Airbus Shares Hit Turbulence After Delivering “Stunning” & “Rather Damaging” Profit Warning
Late Monday, European aerospace giant Airbus delivered an alarming market update that sent shares in Europe tumbling on Tuesday. The company detailed how severe supply chain snarls would necessitate a downward revision of its earnings forecast and a reduction in aircraft delivery targets for the year.
“In commercial aircraft, Airbus is facing persistent specific supply chain issues mainly in engines, aerostructures, and cabin equipment,” Airbus wrote in a 2024 guidance update.
According to Bloomberg, the parts shortage includes over a million items, such as engines, aerostructures, and cabin interiors.
Airbus now expects to deliver 770 commercial aircraft in 2024, down from the prior forecast of 800 at the beginning of the year. Adjusted earnings before interest and tax were forecasted to be around 5.5 billion euros this year, down from the goal of around 7 billion euros. It also slashed its outlook for free cash flow before customer financing to about 3.5 billion euros.
Here are the highlights from the update:
Charges of around € 0.9bn reported on certain telecommunications, navigation and observation space programmes
A320 ramp-up trajectory adjusted to reflect specific supply chain challenges in a degraded operating environment; around 770 commercial aircraft deliveries now expected in 2024; target production rate of 75 A320 Family aircraft a month maintained and now expected to be reached in 2027
Here the updated 2024 guidance (courtesy of Bloomberg):
Sees adjusted Ebit EU5.5 billion, saw EU6.5 billion to EU7.0 billion, estimate EU6.79 billion (Bloomberg Consensus)
Sees adjusted free cash flow about EU3.5 billion, saw about EU4.0 billion, estimate EU4.13 billion
Sees Commercial aircraft deliveries about 770 planes, saw about 800, estimate 804.37
In markets, Airbus shares in Paris tumbled 11%, the largest intra-day decline since Nov. 11, 2021.
Shares are back below their 2019 peak.
The ripple effect of Airbus sent supplier shares tumbling, with Leonardo -4.3%, Rolls-Royce -4.3%, Safran -4.4%, and Sopra Steria -1.2%; other related stocks to decline include Melrose -6.8% and MTU Aero -7.9%.
Wall Street analysts were mostly shocked and stunned by the result:
Deutsche Bank (hold vs buy, PT to €155 vs €186)
A “stunning” and “rather damaging” profit warning, according to analyst Christophe Menard
Prompts cuts in Ebit and free cash flow estimates for 2024-26 of 13%-20%
June deliveries “apparently sluggish” and certainly no guarantee that new delivery target can be reached
Additionally, space systems is still underperforming following an already difficult 2023
RBC (outperform, PT to €180 vs €190)
Analyst Ken Herbert says while commentary on supply chain not unexpected, will “remain a frustration for investors”
Continues to see long-term free cash flow upside as attractive, but for now the stock “is in an execution penalty box”
Many of the headwinds do seem to be already reflected in the stock
Citi (buy, PT €188 vs €190)
Viewed as disappointing news, which prompts Citi analyst Charles Armitage to reduce 2024-27 estimates by 12-19%
However, demand is still strong and says that when production catches up in 2028, estimates are essentially unchanged
The company’s space programs continue to be “problematic,” noting €900m charge
Morgan Stanley (overweight)
“Clearly a disappointing update,” analyst Ross Law writes
Notes that previous guidance had only been reiterated quite recently
“The dust needs to settle before we can turn positive again,” Christophe Menard, an analyst at Deutsche Bank, told clients on Tuesday morning, adding, “June deliveries are apparently sluggish and there is no guarantee at this stage that the new delivery target will be easy to achieve by year-end.”
Immigration has become an increasingly prominent political issue, heightened by the sharp increase in people coming into the country across the southern border.
While studies show it’s good for the economy overall to let more people into the country, they also show that some Americans benefit more than others, and some end up being worse off. It also matters who comes in and how. Poorly regulated immigration contributes to problems not readily apparent when looking from purely economic point of view, some experts argue.
Even many who pride themselves as pro-immigrant have reevaluated their attitudes in light of the border situation that’s now being felt in communities across the country. As recently as June last year, 40 percent of Democrats favored increasing immigration, Gallup reported. This February, the number sank to 27 percent, based on AP/NORK poll.
Republicans or those who lean Republican overwhelmingly see illegal immigration as a “crisis” or “major problem,” according to Pew Research. Majority of them would also prefer less immigration overall, according to Gallup.
Who Benefits?
A growing body of research shows that immigration boosts the economy in the long term.
An upcoming paper by Prof. Tarek Hassan, a Boston University economist, estimates that an influx of 12,000 new immigrants into an average U.S. county boosts its per capita patent filing by native population by 30 percent and the average wage of natives by 5 percent—all within five years. The wage effect would then perhaps double over the next few decades before gradually fading away.
The dynamic behind the results, Mr. Hassan told The Epoch Times, could be described as a “battle between two forces.”
“When more migrants arrive … they should be driving down wages, because more workers should mean lower wages for everyone,” he said.
“But at the same time, we also believe that economic growth comes from just more people being able to sit down and think about ideas.”
The paper demonstrates that the latter effect “wins out,” he said. The theory is that the production and consumption of the new immigrants makes for a larger economy which is then able to support more higher paid jobs.
Yet the study results, shared with The Epoch Times, indicate it’s the highly educated immigrants who bring the bulk of the benefits. Low-educated immigration caused negative effects on both innovation and education, the results showed, but neither figure was statistically significant—the margin of error was too large.
“It is true that more educated immigrants have more positive effects,” Mr. Hassan acknowledged.
That’s where the distinction between legal and illegal immigration comes into play.
While immigrants overall are almost as educated as the native population—36 percent has a Bachelor’s or higher degree—among illegal immigrants the share is just 18 percent, based on estimates by the Migration Policy Institute.
Americans are also much more concerned about illegal, rather than legal, immigration, according to a March AP/NORK poll.
Mr. Hassan’s paper concluded that highly educated Americans benefited the most from immigrant inflow. Those with at least 5 years of college had their wages go up much more than those with 4 years of college. The wages of those with less education barely budged. Those lacking a high school diploma had their wages slightly drop, though again, the figure wasn’t statistically significant.
Prof. Giovanni Peri, an economist at University of California, Davis, used a different method to discern the effects of immigration on wages and employment of native workers. His results seem to clash in part with Mr. Hassan’s.
In an April paper, coauthored with Alessandro Caiumi, Mr. Peri concluded that immigration resulted in somewhat higher wages and higher employment for less educated native workers, but had virtually no effect on the more educated ones in the 2000-2019 period.
New immigrants did caused wages to go down for some people—other immigrants, he found—but only those with high school or higher education.
Mr. Peri noted that low-education immigrants often come illegally and work either off the books or ask for asylum, which allows them to get a work permit while their case is pending.
“The problem is that the large majority of these people will not get asylum,” he told The Epoch Times.
Indeed, those crossing the southern border often flee crime in their home county or seek better employment, neither of which are grounds for asylum, which is reserved for people facing persecution.
Based on his results, Mr. Peri proposed opening a way for low-education immigrants to come to the country legally to fill jobs often picked up by illegal immigrants in restaurants, hotels, on farms, and as aides for the elderly.
“We would be able much more to track and know what’s going on with them. It would be much more orderly,” he said.
Mr. Peri’s paper did find some negative effect of immigration on native employment, but only among less experienced workers with less than high school.
Both Mr. Hassan and Mr. Peri also noted that their research looks at average immigration effects.
“There are many microeconomic studies that have documented wages going up or down for specific groups in specific places at a specific point in time,” Mr. Hassan said.
His argument is that when the effects are averaged, immigration helps the economy, even on a local level.
Fiscal Impact
Whatever the economic benefits of immigration, it should be balanced against how much it costs the taxpayer, some experts have argued. Illegal immigration is particularly expensive because it burdens the immigration enforcement apparatus.
“In a country where you’re trying to provide the procedural process associated with Western civilization, our constitutional norms, a fundamental fairness and a quasi-judicial proceeding, where you have hearing after hearing on removal proceedings, it’s very expensive to try to get someone out of the country,” said Daniel Stein, president of the Federation for American Immigration Reform (FAIR), which advocates for significantly lower immigration.
FAIR has attempted to calculate the fiscal cost of illegal immigration, including immigration enforcement, law enforcement, welfare, medical care, and education for children. Last year, the annual cost reached $163 billion, up from $116 billion in 2017, it reported, though acknowledging limitations of the estimates due to lack of data.
Many illegal immigrants also work off the books so they don’t pay income taxes.
Even if they do pay taxes, however, on average they still end up being a fiscal drain simply on account of not making enough money, according to Steven Camarota, director of research at the Center for Immigration Studies (CIS), which also advocates for lower immigration.
“U.S.-born people and legal immigrants who make $15, $18, $20 an hour are typically a fiscal drain too,” he told The Epoch Times.
Climate Protesters Out Of Control As They Attack Stonehenge And Disrupt PGA Championship
Those “Extinction Rebellion” activists everyone loves to hate are at it again. After multiple instances of vandalism against famous landmarks and artistic works of western cultural significance, many people are growing annoyed with the actions of climate alarmists. One would think the goal of these groups would be to generate public sentiment for their cause; instead they have inspired the exact opposite. What they don’t seem to understand is that not all attention is good attention.
In the past week climate activists targeted two very different venues to send their message of doom, disrupting the PGA Tour’s Travelers Championship in Cromwell, Connecticut and vandalizing the Stonehenge monument at Salisbury Plain in Wiltshire, England.
Their defacement of Stonehenge could be considered relatively successful because no one was able to stop them. It’s impossible to understand the logic behind the focus on an ancient site created thousands of year before the development of carbon based energy. However, climate activists seem to be more concerned with media coverage than making sense.
The protester rush onto the PGA course in Connecticut, on the other hand, did not go so well for them. Throwing smoke bombs and running wildly across the 18th green, police quickly tackled them to the ground. The crowd cheered as the activists were subdued and chanted “USA” as they were dragged off the field. For those people that actually believe man-made climate change is a legitimate threat to the planet (it’s not), this is the worst PR the movement could receive.
The most hated group in America (climate protestors) have STORMED THE GREEN at the 18th hole of the PGA Traveler’s tournament.
‘Climate activists’ with shirts that say ‘No Golf on a Dead Planet’ are taken off by police at a PGA event, the Travelers Championship. One of the protestors kicked a planter of roses.
A perfect encapsulation of the phony cause of ‘climate change’ protest.
They hate nature,… pic.twitter.com/72Ioq4MrOu
Despite billions of dollars spent yearly by governments and NGOs on climate propaganda, blind belief in climate hysteria is on the decline. Specifically, the US is seeing a reversal as recent polling shows a drop from 56% of people believing climate change is a “serious threat” in 2021, to 46% in 2022. Less than half of Americans believe climate change is caused by human activity. Younger adults ages 18 to 34 had the biggest decline in concern over climate change (a 17% drop), meaning the next generation is not as indoctrinated as many assume.
Climate protests will likely increase in the next two months, with the normal heat of summer being exploited as a backdrop for global warming predictions that never seem to materialize.
A new study came out on Friday in Nature Mental Health reveals new evidence that the gut and brain work together to build resilience to stress, contributing to a growing body of research that suggests the gut is a possible pathway to help prevent or minimize stress-related psychiatric conditions.
Specifically, a high-resilience phenotype of the gut microbiome was identified based on a mix of microbes and metabolites that had anti-inflammatory and gut-barrier integrity features. This phenotype was associated with lower levels of anxiety and depression.
Besides looking at the traits of the microbiome, the study used clinical and psychological assessment tools and MRIs that examined structural and functional roles of the brain. The study included 116 healthy participants, 18 to 60 years old.
The main finding suggests that “the microbiome is critical in shaping resilience” and modifying the gut microbiome “can optimize mental health.”
Understanding Stress
Arpana Church, lead author of the study and associate professor at UCLA David Geffen School of Medicine, told The Epoch Times that deep-diving into the relationships stress has with the body can help prevent or mitigate mental and physical ailments.
Not only that, stress is an inevitable part of the human experience, she said, noting that 77 percent of Americans have physical symptoms related to stress and 33 percent report extreme stress.
The study also notes that stress leads to an annual loss of $300 billion in health care expenses and missed work in the United States.
“What really makes the study unique is often we focus on stress, or we focus on the negative or we focus on the disease group,” said Ms. Church, who is also co-director of the Goodman-Luskin Microbiome Center.
“Usually in medicine, we really focus on disease, how to cure disease, how to better understand the underlying mechanism of disease, and what I wanted to do was flip the script.”
This study focused instead on health and the microbiome characteristics of resilient people.
Resiliency Equates to Health
The differences in microbes and metabolites between high-resilience and low-resilience individuals were distinct in the study. High resiliency was associated with biomarkers indicating better gut barrier integrity, lower depression and anxiety psychopathology, higher cognitive function, less gray matter volume in the brain, and increased functional circuitry in the brain.
Compromised or weakened gut barrier, sometimes called “leaky gut,” is being considered as a potential factor in a number of chronic diseases. Dysbiosis, or an imbalance of gut microbes, is associated with chronic diseases and inflammation.
Analysis of the gut microbiome in the high-resilience individuals noted increased levels of microbes and metabolites that are:
Better at environmental adaptation
Able to replicate and repair DNA
Better at carbohydrate and energy metabolism
Anti-inflammatory
Ms. Church said in terms of psychosocial traits, the high-resilient individuals were also more non-judgmental, easy-going, kind, extroverted, and mindful. They had lower levels of perceived stress and also low levels of neuroticism.
She described the relationship between the gut and brain like a car with working brakes.
“If you have great working brakes, you’re able to modulate or control the situation, have emotional regulation and cognitive response,” she said. “And they had gut bacteria and metabolites associated with reduced inflammation and better gut barrier integrity.”
Clinical Implications
The findings may lead to new approaches in mental health. Resiliency has traditionally been perceived as a psychological trait related to a person’s agency, will, mental grit, and ability to use cognitive strategies, Vanessa Ruiz explained.
Ms. Ruiz told The Epoch Times in an email interview that using such strategies to improve resiliency requires metabolic energy and examining stress as resiliency more holistically will help practitioners and patients. Ms. Ruiz is a naturopathic doctor and national speaker on adverse childhood experiences who teaches at Rewire Trauma Therapy.
“Stress is a hypermetabolic state, suggesting that resilience may be linked to a state of metabolic endurance during stressful times,” Ms. Ruiz said. “The role of the microbiome in adapting to these changes is particularly exciting.”
“This study … offers a more holistic perspective on resilience adaptations, emphasizing the dynamic interplay between the microbiome, neuroplasticity, and stress adaptations,” she continued. “Although this doesn’t provide causality, it can help to elucidate a relationship to stress resiliency.”
It makes sense, Ms. Ruiz explained, that someone suffering from post-traumatic stress disorder (PTSD) would lose physical and psychological adaptation, which would naturally show up as a loss of resilience. Previous studies have also shown a loss of gut microbial diversity in those suffering from PTSD.
Gut microbiota are responsible for making metabolites, including neurotransmitters like serotonin and gamma-aminobutyric acid (GABA) that are involved in stress-related psychopathology.
“Most people don’t realize how much impact the gut has on our brain and specifically the way we produce mood-modulating neurotransmitters like dopamine and serotonin,” said Chelsea Blackbird, a nutritionist and co-owner of The School of Christian Health and Nutrition. “These important hormones help govern the way we feel and handle stress. Good gut health supports good mental health.”
Ms. Blackbird told The Epoch Times in an email that often when she works with clients who are seeking help for gut health, they also note an improvement in brain health like better cognition, clarity, and mood.
“People don’t normally associate their gut health with their mental health but it is often a root cause of anxiety, depression, poor focus, and other mental conditions. Many people are able to avoid pharmaceutical prescriptions for these issues once they restore a healthy gut microbiome,” she said.
Hope for the Future
Ms. Church noted that in the future, gut-boosting strategies—like probiotics, prebiotics, other supplements, and diet—could be used for treating mental health states in the same way we advise one another to take vitamin C when we feel a cold coming on.
“It [the study] has implications for how we can boost resilience because all these things are changeable, manipulatable,” she said. “It’s not like you have cancer, and that’s it. You can actually implement a lot of things that can boost these brain and gut microbiome and behavioral variables.”
Because of the bi-directional relationship, brain-boosting strategies may also be helpful for gut health.
“We can focus on stress tolerance and the burden of stress on these body systems. Maybe on the brain level, thinking about resilience training, mindfulness, or just being kind or non-judgmental,” Ms. Church said.
She also advocates for a diet that:
Is high in fiber
Includes probiotics
Minimizes artificial sweeteners, processed foods, and added sugars
Is balanced and diverse
“We don’t need to go on any diets. We just need to add 30 different diverse fruits and vegetables per week to our diet. I think that would really help boost a good, healthy gut microbiome and support optimal brain functioning and even well-being,” Ms. Church said.
Going forward, she said researchers are working on clinical trials that will test diet interventions, probiotics and prebiotics, and brain-directed therapies.
“Looking at ways we can manipulate the brain and the gut microbiome to prevent disease—or at least slow down progression—will be huge in the future but also will empower people to implement these on their own,” Ms. Church said.
In case you needed a preview of what to expect during this week’s presidential election debate – hosted by CNN – we present the following…
Just seconds after Trump 2024 National Press Secretary Karoline Leavitt began to discuss CNN’s historical bias against her candidate – most specifically that of debate moderator Jake Tapper’s history of anti-Trump lies – CNN anchor Kasie Hunt “ma’am’d” her and immediately cut her mic and ended the interview…
BREAKING: CNN host @kasie CUTS OFF Trump spokeswoman @kleavittnh the second she brings up Jake Tapper spending years comparing Trump to Adolf Hitler
Your colleague @jaketapper made himself party of the story by peddling the Very Fine People Hoax among many other lies. Exposing his dishonesty and bias is not disrespect. https://t.co/G9fgwLJNzU
Meanwhile, JustTheNews reports that Hunt’s “colleague” who must be “respected” – Jake Tapper – is at the center of a defamation suit brought by a consulting company which alleges that the network and one of its reporters lied about the company’s work.
The network’s defense: CNN did not intend to harm and its language was “opinion or ambiguous.”
“Jake Tapper started his career working for a Democrat politician and he has never been able to shake the habit. Trying to run cover for Biden’s disastrous pullout from Afghanistan, he and his CNN show slimed a hero who saved the lives of those Biden put in jeopardy. Now CNN is facing a billion dollar defamation suit at the same time Tapper will be moderating the presidential debate featuring the politician he lied for. Unreal,” Dan Schneider, Vice President at conservative media watchdog Media Research Center, told Just the News in a statement. His organization reported that CNN has since deleted the TV segment under scrutiny from its website.
The lawsuit and CNN’s defense is clearly adding fuel to the critics of the network which has faced accusations of bias. Trust in CNN has become one of the most polarizing datapoints when comparing the opinions of Democrats and Republicans, with a 96-point disparity in trust for “The Most Trusted Name in News,”according to a May 2024 YouGov poll. Americans’ overall trust in media has also declined, cratering to an all-time low last year, according to an October 2023 Gallup poll.
Former Hooters spokesman Jake Tapper is a degenerate liar who has peddled every single insane hoax fabricated by the left, and it’s insane that he has any role whatsoever in a presidential debate. https://t.co/gzrfaGBa1X
As Leavitt so devastatingly pointed out in a post on X:
“You cut off my microphone for bringing up the debate moderator’s history of anti-Trump lies. This proved our point that President Trump will not be treated fairly on Thursday. Yet he is still willing to go into this 3-1 fight to bring his winning message to the American people, and he will win.”
While she is likely right on the 3-on-1, we are more interested in the cocktail of drugs that will be required to keep Biden cogent and upright for the 90-minute ‘debate’…
China Premier Snubs German Vice Chancellor, As Beijing Agrees To Talk With Europe Over EV Tariffs
After several weeks of escalating tit-for-tat trade war salvos between China and Europe, threatening to scuttle billions in auto trade between the two blocs, over the weekend China agreed to enter talks with the EU over its decision to impose higher tariffs on imports of Chinese electric vehicles during a visit to Beijing by Germany’s vice-chancellor, which was aimed at soothing tensions.
Robert Habeck, Germany’s minister for economic affairs and climate action, the same minister who was crucified by Deutsche Boerse CEO Theodor Weimer in his recent rant, welcomed the move by China to enter discussions with Brussels on EU tariffs but said it was “a first step and many more will be necessary”.
His comments came after China’s ministry of commerce said Beijing and Brussels had agreed to launch consultations on an anti-subsidy investigation launched by the EU last year. The probe led to a decision this month to increase tariffs on Chinese EVs to as high as 48%, which in turn provoked China’s anger and threats to retaliate in kind on Europe’s internal combustion cars. The announcement followed a video conference between China’s minister of commerce Wang Wentao and EU executive vice-president and trade commissioner Valdis Dombrovskis.
As previously reported, Germany – whose economy has been in peril for the past 2 years caught by the double whammy of soaring energy prices and shrinking Chinese imports of German goods – has been critical of the EU’s decision to increase tariffs on imports of Chinese EVs and Habeck is the first senior European politician to visit the country since the extra duties were announced.
The Chinese market is crucially important for Germany’s vast carmaking industry, making Berlin particularly vulnerable to any retaliatory measures by Beijing, which has already announced its own anti-dumping investigation into EU pork products.
While he struck a conciliatory tone on tariffs, which are yet to be finalized, Habeck was also critical of China’s growing exports to Russia and cited Germany’s efforts to stop exports of “dual-use” goods with potential military applications.
“I looked at the trade figures and Chinese trade with Russia increased more than 40% last year,” he said. “Of course energy is a high part [of] it, but something like half of it is related to dual-use goods. These are technically goods that can be used on the battlefield and this has to stop.”
Spoiler alert: it won’t stop since Germany needs Chinese buyers more than China needs to placate Germany. China is one of Germany’s largest trading partners and Berlin has sought to carefully navigate rising tensions between Beijing and Washington that increased sharply following Russia’s invasion of Ukraine in 2022.
According to the FT, Habeck also visited Beijing where he met Wang Wentao and Zheng Shenjie, head of the National Development and Reform Commission. He said they spoke about energy and climate issues as well as human rights with Chinese officials as part of “intense discussions”.
However, as DW reports, a planned meeting with Premier Li Qiang did not materialize with Premier Li Qiang was cancelled at the last minute without explanation, in a clear snub at Germany.
On Sunday, the German vice-chancellor said China should find a safe alternative to coal after the country ramped up production of the carbon-intensive fuel source. “Without China it would not be possible to meet the climate targets globally,” he said during a visit to Hangzhou, according to a Reuters report.
While Joe Biden imposed tariffs of 100 per cent on Chinese electric vehicles this year, higher than the EU, though the US imports much smaller volumes.
Olaf Scholz, Germany’s chancellor, met President Xi Jinping in April and encouraged China’s president to pressure Russia to end its campaign in Ukraine. Absolutely nothing came out of that, which is understandable since Scholz also petitioned Li for greater market access for German companies in the mainland. Perhaps someone should explain to Germany that when you are begging for concessions, you can’t also be demanding conditions.
Meanwhile, Xi and his Russian counterpart Vladimir Putin have trumpeted their close relationship and sworn to increase trade. Russia became China’s fifth-biggest single-country trading partner last year, up from ninth in 2020, as trade reached $240bn. Chinese exports to Russia rose 46.9 per cent in 2023 year on year, according to official data. Much, if not all of this increase in trade between China and Russia, has come at the expense of the increasingly spineless and irrelevant Germany.
In early June, a rumor began to circulate — which was widely reported in the Indian press as true — that the government of Saudi Arabia had allowed its petro-dollar agreement with the United States to lapse.
This agreement, made in 1974, is quite straight-forward and fulfills various needs of the U.S. government: the U.S. purchases oil from Saudi Arabia, and Saudi Arabia uses that money to buy military equipment from U.S. arms manufacturers while holding the income from the oil sales in U.S. Treasury debt instruments and in the Western financial system. This arrangement to recycle oil profits into the U.S. economy and the Western banking world is known as the petro-dollar system.
This non-exclusive arrangement between the two countries never required the Saudis to limit their oil sales to dollars or to recycle their oil profits exclusively in U.S. Treasury securities (of which it holds a considerable $135.9 billion) and Western banks. Indeed, the Saudis are free to sell oil in multiple currencies, such as the Euro, and participate in digital currency platforms such as mBridge, a trial initiative of the Bank of International Settlements and the central banks of China, Thailand, and the United Arab Emirates (UAE).
Nonetheless, the rumor that this decades-long petrodollar agreement had come to an end reflects the widespread expectation that a seismic shift in the financial system will overturn the rule of the Dollar-Wall Street regime. It was a false rumor, but it carried within it a truth about the possibilities of a post-dollar or de-dollarized world.
The invitation extended to six countries to join the BRICS bloc last August was a further indication that such a shift is underway. Among these countries are Iran, Saudi Arabia and the U.A.E., although Saudi Arabia has yet to finalise its membership.
With its expanded membership, BRICS would include the two countries with the largest and second-largest gas reserves in the world (Russia and Iran, respectively) and the two countries that accounted for nearly a quarter of global oil production (Russia and Saudi Arabia, all figures as of 2022).
The political opening between Iran and Saudi Arabia, brokered by Beijing in March 2023, as well as the signs that U.S. allies U.A.E. and Saudi Arabia seek to diversify their political linkages, demonstrate the possible end of the petrodollar system. That was at the heart of the rumor in early June.
However, this possibility should not be exaggerated, as the Dollar-Wall Street regime remains intact and significantly powerful.
Data from the International Monetary Fund shows that, as of the last quarter of 2023, the U.S. dollar accounted for 58.41 percent of allocated currency reserves, which is far more than the reserves held in euros (19.98 percent), Japanese yen (5.7 percent), British pound sterling (4.8 percent), and Chinese renminbi (short of 3 percent).
Meanwhile, the U.S, dollar remains the main invoicing currency in global trade, with 40 percent of international trade transactions in goods invoiced in dollars despite the fact that the U.S. share of global trade is just 10 percent.
While the dollar remains the key currency, it nonetheless faces challenges around the world, with the share of the U.S. dollar in allocated currency reserves declining gradually but steadily over the last 20 years.
Three factors are driving de-dollarisation:
the U.S. economy’s lack of strength and potential that began with the Third Great Depression in 2008;
the aggressive use of illegal sanctions — especially financial sanctions — by the United States and its Global North allies against one quarter of the countries in the world;
and the development and strengthening of relations among countries of the Global South, especially through platforms such as BRICS.
In 2015, BRICS created the New Development Bank (NDB), also known as the BRICS Bank, to navigate a post-Dollar-Wall Street regime and to produce facilities to further development rather than austerity.
The creation of these BRICS institutions and the increased use of local currencies to pay for cross-border trade created an expectation of hastened de-dollarization. At the 2023 BRICS summit in Johannesburg, Brazil’s President Luiz Inácio Lula da Silva repeated the call to increase the use of local currencies and perhaps create a BRICS-denominated currency system.
There has been a vibrant debate about de-dollarization amongst those who have worked in the BRICS institutions and in the large countries that are interested in de-dollarization, such as China, about its necessity, prospects and the difficulties of finding new ways to hold currency reserves and invoice global trade.
The most recent issue of the international journal Wenhua Zongheng, a collaboration between Tricontinental: Institute for Social Research and Dongsheng, is dedicated to this topic.
In the introduction to “The BRICS and De-Dollarisation: Opportunities and Challenges” (volume 2, issue no. 1, May 2024), Paulo Nogueira Batista Jr., the first vice president of the NDB (2015–2017), summarizes his considerable reflections on the importance of moving away from the Dollar-Wall Street regime and on the political and technical difficulties of such a transition.
BRICS, he correctly asserts, is a diverse group of countries with very different political forces in charge of the different states. The political agendas of its members — even with the new mood in the Global South — are particularly diverse when it comes to economic theory, with many of the BRICS states remaining committed to neoliberal formulas while others seek new development models.
One of the most important points raised by Nogueira is that the United States “will in all likelihood use all the many instruments at its disposal to struggle against any attempt to dethrone the dollar from its status as linchpin of the international monetary system.”
These instruments would include sanctions and diplomatic threats, all of which would dampen the confidence of governments that have weaker political commitments and are not backed by popular movements committed to a new world order.
De-dollarization was moving at a very slow pace until 2022, when the Global North countries began to confiscate Russian assets held in the Dollar-Wall Street financial system and anxiety spread across many countries about the safety of their assets in North American and European banks.
Though this confiscation was not new (the United States has done this before to Cuba and Afghanistan, for instance), the scale and severity of these confiscations operated as a “confidence-destroying” measure, as Nogueira puts it.
Nogueira’s introduction is followed by three essays by leading Chinese analysts of the current shifts in the world order. In “What Is Driving the BRICS’ Debate on De-Dollarisation?”, Professor Ding Yifan (senior fellow at Beijing’s Taihe Institute) charts the reasons why many Global South countries now seek to trade in local currencies and to offload their reliance upon the Dollar-Wall Street regime.
He emphasises two factors that put into question whether or not the dollar will be able to continue to serve as an anchor currency:
first, the weakness of the U.S. economy due to its reliance upon military spending over productive investment (the former of which accounts for 53.6 percent of total world military spending) and, second, the U.S.’ history of breach of contract.
At the close of his article, Ding reflects on the possibility of the Global South countries accepting the Chinese renminbi (RMB) as their reference currency, since China’s manufacturing capabilities make the RMB valuable as a way to buy Chinese goods.
Yet, in his essay “China’s Foreign Exchange Reserves: Past and Present Security Challenges,” Professor Yu Yongding (member of the Chinese Academy of Social Sciences) is cautious about the possibility of the RMB supplanting the dollar.
For the RMB to become an international reserve currency, Yu argues, “China must fulfill a series of preconditions, including establishing a sound capital market (especially a deep and highly liquid treasury-bond market), a flexible exchange rate regime, free cross-border capital flows, and long-term credit in the market.”
This would mean that China would have to eschew its capital controls and begin to offer RMB treasury bonds for international buyers. RMB internationalization, Yu argues, “is a goal worth pursuing,” but it is not something that can take place in the short run. “Distant water,” he writes poetically, “will not quench immediate thirst.”
So, where do we go from here? In his article “From De-Risking to De-Dollarisation: The BRICS Currency and the Future of the International Financial Order,” Professor Gao Bai, who teaches at Duke University in the United States, concurs that there is a pressing need to overcome the Dollar-Wall Street regime and that there is no easy way forward at this time.
Local currency use has expanded — such as between Russia and China as well as between Russia and India — but such bilateral arrangements are insufficient.
Increasingly, as a recent report from the World Gold Council shows, central banks around the world have been buying up gold for their reserves and thereby driving up its price (the spot price for gold is over $2,300 per ounce, far above the $1,200 per ounce price where it hovered in 2015).
If no immediate currency is available to supplant the U.S. dollar, Gao argues, then the Global South countries should establish a “reference value for settlements in their local currencies and an exchange platform to support such settlements. The great demand for such a valuation provides an opportunity for the creation of a BRICS currency.”
The new issue of Wenhua Zongheng provides a clear and thoughtful assessment of the problems with the Dollar-Wall Street regime and the need for an alternative. The wide array of ideas that are on the table reflect the diversity of discussions taking place within policy circles around the world. We are keen to summarise these ideas and test their technical feasibility and their political viability.
It is important to note that two of the BRICS countries have elected new governments this year.
In India, the far-right government led by Prime Minister Narendra Modi returns to power, but with a much-reduced mandate. Given that the Modi government has put forward a policy of “national interest,” it is likely that it will continue to play a role in the BRICS process and to use local currencies to buy goods such as Russian oil.
Meanwhile, South Africa’s ruling alliance, led by the African National Congress (ANC), has formed a government with the right-wing Democratic Alliance, which is committed to U.S. imperialism and is not keen on the BRICS agenda. With the likely entry of Nigeria into BRICS, the bloc’s center of gravity on the African continent might shift northward.
During the hard years of struggle against the apartheid government in South Africa, ANC member Lindiwe Mabuza (known as Sono Molefe) began to collect poems written by women in the ANC camps.
Guerrilla fighters, teachers, nurses and others sent in poems that she published in a volume called Malibongwe (Be Praised), which referred to the 1956 Women’s March in Pretoria. In her introductory essay, Mabuza (1938–2021) wrote that in struggle “there is no romance” … “only pounding reality.”
That phrase, “pounding reality,” merits reflection today. Nothing comes from nothing. You have to pound reality to make something, whether a new political opening in places such as India and South Africa or a new financial architecture beyond the Dollar-Wall Street regime.
Fossil Fuel, CO2 Emissions Hit Record High In 2023
Don’t tell Greta, or her much easier on the eyes replacement, Sophia.
At a time when the peak of “green” virtue signaling has come and gone, we regret to inform you that all that jawboning and posturing has achieved… absolutely nothing because according to the Statistical Review of World Energy report released on Thursday, global fossil fuel consumption and energy emissions hit all-time highs in 2023 (even as fossil fuels’ share of the global energy mix decreased slightly on the year).
Growing demand for fossil fuel despite the scaling up of renewables could be a sticking point for the transition to lower carbon energy as climate alarmist scream and rage that global temperature increases are set to reach 1.5C (2.7F), the threshold beyond which scientists say impacts such as temperature rise, drought and flooding will become more extreme; then again these are the same shrill activists who predicted in 2018 that the world would end unless we stop using fossil fuels by 2023. Not only has that not happened, but fossil fuel use is hitting annual records!
“We hope that this report will help governments, world leaders and analysts move forward, clear-eyed about the challenge that lies ahead,” Romain Debarre of consultancy Kearney said, realizing with even clearer-eyes that absolutely nothing will change since the bulk of fossil fuel consumption now comes from China and India, both of which could give a rat’s ass what some woke liberal kitten-hoarding, purple-haired screaming freak thinks.
Last year was the first full year of rerouted Russian energy flows away from the West following Moscow’s invasion of Ukraine in 2022, and also the first full year without major movement restrictions linked to the COVID-19 pandemic. Indeed, it confirms that attempts to throttle Russian sales of fossil fuels have been a total fiasco.
It gets better (or worse if you are a green lunatic): overall global primary energy consumption hit an all-time high of 620 Exajoules (EJ), the report said…
… as CO2 emissions exceeded 40 gigatonnes of CO2 for the first time.
“In a year where we have seen the contribution of renewables reaching a new record high, ever increasing global energy demand means the share coming from fossil fuels has remained virtually unchanged,” Simon Virley of consultancy KPMG said.
The report recorded shifting trends in fossil fuel use in different regions. In Europe, for example, the fossil fuel share of energy fell below 70% for the first time since the industrial revolution.
“In advanced economies, we observe signs of demand for fossil fuels peaking, contrasting with economies in the Global South for whom economic development and improvements in quality of life continue to drive fossil growth,” Energy Institute Chief Executive Nick Wayth said.
And since nobody dares to dictate conditions to the “global south” lest they stop producing the cheap crap demanded by the “global north” (to feed their ravenous consumerist habits) sparking epic inflation, nothing will change.
Industry body the Energy Institute, together with consultancies KPMG and Kearney, has published the annual report since 2023. They took over from BP which had authored the report, a benchmark for energy professionals, since the 1950s.
It will come as no surprise to anyone that fossil fuel accounted for almost all demand growth in India in 2023, the report said, while in China fossil fuel use rose 6% to a new high
Here are some highlights from the report on 2023:
CONSUMPTION
Global primary energy demand rose by 2% in 2023 from 2022, to 620 EJ.
Fossil fuel use rose 1.5% to 505 EJ, which accounted for 81.5% of the overall energy mix, down by 0.5% from 2022.
Fossil fuel use did not increase in a single European country in 2023.
Electricity generation rose by 2.5% in 2023, up slightly from 2.3% of growth the previous year.
Renewable fuel generation (excluding hydro) gained 13% to a new record high of 4,748 terawatt-hours (TWh).
Renewables’ share of the overall energy mix excluding hydro was 8%, up from 7.5% in the 2022 report.
Including hydro renewables accounted for 15% of the global mix.
OIL
Oil consumption exceeded 100 million bpd in 2023 for the first time ever, following a 2% year-on-year rise.
Oil supply growth was met by non-OPEC+ producers, with U.S. output gaining 9% on the year.
China overtook the U.S. as the country with the largest refining capacity in the world last year at 18.5 million bpd, though refining volumes still lagged behind at 82% utilisation vs the U.S.’ 87%.
Global gasoline consumption hit 25 million bpd last year, just above its 2019 pre-pandemic level.
Biofuels production increased by 8% to 2.1 million bpd in 2023, driven by gains in the U.S. and Brazil.
The U.S., Brazil, and Europe accounted for 80% of global biofuels consumption.
NATURAL GAS
Global gas production and consumption remained relatively flat on the year in 2023.
LNG supply rose by almost 2% to 549 billion cubic metres (bcm).
The U.S. overtook Qatar as the leading global supplier of LNG after a 10% rise in production.
Overall European gas demand was down 7% on the year in 2023.
Russia’s share of European gas supply was just 15% in 2023, from 45% in 2021.
COAL
Coal consumption hit a new high of 164 EJ in 2023, up 1.6% on the year, driven by China and India.
India’s coal consumption exceeded that of Europe and North America combined.
U.S. coal consumption fell by 17% in 2023 and has halved in the last decade.
RENEWABLES
The record high in renewable generation was driven by higher wind and solar capacity, with 67% more additions in those two categories in 2023 than 2022.
As much as 74% of net growth in overall power generation came from renewables.
China accounted for 55% of all renewable generation additions in 2023, and was responsible for 63% of new global wind and solar capacity.
EMISSIONS
Emissions grew by 2% on the year to exceed 40 gigatonnes.
Emissions rose despite the slight drop in fossil fuels’ share of the energy mix, because emissions within the fossil fuels category became more intense as oil and coal use rose and gas held steady.
The report notes that since 2000, emissions from energy have increased by 50%.
Diplomatic and media delegations toured Beirut’s Rafic Hariri International Airport on Monday, one day after UK newspaper The Telegraph released a report claiming that Hezbollah had hidden weapons inside the facility.
Lebanon’s Information Minister Ziad al-Makari, Foreign Minister Abdullah Bou Habib, Tourism Minister Walid Nassar, and other officials attended the airport tour. Several ambassadors and media correspondents, including one from The Cradle, were also present.
They were shown the main cargo centers, a site storing imported goods, and several locations in the vicinity of the airport.
“The British Department of Transport is an official body concerned with transport. It visited Beirut Airport six months ago and viewed all its corners. It would have been more effective for this newspaper to rely on the Authority as a source in its article and not to unknown people and unknown parties,” Lebanese Transport Minister Ali Hamieh said during a press conference after the tour.
He also reiterated what he said a day earlier, on Sunday, about consultations being held with Lebanon’s prime minister and legal teams to file a lawsuit against The Telegraph, adding: “What is happening is a psychological war against Lebanon… we have proven that the article is ridiculous.”
The UK newspaper cited “whistleblowers” from the airport on June 23 as saying they were concerned about increasing weapons deliveries coming into the country on direct flights from Iran, claiming they had seen “unusually big boxes” and the “increased presence of high-level Hezbollah commanders.”
The Telegraph quoted Lebanon’s International Air Transport Association (IATA) as saying that it has been aware of Hezbollah weapons at the airport “for years” but is unable to do anything about it.
After the IATA announced that the quote was completely false, the daily edited the article, attributing the same quote to an unnamed “major international aviation body.”
Commenting on the allegations, a high-ranking Lebanese security official told The Cradle on Sunday: “They spread lies to later justify any Israeli attack against Beirut airport because they want to isolate Lebanon. The enemy spreads these rumors as a kind of psychological warfare.”
Al Qassam Brigades using anti-tank guided missiles (Chinese Hongjian-8 ‘Red Arrow’) against Israeli vehicles.
A large group of foreign ambassadors toured several sites in the vicinity of Beirut airport in 2018 to refute Israeli claims about missile depots in the area. In 2020, after Benjamin Netanyahu claimed a residential area in the Lebanese capital was being used to store weapons, Hezbollah invited international and local media to visit the site, and no such weaponry was found.
Israel bombed Beirut’s Rafic Hariri International Airport at the start of the war between Hezbollah and Israel in 2006.
The G7 and the subsequent Swiss ‘Bürgenstock Conference’ can – in retrospect – be understood as preparation for a prolonged Ukraine war. The three centrepiece announcements emerging from the G7 – the 10 year Ukraine security pact; the $50 ‘billion Ukraine loan’; and the seizing of interest on Russian frozen funds – make the point. The war is about to escalate.
These stances were intended as preparation of the western public ahead of events. And in case of any doubts, the blistering belligerency towards Russia emerging from the European election leaders was plain enough: They sought to convey a clear impression of Europe preparing for war.
What then lies ahead? According to White House Spokesman John Kirby: “Washington’s position on Kiev is “absolutely clear”:
“First, they’ve got to win this war”.
“They gotta win the war first. So, number one: We’re doing everything we can to make sure they can do that. Then when the war’s over … Washington will assist in building up Ukraine’s military industrial base”.
If that was not plain, the U.S. intent to prolong and take the war deep into Russia was underlined by National Security Adviser Jake Sullivan: “Authorization for Ukrainian use of American weapons for cross-border attacks extends to anywhere [from which] Russian forces are coming across the border”. He affirmed, too, that Ukraine can use F-16s to attack Russia and use U.S. supplied air defence systems “to take down Russian planes – even if in Russian airspace – if they’re about to fire into Ukrainian airspace”.
Ukrainian pilots have the latitude to judge ‘the intent’ of Russian fighter aircraft? Expect the parameters of this ‘authorisation’ to widen quickly – deeper to air bases from which Russian fighter bombers launch.
Understanding that the war is about to transform radically – and extremely dangerously – President Putin (in his speech to the Foreign Ministry Board) detailed just how the world had arrived at this pivotal juncture – one which could extend to nuclear exchanges.
The gravity of the situation itself demanded the making of one ‘last chance’ offer to the West, which Putin emphatically said was “no temporary ceasefire for Kiev to prepare a new offensive; nor was it about freezing the conflict”; but rather, his proposals were about the war’s final completion.
“If, as before, Kiev and western capitals refuse it – then at the end, that’s their business”, Putin said.
Just to be clear, Putin almost certainly never expected the proposals to be received in the West other than by the scorn and derision with which they, in fact, were met. Nor would Putin trust – for a moment – the West not to renege on an agreement, were some arrangement to be reached on these lines.
If so, why then did President Putin make such a proposal last weekend, if the West cannot be trusted and its reaction was so predictable?
Well, maybe we need to search for the nesting inner Matryoshka doll, rather than fix on the outer casing: Putin’s ‘final completion’ likely will not credibly be achieved through some itinerant peace broker. In his Foreign Ministry address, Putin dismisses devices such as ‘ceasefires’ or ‘freezes’. He is seeking something permanent: An arrangement that has ‘solid legs’; one that has durability.
Such a solution – as Putin before has hinted – requires a new world security architecture to come into being; and were that to happen, then a complete solution for Ukraine would flow as an implicit part to a new world order. That is to say, with the microcosm of a Ukraine solution flowing implicitly from the macrocosm agreement between the U.S. and the ‘Heartland’ powers – settling the borders to their respective security interests.
This clearly is impossible now, with the U.S. in its psychological mindset stuck in the Cold War era of the 1970s and 1980s. The end to that war – the seeming U.S. victory – set the foundation to the 1992 Wolfowitz Doctrine which underscored American supremacy at all costs in a post-Soviet world, together with “stamping out rivals, wherever they may emerge”.
“In conjunction with this, the Wolfowitz Doctrine stipulatedthat the U.S. would … [inaugurate] a U.S.-led system of collective security and the creation of a democratic zone of peace”. Russia, on the other hand, was dealt with differently—the country fell off the radar. It became insignificant as a geopolitical competitor in the eyes of the West, as its gestures of peaceful offerings were rebuffed – and guarantees given to it regarding NATO’s expansion forfeited”.
“Moscow could do nothing to prevent such an endeavour. The successor state of the mighty Soviet Union was not its equal, and thus not considered important enough to be involved in global decision-making. Yet, despite its reduced size and sphere of influence, Russia has persisted in being considered a key player in international affairs”.
Russia today is a preeminent global actor in both the economic and political spheres. Yet for the Ruling Strata in the U.S., equal status between Moscow and Washington is out of the question. The Cold War mentality still infuses the Beltway with the unwarranted confidence that the Ukraine conflict might somehow result in Russian collapse and dismemberment.
Putin in his address, by contrast, looked ahead to the collapse of the Euro-Atlantic security system – and of a new architecture emerging. “The world will never be the same again”, Putin said.
Implicitly, he hints that such a radical shift would be the only way credibly to end the Ukraine war. An agreement emerging from the wider framework of consensus on the division of interests between the Rimland and the Heartland (in Mackinder-esque language) would reflect the security interests of each party – and not be achieved at the expense of others’ security.
And to be clear: If this analysis is correct, Russia may not be in such a hurry to conclude matters in Ukraine. The prospect of such a ‘global’ negotiation between Russia-China and the U.S. is still far off.
The point here is that the collective western psyche has not been transformed sufficiently. Treating Moscow with equal esteem remains out of the question for Washington.
The new American narrative is no negotiations with Moscow now, but maybe it will become possible sometime early in the new year – after the U.S. elections.
Well, Putin might surprise again – by not jumping at the prospect, but rebuffing it; assessing that the Americans still are not ready for negotiations for a ‘complete end’ to the war – especially as this latest narrative runs concurrently with talk of a new Ukraine offensive shaping up for 2025. Of course, much is likely to change over the coming year.
The documents outlining a putative new security order however, were already drafted by Russia in 2021 – and duly ignored in the West. Russia perhaps can afford to wait out military events in Ukraine, in Israel, and in the financial sphere.
They are all, in any event, trending Putin’s way. They are all inter-connected and have the potential for wide metamorphosis.
Put plainly: Putin is waiting on the shaping of the American Zeitgeist. He seemed very confident both at St Petersburg and last week at the Foreign Ministry.
The backdrop to the G7’s Ukraine preoccupation seemed to be more U.S. elections-related, than real: This implies that the priority in Italy was election optics, rather than a desire to start a full-blown hot war. But this may be wrong.
Russian speakers during these recent gatherings – notably Sergei Lavrov – hinted broadly that the order already had come down for war with Russia. Europe seems, however improbably, to be gearing up for war – with much chatter about military conscription.
Will it all blow away with the passing of a hot summer of elections? Maybe.
The coming phase seems likely to entail western escalation, with provocations occurring inside Russia. The latter will react strongly to any crossing of (real) red lines by NATO, or any false flag provocation (now widely expected by Russiam military bloggers).
And herein lies the greatest danger: In the context of escalation, American disdain for Russia poses the greatest danger. The West now says it treats notions of putative nuclear exchange as Putin’s ‘bluff’. The Financial Timestells us that Russia’s nuclear warnings are ‘wearing thin’ in the West.
If this is true, western officials utterly misconceive the reality. It is only by understanding and taking the Russian nuclear warnings seriously that we may exclude the risk of nuclear weapons coming into play, as we move up the escalatory ladder with tit-for-tat measures.
Even though they say they believe them to be bluff, U.S. figures nonetheless hype the risk of a nuclear exchange. If they think it to be a bluff, it appears to be based on the presumption that Russia has few other options.
This would be wrong: There are several escalatory steps that Russia can take up the ladder, before reaching the tactical nuclear weapon stage: Trade and financial counter-attack; symmetrical provision of advanced weaponry to western adversaries (corresponding to U.S. supplies to Ukraine); cutting the electricity branch distribution coming from Poland, Slovakia, Hungary and Romania; strikes on border munition crossings; and taking a leaf from the Houthis who have knocked down several sophisticated and costly U.S. drones, disabling America’s intelligence, surveillance and reconnaissance (ISR) infrastructure.
