nationality.  As Israel wages its war against Hamas over last week's unprecedented attack by the Gaza Strip militant group, there's been concern that Hezbollah could enter the war as well as Israel moves toward launching a ground offensive in Gaza.

* * *

Hezbollah Strikes Israeli Army Posts:  Iran-backed Hezbollah attacked two Israeli army posts near the border with Lebanon in response to what the militant group said was the killing of Lebanese nationals in recent days. One of the Middle East’s most powerful militias, Hezbollah said it fired guided missiles against an Israeli army post in Shtula in Upper Galilee. An hour later, it said its members used “live ammunition” to target an army post in Al-Raheb and destroyed a tank.

* * *

Israeli Shares Down 3% As War Enters Second Week:  Israel’s TA-35 stock index fell sharply on Sunday as Israel continues to strike back against Hamas targets and tensions rise on the northern border with Hezbollah. The index was down 3.3% in early afternoon, having reached the lowest levels since mid-2021. Banking stocks led the decline. The sector was down 12.3% last week “on account of volatility concerns,” the Tel Aviv Stock Exchange said. Other Middle Eastern markets were narrowly mixed.  

* * *

Israel Acknowledges Reports of Gaza Activity: Israel confirmed for the first time that there were intelligence indications of something happening in Gaza two hours before the attacks last week. The head of Shin Bet, Israel’s internal security service, spoke with military personnel about the reports, said Tzachi Hanegbi, head of Israel’s National Security Council. “Both sides assessed that this is something other than it turned out to be,” he said.

* * *

Abbas Stresses Need for Humanitarian Corridor in Biden Call:  In a phone call with US President Joe Biden late Saturday, Palestinian President Mahmoud Abbas stressed the urgent need for humanitarian corridors to be opened in the Gaza Strip so that basic materials and medical supplies such as water, electricity and fuel, can be delivered to civilians. Abbas also told Biden he rejected the displacement of Palestinians from Gaza and affirmed his rejection of the killing or abusing of civilians on both sides, calling for the release of civilians, priosners and detainees.  

* * *

Pope calls for humanitarian corridors for Gaza residents: Pope Francis called on Sunday for humanitarian corridors to allow the delivery of essentials to the Gaza Strip, which is under heavy Israeli bombardment following a bloody attack on Israel by Gaza's rulers, Hamas. "Humanitarian law must be respected, especially in Gaza, where it is urgent and necessary to guarantee humanitarian corridors and help the population," said the Pope after his traditional Angelus prayer in Rome's Saint Peter's Square.

* * *

U.S. arranges for ship to evacuate Americans from Israel to Cyprus Monday: The United States has organized a ship to take Americans out of Israel to Cyprus on Monday, the U.S. Embassy said. With Israel moving toward an invasion of the Gaza Strip, the ship will leave from the Israeli port of Haifa for Limassol, taking "U.S. nationals and their immediate family members with a valid travel document," the U.S. embassy said in a security alert Sunday. Tens of thousands of U.S. passport holders live in Israel and 29 have been confirmed killed in the Hamas attacks on October 7. Another 15 are missing and believed to be among hostages held by Hamas since the attacks. The U.S. embassy didn't say how many people would fit on the ship but said "boarding will proceed in order of arrival and is on a space limited basis." Each passenger will have to sign a document promising to repay the cost of the trip and will only be allowed to bring one suitcase. The embassy said some chartered flights would be arranged from Cyprus for onward travel.

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UK Foreign Minister Urges Israel to Show Restraint:  James Cleverly called on Israel to avoid civilian casualties in Gaza and respect international law in any military operations against Hamas, saying his “strong advice” was being offered from a position of friendship.” It’s in Israel’s interest to avoid civilian casualties because Hamas wants to turn the conflict “into a wider Arab-Israeli war, or indeed a war between the Muslim world and and the wider world,” the UK foreign minister said on Sky News. His comments came hours after Prime Minister Rishi Sunak said the UK stood unequivocally with Israel, making no mention of the plight facing Palestinian civilians.

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Gaza Death Toll Reaches 2,300: The number of people killed in Israeli attacks on Gaza has reached more than 2,300, local authorities said, with thousands more wounded in the past eight days. This now outnumbers the death toll of the 51-day Israel-Hamas war of 2014, according to Ashraf Al-Qedra, a spokesperson for the Gaza health ministry. The 2014 war killed more than 2,200 Palestinians, according to UN figures. At the time it was the deadliest and most destructive violence since Hamas took over the Gaza Strip.

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Situation in Gaza hospitals getting ever more desperate: Medics in Gaza warned Sunday that thousands could die as hospitals packed with wounded people run desperately low on fuel and basic supplies. Palestinians in the besieged coastal enclave struggled to find food, water and safety ahead of an expected Israeli ground offensive in the war sparked by Hamas' deadly attack. A week of blistering airstrikes have demolished entire Gaza neighborhoods but failed to stem militant rocket fire into Israel. Hospitals are expected to run out of generator fuel within two days, according to the U.N., which said that would endanger the lives of thousands of patients. Gaza's sole power plant shut down for lack of fuel after Israel completely sealed off the 25-mile-long territory following the Hamas attack.

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Israel Says it Killed Hamas Military Leader:  The Israeli military said on Sunday its fighter jets killed the Hamas military leader responsible for the attack on one of Israel’s communities last Saturday, Kibbutz Nirim. In a statement, the military said this occurred Saturday night during operations that also took out Hamas rocket launchers. It said the man was commander of the Nukhba forces in Khan Yunis in the southern Gaza Strip. Nukhba are the elite Hamas military unit that Israel says trained and led the October 7 attack. Hamas has been designated as a terrorist group by the US and the European Union.

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Tyler Durden Sun, 10/15/2023 - 13:10

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