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EU Leaders Outraged As A Defiant Viktor Orban Visits Putin On “Peace Mission”

EU Leaders Outraged As A Defiant Viktor Orban Visits Putin On “Peace Mission”

Hungarian Prime Minister Viktor Orban has showed up in Moscow Friday, on a surprise visit to meet with President Vladimir Putin which has at the same time outraged European officials.

Defying the EU, Orban wrote of the trip on X, “The #peace mission continues. Second stop: #Moscow.” This “peace mission” comes a mere days after for the first time of the war he visited Kiev and met with President Zelensky to talk about getting the sides to the negotiating table.

What especially makes things awkward for European Union leadership is the fact that Hungary just recently took over the rotating EU presidency.

Putin alluded to this in televised comments, saying that Orban had come to Moscow precisely in this capacity as the top representative of the European Council. This despite a number of European officials having strongly condemned the visit.

“I understand that this time you have come not just as our longstanding partner but as president of the council,” Putin told Orban. Putin said he’s expecting that Orban will lay out “the position of European partners” on Ukraine.

While Orban had informed NATO about his intention to visit Moscow, EU foreign affairs chief Josep Borrell slammed the visit, saying the PM is “not representing the EU in any form.” Borrell emphasized the trip is only in the context of  “the framework of… bilateral relations between Hungary and Russia.”

Borrell also reminded a press briefing that Putin “has been indicted by the International Criminal Court and an arrest warrant released for his role in relation to the forced deportation of children from Ukraine to Russia.”

European Council President Charles Michel also said that Orban has “no mandate to engage with Russia on behalf of the EU.” He posted on X just prior to Orban’s meeting with Putin, “The European Council is clear: Russia is the aggressor, Ukraine is the victim. No discussions about Ukraine can take place without Ukraine.” And Ursula von der Leyen has called the visit “appeasement”. 

Estonian Prime Minister Kaja Kallas, who is set to become the EU’s next foreign policy chief, issued a swift and fierce condemnation, saying Orban is “exploiting” the EU presidency position in order to “sow confusion”. The well-known hawk added: “The EU is united, clearly behind Ukraine and against Russian aggression.”

Polish Prime Minister Donald Tusk stated, “The European Council is clear: Russia is the aggressor, Ukraine is the victim. No discussions about Ukraine can take place without Ukraine.” He expressed shock and dismay on X: “The rumors about your visit to Moscow cannot be true, @PM_ViktorOrban, or can they?”

Yet Orban remained unbowed and defiant in the face of an avalanche of denunciations, telling Putin in their meeting, “Hungary will slowly become the last European country that can talk to everyone.”

Orban has been busy blasting his EU counterparts for creating the conditions to extend the war as opposed to seeking its end…

After likely hundreds of thousands of lives lost in a grinding, horrific war which shows no signs of stopping and which could easily reach the three year mark, peace talks are still nowhere on the horizon. It is indeed long past time that an EU leader is seen going between the warring capitals in a desperate effort to open a window for truce talks which could lead to final negotiated settlement.

But Orban’s peace mission has European and NATO bureaucrats absolutely livid. This sets up Hungary for future and near-term contentious leadership within the EU Council. This friction was already present, but is deepening fast at this point. Are NATO and the EU afraid of peace?

Tyler Durden
Fri, 07/05/2024 – 09:55

June Jobless Rate Triggers Sahm Rule: Recession Imminent?

June Jobless Rate Triggers Sahm Rule: Recession Imminent?

Via The American Institute for Economic Research,

In this morning’s US Bureau of Labor Statistics data release, the U-3 unemployment rate increased 4.1 percent in June 2024, rising by one-tenth of a percentage point above the forecast rate. The U-3 rate measures the percentage of the civilian labor force that is jobless, actively seeking work, and available to work, excluding discouraged workers and the underemployed. 

This uptick triggers the Sahm Rule, a real-time recession indicator, suggesting that the US economy is in, or is nearing, a recession. The Sahm Rule, developed by former Fed economist Claudia Sahm, is designed to identify the start of a recession using changes in the total unemployment rate.

According to the rule, a recession is underway if the three-month moving average of the national unemployment rate rises by 0.50 percentage points or more, relative to its low during the previous 12 months. With the June 2024 U-3 rate of 4.1 percent, the average of the last three months being 4.0 and the lowest 12-month rate of 3.5 percent in July 2023, this criterion has been met.

Sahm Rule indications (1960 – 2024)

Source: Bloomberg

Surveys had forecast the U-3 rate to hold steady at 4.0 percent in June, unchanged from May 2024. The seemingly small 0.1 percent uptick, however, carries substantial implications for the broader economy. One possible confounding effect of the signal is growth in the labor force: If the labor force grows rapidly and the economy does not generate enough jobs to match the increase, the unemployment rate might rise and the Sahm Rule may be triggered, even if overall employment is increasing.

The rise of initial claims over the past few weeks, and nine consecutive increases in continuing claims, support the June 2024 Sahm indication.

Source: Bloomberg

Equity futures were flat just after the release, while Treasuries rallied across all maturities.

In recent months, Fed Chairman Jerome Powell has indicated that “unexpected weakness” may prompt a start to an accommodative policy stance without the additional data sought regarding the pace of disinflation. Historically, an increase in unemployment rates and the onset of a recession have led to policy adjustments aimed at stimulating economic growth and mitigating job losses, and the reversal of the rate hikes which began in 2022 to mitigate the highest inflation in four decades has been widely anticipated.

While more data will be required to confirm the Sahm Rule indication, the impact of accelerating prices, interest rates at their highest levels since 2007, and commercially suppressive pandemic policies have probably caught up with US producers and consumers.

Tyler Durden
Fri, 07/05/2024 – 09:35

China’s ‘National Team’ Gets To Work At Key Psychological Level For Stocks 

China’s ‘National Team’ Gets To Work At Key Psychological Level For Stocks 

The Shanghai Stock Exchange Composite recently dropped below a key psychological level, reflecting the uninspiring economic recovery and muted credit impulse data. With no stimulus bazooka in sight, the economy struggles amid a property market downturn. The Market Ear recently questioned the future of Chinese stocks after their multi-month rally stalled and reversed in mid-May. However, there are indications that China’s ‘national team’ may have stepped in to purchase stocks.

On June 21, the Shanghai Stock Exchange Composite tumbled below 3,000 points for the first time since late March. There were possible signs the national team stepped in around June 26 to boost the main equity index to near 3,000, but that effort has since failed.

Last month, Shen Meng, director at Beijing-based Chanson & Co., told Bloomberg that the break below the 3,000 level “indicates that the overly stringent policies introduced by the new China Securities Regulatory Commission head have shaken investor confidence and made investors panic in the short term.” 

Fast forward to Friday, and the main equity index is trading at about a 1.6% discount to the 3,000 level. According to Bloomberg calculations, exchange-traded funds preferred by China’s sovereign wealth fund have recorded volume spikes, likely indicating increased activity by the national team. 

The increasing inflows into the ETFs, including the nation’s biggest Huatai-Pinebridge CSI 300 ETF, added to signs that the so-called “national team” may have stepped in to shore up market confidence ahead of the Communist Party’s Third Plenum later this month. State funds were crucial in stabilizing the stock market when the Shanghai Composite Index plunged in a February rout.

Still, the value of net inflows in the past two weeks is much smaller than purchases by state funds earlier this year, and the buying has done little to stem the ongoing market slump. China’s benchmark CSI 300 Index has finished with its seventh week of declines, the longest losing streak since 2012, due to increasing economic growth pressures at home and tariff disputes with the nation’s major trading partners.

The trading volume of the Huatai-Pinebridge ETF jumped to about 190% of three-month average on Friday, as the benchmark index pared a decline of as much as 1.3% to close just 0.4% lower.-BBG

Bloomberg shows when the Shanghai Stock Exchange Composite dips below 3,000, the volume of ETFs preferred by the national team surges. 

For further insights, The Market Ear published a recent note titled “China: Now what?” It’s a comprehensive chartbook breaking down Chinese markets.

Tyler Durden
Fri, 07/05/2024 – 09:20

Liberty & Inflation For All: Even Fireworks Shows Scaled Down This Year

Liberty & Inflation For All: Even Fireworks Shows Scaled Down This Year

Via SchiffGold.com,

While the cost of fireworks is down compared to last year, prices of just about everything else are way up.

That means individuals are still buying fireworks to light off themselves, but the size and scope of municipal fireworks shows are being downgraded in many towns and cities across the country – and in some areas, have been canceled entirely. 

By and large, fireworks are cheaper now than a year ago, but they’re still vastly more expensive if you go back a few years farther, to pre-covid. And a reduction in demand since then hasn’t fully stifled the cost increase, especially as fireworks produced in China still need to be shipped across the ocean to American buyers.

For towns and cities used to putting on extravagant displays, the costs are many. There’s a need for practical additions like portable bathrooms, shuttle buses, and trained pyrotechnicians. Some towns hire DJs to play music. But one of the largest costs is insurance, which every official fireworks display is required to have, and which has skyrocketed in cost.

Insurers know that if something goes awry and a claim is filed, the cost of dealing with it will be much higher than during previous years: fixing or replacing damage, handling medical emergencies, and planning for other externalities take much more fiat money than it did just a few years ago, and nothing is expected to change for the better. As Peter Schiff said earlier this year:

“The Fed printed an absurd quantity of money during the pandemic, and government deficits went through the roof. What has fundamentally changed since then?”

That’s even truer when you need specialized insurance coverage which has to cover a wide variety of things, as is the case for municipal fireworks shows. Towns don’t just need personal and property liability insurance to protect technicians and the public, but also insurance for transporting the fireworks, protection in case of event cancellation or inclement weather, and other aspects.

That’s why premiums for home, health, and car insurance have also gone way up, along with liability insurance and other types. Insurers know it’s going to cost way more to fix what breaks, whether it’s your home, your car, or a glitchy municipal fireworks demonstration going haywire and blowing up a public park.

Home Insurance Premiums, 2019-2024

Source

The problem will only get worse, so expect to see even more downscaling next year, especially if Trump wins the election and imposes tariffs on Chinese imports, and further pushes up the cost of fireworks themselves.

Municipalities are going to have to deal with those higher costs and adjust their shows — and the expectations of residents — accordingly. On the bright side, your dogs and cats may get a break from all the noise. But on the downside, goods and services for Americans will be less affordable than ever before as Americans try to spend their devalued dollars.

Tyler Durden
Fri, 07/05/2024 – 09:00

Payrolls Rise 206K After Huge Downward Revisions As Unemployment Rate Jumps To Three Year High

Payrolls Rise 206K After Huge Downward Revisions As Unemployment Rate Jumps To Three Year High

It appears that Biden’s apparatchiks refuse to give up on the myth of a “strong labor market” just yet even as they admit to anyone who reads between the lines just how ugly things are getting.

Moments ago the BLS reported that in June the US added 206K jobs, above the 190K expected.

Not bad, especially with Goldman expecting 140K. Of course, a quick glance reveals where the “beat” came from: both previous months were revised sharply lower:

  • May jobs revised from 272K, to 218K
  • April jobs revised from 165K to 108K

With these revisions, employment in April and May combined is 111,000 lower than previously reported. So yes, it is easy to “beat” when you have a pool of 111K jobs that never existed to push into this month. And course, next month when the June data is revised lower, the 206K beat will be revised to a sub 190K miss but by then it will be too late.  And as shown in the chart below, 4 of the past 5 months have seen payrolls revised lower.

Not only that but the composition of jobs was once again dismal and followed the same gimmick the BLS used for its “strong” JOLTS report this week: private sector workers came in at 136K, well below the 160K expected and down from a downward revised 193K (was 229K). The gap was filled by – what else- deep stater and other government workers, as government payrolls jumped from 25K to 70K!

The good news is that unlike last month when the number of employed workers actually plunged again leading to a a record gap between the Establishment and Household Surveys, in June at least the number of employed workers rose by 116K. Which however means that the gap between the two series rose by another 90K!

Turning to the unemployment rate, there was a big surprise here because contrary to expectations of a flat print, the number rose to 4.1%, up from 4.0% in May and the highest print since November 2021!

Among the major worker groups, the unemployment rates for adult women (3.7 percent) and Asians (4.1 percent) increased in June. The jobless rates for adult men (3.8 percent), teenagers (12.1 percent), Whites (3.5 percent), Blacks (6.3 percent), and Hispanics (4.9 percent) showed little or no change over the month.

Some more stats from the latest jobs report:

  • The number of long-term unemployed (those jobless for 27 weeks or more) rose by 166,000 to 1.5 million in June. This measure is up from 1.1 million a year earlier. The long-term unemployed accounted for 22.2 percent of all unemployed people in June.
  • The labor force participation rate changed little at 62.6 percent in June, and the employment-population ratio held at 60.1 percent. These measures showed little or no change over the year.
  • The number of people employed part time for economic reasons, at 4.2 million, changed little in June.
  • The number of people not in the labor force who currently want a job declined by 483,000 to 5.2 million in June. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.
  • Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force, at 1.5 million, was essentially unchanged in June. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, edged down to 365,000 in June.

Turning to hourly earnings, here too there was continued slowing with the average hourly earnings number rising 3.9% YoY, down from 4.1% in May and in line with expectations. On a monthly basis, the print also slower to 0.3%, down from 0.4% in May.

In keeping with the BLS’ other favorite gimmick of representing part-time jobs growth as the primary driver of the US labor market, in June, the number of part-time workers rose 50K to 28.1 million while full-time workers dropped by 28K. This means that since June 2023, the US has added 1.8 million part-time jobs and lost 1.6 million ful-time jobs.

Finally, looking at the various industries, we find that the bulk of jobs growth in June was on the back of government workers, which as is well-known, do not actually produce anything but are a drain of US wealth and merely serve to redistribute income.  Here is the full breakdown:

  • Government employment rose by 70,000 in June, higher than the average monthly gain of 49,000 over the prior 12 months. Over the month, employment increased in local government, excluding education (+34,000) and in state government (+26,000).
  • Health care added 49,000 jobs in June, lower than the average monthly gain of 64,000 over the prior 12 months. In June, employment rose in ambulatory health care services (+22,000) and hospitals (+22,000).
  • Employment in social assistance increased by 34,000 in June, primarily in individual and family services (+26,000). Over the prior 12 months, social assistance had added an average of 22,000 jobs per month.
  • Construction added 27,000 jobs in June, higher than the average monthly gain of 20,000 over the prior 12 months.
  • Retail trade employment changed little in June (-9,000), after trending up earlier in the year. Furniture, home furnishings, electronics, and appliance retailers lost 6,000 jobs over the month, while warehouse clubs, supercenters, and other general merchandise retailers gained 5,000 jobs.
  • Employment in professional and business services changed little in June (-17,000) and has shown little change over the year. And the best leading indicator for jobs: temp-help services employment declined by 49,000 over the month and is down by 515,000 since reaching a peak in March 2022.

Commenting on the jobs report,  Rubeela Farooqi, chief US economist at High Frequency Economics said that “Overall, a moderation in payrolls in Q2 coupled with a rise in the unemployment rate and a slower growth path suggested by recent data bolster the case for rate cuts this year. We think the Fed could certainly start the discussion about cutting rates at the upcoming FOMC meeting, and lower the policy rate in September, if the data continue to show moderation.”

And here is Seema Shah, chief global strategist at Principal Asset Management:“The equity market may be a little conflicted how to respond to today’s jobs report. On one hand, the downward revisions to prior months and the rise in the unemployment rate raises the odds of a September Fed rate cut – bond markets are certainly celebrating this. But those same figures cannot help but prompt a twinge of concern about the direction of the US economy. The broad host of economic data all point to a softening – today’s report adds to that picture.”

However, the bigger take home message here besides the timing of the next Fed cut which will come – just a matter of when – is that the Biden BLS is now clearly expecting to dump the mother of all disastrous job report realities on the Trump admin, which will come in just in time to have to revise the actual number of jobs lower by several million.

Tyler Durden
Fri, 07/05/2024 – 08:49

Polestar Says Implementing “Mitigating Measures” To Offset Import Tariff Chaos

Polestar Says Implementing “Mitigating Measures” To Offset Import Tariff Chaos

EV manufacturer Polestar, one of several struggling names at the bottom of the EV barrel, says that new hefty EU and US import tariffs on its Chinese-made cars are becoming an issue.

On a Tuesday call, the company said it would need to “take steps to offset” these new tariffs. The company also announced a Q1 operating loss, according to Reuters. 

Polestar said it would need to introduce “mitigating measures” to achieve cashflow breakeven for 2025 and that those measures could include cost reductions across the company’s supply chain or “other actions”.

Despite this, the company claims there will be no further job cuts. We’ll see how long that lasts. 

The Swedish company, owned by China’s Geely, currently makes all its EVs in China.

However, the new Polestar 3 will be produced in the U.S. starting late this summer, and the Polestar 4 in South Korea from mid-next year. Until then, it faces temporary tariffs of 20% for cars imported into the EU and over 100% for the U.S. The Polestar 2 will continue to be made in China. Despite the tariffs,

“Polestar will be constrained which cars it can sell where (US, CN, EU) until it can find a way to re-domicile production in each of the three regions – requiring more funds as well,” analysts at Bernstein said. 

“More than ever, the company’s fortunes now hinge on the Polestar 3 and 4,” they continued. 

During a call with analysts and shareholders, CEO Thomas Ingenlath mentioned plans to move production to Europe but provided no further details. Polestar, like other EV makers, faces declining demand due to a price war initiated by Tesla last year, causing many to struggle with unsold inventory. In the second quarter, Polestar delivered around 13,000 cars, missing Bernstein’s forecast of 15,500.

The company’s quarterly report cited lower sales and increased discounts as factors impacting its results.

As we noted days ago, SAIC is being hit with a 38.1% tariff and BYD is being hit with a 17.4% tariff, the report says. Geely Auto will face a 20% tariff and all tariffs are on top of the EU’s existing 10% tariff. 

EV-makers that cooperated with the probe but weren’t in the three-company sample will face an additional 21% duty, while uncooperative ones will incur the full 38.1%. European brands like Mercedes-Benz, BMW, and Renault, which export China-assembled EVs, will also face extra tariffs, according to Caixin.

China’s Ministry of Commerce criticized the decision, stating the EU ignored facts, WTO rules, and objections from China and EU member states. Beijing vowed to protect Chinese companies’ rights.

Tesla, importing Model 3 sedans from Shanghai, has requested the EU to impose a lower tariff, arguing it received less state support.

Caixin wrote that last year, nearly 20% (300,000 units) of EVs sold in the EU were made in China, according to the European Federation for Transport and Environment.

Tyler Durden
Fri, 07/05/2024 – 06:55

Leftist Media Outlet Calls For Biden Campaign To Use AI To Make Him Appear Cogent

Leftist Media Outlet Calls For Biden Campaign To Use AI To Make Him Appear Cogent

Authored by Steve Watson via Modernity.news,

Leftist Biden mouthpiece the Huffington Post published an article Wednesday which literally calls for the Biden campaign to use AI to make fake videos of him looking and sounding normal in an effort to salvage his candidacy.

The piece, titled ‘It’s Time For The Biden Campaign To Embrace AI‘ states “After the president’s dismal debate performance, he noted that he ‘might not walk as easily or talk as smoothly as I used to.’ AI could help with this.”

“Given the president’s concerning performance last week, it’s time for the Biden campaign to consider leveraging artificial intelligence (AI) to effectively reach the voting public,” it continues, with the author, one Kaivan Shroff, declaring that “the consequences of not taking this approach could be dire.”

He goes on to state that Biden is old and can barely speak, suggesting that “AI augmentations and video renderings could serve to smooth out these bumps while allowing the Biden campaign to effectively disseminate true information.”

So, lets get this straight.

Mr Shroff is suggesting the Biden team make fake videos where Biden speaks perfectly and looks more than half awake, and pass them off as real to encourage people to vote him in for a second term as President of the country, when in reality he cannot even form coherent thoughts or operate for 90 minutes per day.

Incredible.

“AI would be a cost-effective and efficient way to communicate his message personally and directly to voters,” Shroff continues, adding “How many times have we heard voters and pundits alike gripe that ‘Biden would be the perfect candidate if he were just 10 years younger?’ With modern technology, this exact deliverable is possible.”

He goes on to argue that Biden’s campaign creating fake AI videos would be fine because the likes of The New York Post have shared “cheap fakes”of Biden wandering around looking lost and completely out of it “to make him appear confused or weak.”

The only issue here being, of course, that the so called ‘cheap fake’ videos in question were actually 100% real.

No one needs to create fake videos to show Biden looking confused and weak, because he really is. You’ve just admitted that earlier in your extremely stupid article.

Even more incredibly, the author then goes on to argue that if the Biden campaign created its own fake videos it would allow them “to respond rapidly to misinformation.”

“In a world where misinformation and disinformation spreads virally, often through short-form video content, having the capability to produce polished, articulate responses in real-time could be a game-changer,” he ludicrously proclaims.

To summarise, this guy thinks its totally acceptable that the Biden campaign knock up some cheap AI generated fake videos of him appearing fine in order to declare that any real videos of him looking and sounding old, tired and senile are ‘disinformation’.

It doesn’t get any more backwards than this.

Incredibly, the article continues, “Until now, it has been almost taken as a given that using AI renderings of the president would violate some ethical baseline of campaigning. In an ideal world that may be so. Yet, what last week’s debate made clear is just how far from any such ideal our current reality is. The greatest moral and ethical imperative for those who care about American democracy should be keeping the man who tried to overthrow it as far away from the White House as possible.”

So, your argument is that because Biden is mentally deficient and proved so during the debate, his campaign needs to forget about any remaining morals they have and create fake videos in order to keep Donald Trump from winning because it’ll be the end of democracy… or something.

Hell, why not just go the whole hog and steal the election then? Use AI to fake some votes, rig some ballots, swing some states in Biden’s favour… in order to save democracy.

* * *

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Tyler Durden
Fri, 07/05/2024 – 06:30

U.S. Government Awards Moderna $176 Million Bird Flu Vaccine Contract

U.S. Government Awards Moderna $176 Million Bird Flu Vaccine Contract

Despite what can only be described as a host of looming unanswered questions about its mRNA technology and its Covid vaccines, the U.S has awarded Moderna a new $176 million contract to advance development of its bird flu vaccine.

Stop us if you feel like you’ve seen this movie before…

The U.S. government has granted Moderna $176 million to develop its bird flu vaccine amid rising concerns over the H5N1 virus outbreak in dairy cows and infections among dairy workers.

The funds, provided by the Biomedical Advanced Research and Development Authority, will support the late-stage development and testing of an mRNA-based vaccine for H5N1 avian influenza, according to The Globe and Mail/Reuters. 

Moderna’s agreement with the government also includes options to prepare for future public health threats. The first outbreak in dairy cattle was reported in March, and the virus has since spread to over 130 herds in 12 states.

The report says that scientists worry that the virus could mutate and spread among humans, though the current risk remains low. (We’re guessing this risk could grow in size as we move closer to Election Day…but what do we know?)

Moderna began a study of its bird flu vaccine, mRNA-1018, in healthy adults last year, with results expected this year. Late-stage trials are planned for 2025. Moderna’s mRNA technology, also used in its COVID-19 vaccine, offers rapid development and scalability advantages.

U.S. officials are preparing 4.8 million doses of a similar vaccine for at-risk workers, and the FDA confirms pasteurization inactivates the virus in dairy products.

The best part is they don’t even need to compete with ivermectin or hydroxychloroquine this time. 

Now, what’s next on the public health agenda, awarding the EcoHealth Alliance another contract?

Tyler Durden
Fri, 07/05/2024 – 05:45

The West, Indubitably, Has Lost Russia, And Is Losing Eurasia Too…

The West, Indubitably, Has Lost Russia, And Is Losing Eurasia Too…

Submitted by Alastair Crooke,

Is not President Putin’s purpose in visiting North Korea and Vietnam now clear in the context of the Eurasian security architecture project?

There perhaps was a momentary shrugging-off of slumber in Washington this week as they read the account of Sergei Lavrov’s démarche to the U.S. Ambassador in Moscow: Russia was telling the U.S. – “We are no longer at peace”!

Not just ‘no longer at peace’, Russia was holding the U.S. responsible for the ‘cluster strike’ on a Crimean beach on last Sunday’s Pentecost holiday, killing several (including children) and injuring many more. The U.S. thereby “became party” to the proxy war in Ukraine (it was an American-supplied ATACM; programmed by American specialists; and drawing on U.S. data), Russia’s statement read; “Retaliatory measures will certainly follow”.

Evidently, somewhere an amber light flashed hues of pink and red. The Pentagon grasped that something had happened – ‘No going around it; This could escalate badly’. The U.S. Defence Secretary (after a pause since March 2023) reached for the phone to call his Russian counterpart: ‘The U.S. regretted civilian deaths; the Ukrainians had full targeting discretion’.

The Russian public however, is plain furious.

The diplomatic argot of ‘there now being a state of betweenness; not war and not peace’ is but the ‘half of it’.

The West has ‘lost’ Russia much more profoundly than is understood.

President Putin – in his statement to the Foreign Ministry Board in wake of the G7 sword-rattling – detailed just how we had arrived at this pivotal juncture (of inevitable escalation). Putin indicated that the gravity of the situation demanded a ‘last chance’ offer to the West, one that Putin emphatically said was to be “No temporary ceasefire for Kiev to prepare a new offensive; nor a freezing the conflict – but rather, needed to be about the war’s final completion”.

It has been widely understood that the only credible way to end the Ukraine war would be a ‘peace’ agreement emerging through negotiation between Russia and the U.S.

This however is rooted in a familiar U.S.-centric vision – ‘Waiting on Washington …’.

Lavrov archly commented (in paraphrase) that if anyone imagines we are ‘waiting for Godot’, and ‘will run for it’, they are mistaken.

Moscow has something much more radical in mind – something that will shock the West.

Moscow (and China) are not simply waiting upon the whims of the West, but plan to invert completely the security architecture paradigm: To create an ‘Alt’ architecture for the ‘vast space’ of Eurasia, no less.

It is intended to exit the existing bloc zero-sum confrontation. A new confrontation is not envisaged; however the new architecture nevertheless is intended to force ‘external actors’ to curtail their hegemony across the continent.

In his Foreign Ministry address, Putin explicitly looked ahead to the collapse of the Euro-Atlantic security system and to a new architecture emerging: “The world will never be the same again”, he said.

What did he mean?

Yuri Ushakov, Putin’s principal Foreign Policy adviser (at the Primakov Readings Forum), clarified Putin’s ‘sparse’ allusion:

Ushakov reportedly said that Russia increasingly has come to the view there is not going to be any long-term re-shaping of the security system in Europe. And without any major re-shaping, there will be no ‘final completion’ (Putin’s words) to the conflict in Ukraine.

Ushakov explained that this unified and indivisible security system in Eurasia must replace the Euro-Atlantic and Euro-centric models that are now receding into oblivion.

“This speech [of Putin at the Russian Foreign Ministry], I would say, sets the vector of further activities of our country at the international stage, including the building of a single and indivisible security system in Eurasia,” Ushakov said.

The dangers of excessive propaganda were apparent in an earlier episode where a major state found itself trapped by its own demonisation of its adversaries: South Africa’s security architecture for Angola and South-West Africa (now Namibia) too had fallen apart by 1980 – (I was there at the time). The South African Defence Forces still retained a residue of immense destructive capacity to the north of South Africa, but the use of that force was not yielding any political solution or amelioration. Rather, it was taking South Africa to oblivion (just as Ushakov described the Euro-Atlantic model today). Pretoria wanted change; It was ready (in principle) to do a deal with SWAPO, but the attempt to implement a ceasefire fell apart in early 1981.

The bigger problem was that the South African apartheid government had so succeeded with their propaganda and demonisation of SWAPO as being both ‘Marxist AND terrorist’ that their public recoiled at any deal, and it was to be another decade (and would take a geo-strategic revolution) before a settlement finally became possible.

Today, the U.S. and EU Security ‘Élite’ have been so ‘successful’ with their equally exaggerated anti-Russian propaganda that they too, are trapped by it. Even if they wanted to (which they don’t), a replacement security architecture may simply prove ‘unnegotiable’ for years to come.

So, as Lavrov has underlined, Eurasian countries have come to the realization that security on the continent must be built from within – free and far from American influence. In this conceptualisation, the principle of indivisibility of security – a quality not implemented in the Euro-Atlantic project – can and should become the key notion around which the Eurasian structure can be built, Lavrov specified.

Here, in this ‘indivisibility’, is to be found the real, and not the nominal, implementation of the provisions of the UN Charter, including the principle of sovereign equality.

Eurasian countries are pooling efforts together to jointly counter the U.S. claims on global hegemony and the West’s interference in other states’ affairs, Lavrov said at the Primakov Readings Forum on Wednesday.

The U.S. and other Western countries “are trying to interfere in the affairs” of Eurasia; transferring NATO infrastructure to Asia; holding joint drills and creating new pacts. Lavrov predicted:

“This is a geopolitical struggle. This has always been; and will perhaps, last for long – and maybe we will not see an end to this process. Yet it is a fact that the course towards control from the ocean of everything that occurs everywhere – is now countered by the course towards uniting the efforts of Eurasian countries”.

The start of consultations on a new security structure does not yet indicate the creation of a military-political alliance similar to NATO; “Initially, it may well exist in the form of a forum or consultation mechanism of interested countries, not burdened with excessive organisational and institutional obligations”, writes Ivan Timofeev.

However, the “parameters” to this system, explained Maria Zakharova,

“… will not only ensure long-lasting peace, but also avoid major geo-political upheavals due to the crisis of globalization, built according to Western patterns. It will create reliable military-political guarantees for the protection of both the Russian Federation and other countries of the macro-region from external threats, create a space free from conflicts and favourable for development – by eliminating the destabilizing influence of extra-regional players on Eurasian processes. In the future, this will mean curtailing the military presence of external powers in Eurasia”.

Honorary Chair of Russia’s Council for Foreign and Defense Policy, Sergei Karaganov, (in a recent interview) however, inserts his more sober analysis:

“Unfortunately, we are heading for a real world war, a full-blown war. The foundation of the old world system is bulging at the seams, and conflicts will break out. It is necessary to block the way leading to such a war … conflicts are already brewing and taking place in all areas”.

“The UN is a dying breed, saddled with the Western apparatus and therefore unreformable. Well, let it remain. But we need to build parallel structures … I think we should build parallel systems by expanding BRICS and the SCO, developing their interaction with ASEAN, the League of Arab States, the Organization of African Unity, Latin American Mercosur, etc.”.

“In general, we are interested in establishing a multilateral nuclear deterrence system in the world. So, I am personally not worried by the emergence of new nuclear powers and the strengthening of old ones simply because reliance on people’s reason doesn’t work. There must be fear. There must be greater reliance on a “nuclear deterrence-fear, inspiring-sobering up””.

The nuclear policy aspect is a complex and contentious issue today in Russia. Some argue that an overly restrictive Russian nuclear doctrine can be dangerous, should it cause adversaries to become overly blasé; that is to say, that adversaries become unimpressed or indifferent to the deterrence effect, so as to dismiss its reality.

Others prefer a posture of very last resort. All agree however that there are many stages of escalation available to an Eurasian security architecture, other than nuclear.

Yet the capacity for a continent-wide nuclear ‘security lock’ versus a nuclear-equipped NATO is evident: Russia, China, India, Pakistan – and now North Korea – are all nuclear weapons states, so a certain degree of deterrence potential is baked-in.

Other ‘steps of escalation’ no doubt will be at the centre of discussions at the Khazan BRICS summit this October. For a security architecture is not conceptually just ‘military’. The agenda embraces trade, financial and sanctions issues.

The simple logic of inverting the NATO military paradigm to yield an ‘Alt’ Eurasian security system would seem through force of logic alone, to argue that if the security paradigm is to be inverted, then the western financial and trading hegemony be inverted too.

De-dollarisation, of course, is already on the agenda, with tangible mechanisms likely to be unveiled in October. But if the West now feels free to sanction Eurasia at whim, the potential is also there for Eurasia reciprocally to sanction both the U.S. or Europe – or both.

Yes.

We have ‘lost’ Russia (not forever). And we may lose much more. Is not President Putin’s purpose in visiting North Korea and Vietnam now clear in the context of the Eurasian security architecture project? They are part of it.

And to paraphrase CP Cavafy’s celebrated poem:

Why this sudden bewilderment, this confusion? (How serious people’s faces have become).

Because night has fallen, and the [Russians] haven’t come.

 And some of our men just in from the border say

 there are no [Russians] any longer…

“Now what’s going to happen to us without [the Russians]”?

“They were a kind of solution”.

Tyler Durden
Fri, 07/05/2024 – 05:00

Bottom-Fishing: Two Hedge Funds Quietly Buying Physical Cobalt Amid EV Battery Slump 

Bottom-Fishing: Two Hedge Funds Quietly Buying Physical Cobalt Amid EV Battery Slump 

Cautious optimism is creeping back into the cobalt metal market as hedge funds move to physical purchases of the battery metal as prices slump to seven-year lows. With oversupply conditions and slumping electric vehicle demand, the market could soon find balance, given cobalt’s critical role in the energy transition toward a net-zero future. 

According to Bloomberg, citing people familiar with the matter, Anchorage Capital Advisors and Squarepoint Capital LLP have quietly purchased physical cobalt. 

Squarepoint has been buying cobalt metal from traders, according to people familiar with the matter, while Anchorage has been buying both cobalt metal and cobalt hydroxide — an intermediate product in the production of cobalt sulphate that goes into EV batteries. Anchorage has also been active in trading on CME, said some of the people, who asked not to be identified as the information is private. -BBG

Both hedge funds have been buying physical cobalt as spot prices hover at seven-year lows, oscillating between $15 and $12.5 a pound for much of this year. Prices peaked at $40 a pound during the EV mania in 2022. 

“Surging supply and weaker-than-expected sales in the EV sector have contributed to a record surplus in the market this year, and many in the industry are pessimistic about the prospects for a rebound. The rise in popularity of lithium-iron phosphate batteries, which don’t require cobalt, also poses a threat to demand,” Bloomberg explained. 

However, Bloomberg noted that China’s strategic stockpiling agency has been soaking up surplus inventories of the metal in record volumes this year “in a trend that underscores the metal’s strategic value both in electric vehicles and defense.” 

A look at the ProShares S&P Global Core Battery Metals ETF (ION), which includes companies generating positive revenue and production value from mining lithium, nickel, or cobalt, shows it has been trading sideways since peaking in 2022.

A recent International Energy Agency report showed how cobalt will expand 7-fold by 2030 and 10-fold by 2050 to over $400 billion as it plays a critical role in reaching the global net zero target in the decades ahead. 

Carbon Credits noted in April, “Although the bottom for cobalt prices is uncertain, some analysts anticipate a gradual improvement in prices over the next few quarters.” 

Tyler Durden
Fri, 07/05/2024 – 04:15