Pablo Picasso The muse 1935
“How many people have you killed with a nuclear weapon? How many generations have you wiped out with these weapons?”
• Iran Says It Will Never Pursue A Nuclear Weapon (ZH)
Following Iran’s statement that diplomacy with the United States is “closed forever” after Washington sanctioned the Supreme Leader and other key officials, including on the foreign minister himself – making it practically hard to actually “do” diplomacy given sanctions also have the impact of restricting travel for the nation’s top diplomat – FM Javad Zarif slammed America’s track record with nukes. “You were really worried about 150 people? How many people have you killed with a nuclear weapon? How many generations have you wiped out with these weapons?” Zarif said Tuesday in reference to Trump’s calculus that he refrained from ordering last Thursday night’s readied military strike against Iran when informed 150 people would die.
“It is us who, because of our religious views, will never pursue a nuclear weapon,” Zarif added. Indeed it’s been long understood that since Iran’s Islamic revolution the Ayatollahs have been consistently against nuclear weapons on moral grounds, citing Koranic principles. The US remains the only country in the world to have ever deployed nuclear weapons in a wartime situation, dropping two on Japan at the end of WWII. Though scholars generally agree that the overwhelming destruction on Hiroshima and Nagasaki made counting impossible, conservative estimates tend to be at over 200,000 dead and wounded total wrought by the twin atom bombs dropped over those cities. And of course, the overwhelming majority of the Japanese dead and wounded were civilians.
How dare he.
• Iran Foreign Minister Accuses Bolton Of Plotting For War (R.)
Iran’s Foreign Minister Mohammad Javad Zarif accused U.S. National Security Adviser John Bolton of plotting for war against Iran in a tweet on Tuesday. “Wanna know why those with proven record of detesting diplomacy are suddenly interested in talks? Just read @AmbJohnBolton’s 2017 recipe for destroying the #JCPOA,” Zarif wrote, adding a link to a 2017 article written by Bolton in the National Review. The Joint Comprehensive Plan of Action, or JCPOA, is the landmark 2015 nuclear deal Iran signed with world powers. “Iran never left the negotiation table. #B_Team dragged the U.S. out, while plotting for war,” Zarif added. Zarif has in the past said that a “B-team” including Bolton, an ardent Iran hawk, and Israeli Prime Minister Benjamin Netanyahu, could goad Trump into a conflict with Tehran.
An excuse for more rockets on Russia’s border.
• NATO Calls On Russia To Destroy New Missile, Warns Of Response (R.)
NATO urged Russia on Tuesday to destroy a new missile before an August deadline and save a treaty that keeps land-based nuclear warheads out of Europe or face a more determined alliance response in the region. NATO defense ministers will discuss on Wednesday their next steps if Moscow keeps the missile system that the United States says would allow short-notice nuclear attacks on Europe and break the 1987 Intermediate-range Nuclear Forces Treaty (INF). “We call on Russia to take the responsible path, but we have seen no indication that Russia intends to do so,” Secretary-General Jens Stoltenberg told a news conference. “We will need to respond,” Stoltenberg said.
He declined to go into more details. But diplomats said defense ministers will consider more flights over Europe by U.S. warplanes capable of carrying nuclear warheads, more military training and the repositioning U.S. sea-based missiles. The United States and its NATO allies want Russia to destroy its 9M729/SSC-8 nuclear-capable cruise missile system, which Moscow has so far refused to do. It denies any violations of the INF treaty, accusing Washington of seeking an arms race. Without a deal, the United States has said it will withdraw from the INF treaty on Aug. 2, removing constraints on its own ability to develop nuclear-capable, medium-range missiles.
Brought to you by the Trump 2020 re-election committee.
• Mueller To Testify Before Two House Committees July 17 (AFP)
Former US special counsel Robert Mueller is to testify in public about his report into Russian electoral interference, paving the way for a historic television moment in which Democrats will attempt to make the case for President Donald Trump’s impeachment before the American people. The scrupulously tight-lipped Mueller will appear at back-to-back hearings on July 17 of the House Judiciary and Intelligence Committees, which announced Tuesday that the prosecutor had agreed to abide by subpoenas for his testimony. “Russia attacked our democracy to help Trump win. Trump welcomed and used that help,” House Intelligence Committee chairman Adam Schiff said on Twitter.
“As Mueller said, that should concern every American. And now, every American will get to hear directly from Mueller.” Trump’s apparent response to the announcement came swiftly in a two-word tweet in which he complained, without referring to Mueller, of “Presidential Harassment!” The Mueller report released in April outlined numerous contacts between Trump’s 2016 election campaign and government-linked Russians, as well as evidence that the president tried on several occasions to stymie the investigation. The Democrats have been split on whether to launch impeachment proceedings against the Republican president but — fearing that much of the country is unaware of the Mueller report’s contents — have been asking major figures in the probe to testify in public on its findings.
He says it will be mild.
• A. Gary Shilling Says The US Is Already In A Recession
Gary Shilling, an economist and financial analyst who is credited with predicting several recessions over the past 40 years, thinks the U.S. is in a relatively mild slump. “I think we’re probably already in a recession but I think it will probably be a run-of-the-mill affair, which means real GDP would decline 1.5% to 2%, not the 3.5% to 4% you had in the very serious recessions,” Shilling, president of economic and financial research firm A. Shilling & Co., said in a recent interview broadcast this week by Real Vision. In such a tempered slide, he says, “Stocks probably wouldn’t fall” but if they did, they likely would tumble about 22% — similar to other recent recessions. That, he says, would take the Standard and Poor’s 500 index about 200 points below it’s Christmas Eve nadir of 2,351.
His view is at odds with the vast majority of economists who expect the economy to grow a solid 2% to 2.5% this year after expanding at about a 3% clip last year and in the first quarter. Shilling points to: • Declining industrial production, a result of a weak global economy and the Trump administration’s trade war with China. • Feeble job growth of 75,000 in May, along with downward revisions to prior months. • The Federal Reserve Bank of New York’s recession probability chart, which shows about a 30% chance of a downturn the next 12 months, up from about 10% early this year. That data is based on an inversion of the yield curve, which has shown rates on 3-month Treasury bonds topping 10-year notes recently – a sign that investors don’t have much faith in the longer-term outlook. Inversions do herald recessions but often two years in advance.
China: $6.8 trillion in household debt, a 70% rise in personal debt from just three years ago.
• Housing Market Slump Could Drive Global Growth To A Decade Low (MW)
The global housing market is showing cracks. Those fissures could spread throughout the world-wide economy, potentially sending world-wide gross domestic product, or GDP, to its lowest annual pace of in 10 years, according to research from Oxford Economics, led by economists Adam Slater, and John Payne in a research report dated June 24. “A combined slump in house prices and housing investment in the major economies could cut world growth to a 10-year low of 2.2% by 2020 – and to below 2% if it also triggered a tightening in global credit conditions.” the Oxford Economics researchers wrote.
A decade since the 2008-09 U.S. housing bubble imploded, sparking a global financial crisis, worries about the health of the global housing market persist. An Oxford Economics’ proprietary gauge of housing conditions in the globe shows that home prices have declined by 10% and investments in houses have shrunk by 8%. Housing prices across the globe have come in to focus as a protracted tariff squabble between the U.S. and China ripples throughout the global economy, compelling a number of central bankers to entertain the idea of lowering benchmark borrowing costs in an effort to stimulate, or just maintain, economic expansion.
The Federal Reserve last Wednesday signaled a willingness to lower federal-funds rates, currently at 2.25%-2.50%, if financial conditions worsen. In China, a decade long housing boom has sent home values to the lofty levels, with buying in the region underpinned by some $6.8 trillion in household debt, according to the Bank for International Settlements, a 70% rise in personal debt from just three years ago, with much of that tied to residential mortgages. Oxford Economics says data show that residential investment in China is slowing as are starts for new construction also ebb
Nopbody goes to jail, nobody even pays a fine. A broken system indeed.
• Merrill Lynch Caught Criminally Manipulating Precious Metals Market (ZH)
On Tuesday after the close, the CFTC announced that Merrill Lynch Commodities (MLCI), a global commodities trading business, agreed to pay $25 million to resolve the government’s investigation into a multi-year scheme by MLCI precious metals traders to mislead the market for precious metals futures contracts traded on the COMEX (Commodity Exchange Inc.). The announcement was made by Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. In other words, if the Merrill Lynch Commodities group was an individual, he would have gotten ye olde perp walk.
As MLCI itself admitted, beginning in 2008 and continuing through 2014, precious metals traders employed by MLCI schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market. They did so in the now traditional market manipulation way – by placing fraudulent orders for precious metals futures contracts that, at the time the traders placed the orders, they intended to cancel before execution. In doing so, the traders intended to “spoof” or manipulate the market by creating the false impression of increased supply or demand and, in turn, to fraudulently induce other market participants to buy and to sell futures contracts at quantities, prices and times that they otherwise likely would not have done so.
Over the relevant period, the traders placed thousands of fraudulent orders. Of course, since we are talking about a bank, and since banks are in charge of not only the DOJ, and virtually every other branch of government, not to mention the Fed, nobody will go to jail and MLCI entered into a non-prosecution agreement and agreed to pay a combined – and measly – $25 million in criminal fines, restitution and forfeiture of trading profits.
Stock manipulation
• Apple Doubles Down On Buybacks (Axios)
Apple again led S&P 500 companies in buybacks, spending a new record $23.8 billion in Q1, more than doubling its spend from the previous quarter, data from S&P Global shows. Apple has long been a buyback behemoth. The company holds 8 of the 10 all-time records for quarterly buybacks, and has spent more than $75 billion on buybacks over just the past year. It has spent $234.7 billion over the most recent 5-year period, and $284.3 billion over the last 10-year period. Apple accounted for 23% of share buybacks made by the top 20 S&P 500 companies. The big picture: While Apple has increased its buyback spending, other S&P 500 companies have slowed from 2018’s record pace.
Companies bought back just $205.8 billion worth of their own shares, a 7.7% decline from Q4 2018, S&P reported. That ended the streak of 4 consecutive quarters of record buybacks. Yes, but: Buybacks rose 8.9% from Q1 2018, which set a record at the time. Outside analysis of the broader stock market, beyond just the S&P, shows announced buyback spending was higher in Q1 2019 than Q4 2018. Ratings agency Moody’s warned last month that companies are spending more on share buybacks and dividends than they were paying in taxes before the 2017 tax cut. The tax savings “can be wiped out entirely by even a modest change in share buybacks,” Christina Padgett, senior vice president at Moody’s, told Axios at the time.
Italy has quite a lot of it.
• Italy’s Gold Now Belongs To The ECB (ZH)
As the squabbling over Italy’s populist government’s plans to blow out its budget deficit to finance an agenda of tax cuts and social spending (including a ‘citizen’s income’ that’s essentially UBI-lite) crowded the headlines, the issue of who owns the 2,451 metric tons of gold reserves held by the Bank of Italy has been quietly ignored – at least, outside of Italy. But that might be about to change. On Tuesday, the ECB asked the League, the dominant party in Italy’s ruling coalition, to remove a reference to the Bank of Italy holding gold as an “exclusive title of deposit” according to Bloomberg. Translation? If Italy is not allowed to have title to Italian gold, then Italy’s gold now belongs to the ECB.
Today’s escalation over Italy’s gold “title” comes two months after the WSJ reported that Italy’s ruling populists pushed ahead with efforts to seize control of the central bank and its gold reserves. Complaining that hundreds of thousands of small individual investors lost billions of dollars after several Italian banks failed in recent years, the current Italian government depicted the central bank as a symbol of a technocratic elite aloof from the needs of ordinary Italians. “We need a change of course at the Bank of Italy if we think about what happened in the last years,” said Deputy Prime Minister Luigi Di Maio, leader of the 5 Star Movement. Shortly thereafter, 5 Star lawmakers asked parliament to pass two draft laws.
One law would instruct the central bank’s owners, most of them private banks , to sell their shares to the Italian Treasury at prices from the 1930s.The other law would declare the Italian people to be the owners of the Bank of Italy’s reserve of 2451.8 metric tons of gold, worth around $102 billion at current prices. “The gold belongs to the Italians, not to the bankers,” said Giorgia Meloni, leader of the Brothers of Italy, a far-right opposition party that supports both bills. “We are ready to battle everywhere in Italy and to bring Italians to the streets if necessary.” So far there has been no fighting but if indeed Draghi just told Italy that its gold now belongs to the Frankfurt-based central bank we expect that to change..
So how much are they willing to pay?
• Investors With $34 Trillion Demand Urgent Climate Change Action (R.)
Investors managing more than $34 trillion in assets, nearly half the world’s invested capital, are demanding urgent action from governments on climate change, piling pressure on leaders of the world’s 20 biggest economies meeting this week. In an open letter to the “governments of the world” seen by Reuters, groups representing 477 investors stressed “the urgency of decisive action” on climate change to achieve the Paris Agreement target. Almost 200 nations agreed in Paris in 2015 to limit the global average temperature rise to well below 2 degrees Celsius above pre-industrial times. Current policies put the world on track for at least a 3C rise by the end of the century.
The letter comes ahead of a June 28-29 G20 summit in Japan and as United Nations Secretary-General Antonio Guterres urges countries to back more ambitious climate goals. “There is an ambition gap… This ambition gap is of great concern to investors and needs to be addressed, with urgency,” a statement from the investors accompanying the letter said. Governments were urged to strengthen their Paris Agreement targets by 2020; phase out thermal coal power and fossil fuel subsidies by set deadlines; set a robust global carbon price by 2020 and improve climate-related financial reporting. “It is vital for our long-term planning and asset allocation decisions that governments work closely with investors to incorporate Paris-aligned climate scenarios into their policy frameworks and energy transition pathways,” the statement said.
Arundhati Roy:
