The US military’s ambitious project to erect a large pier off Gaza’s coast (all within a war zone) to allow maritime shipments of humanitarian aid to Palestinians is off to a rocky start, after new reports that the construction site has come under fire.

UN officials were reportedly present at the location on Thursday when it came under attack by unknown gunmen, forcing the visiting delegation to take cover. Hamas has previously warned that it plans to resist any foreign military entity on Gaza’s territory, which would include the US forces constructing the pier. The Israel Defense Forces (IDF) issued a statement blaming Palestinian terrorists for the attack (either Hamas or PIJ/Islamic Jihad), which included the launching of mortars.

“Members of a terror group in the Gaza Strip launched mortars at an under-construction pier for a US-led project to bring aid into the Palestinian enclave yesterday, the military says,” as cited in Times of Israel. “The mortar attack occurred as United Nations officials were touring the site with Israeli troops on the coast of central Gaza, the IDF says in response to a query on the incident.”

Officials said there were no casualties, but the IDF rushed the visiting UN officials to shelter. The UN subsequently also acknowledged the unprecedented attack on the site.

“The terrorist organizations continue to systematically harm humanitarian efforts while risking the lives of UN workers, while Israel allows the supply of aid to the residents of the Gaza Strip,” the IDF added in its statement.

During his March State of the Union address, President Biden formally ordered the Pentagon to conduct an “emergency mission” to expand US humanitarian access to the Gaza Strip using a maritime route. He described that a port will be built by the US military, and will utilize a temporary pier to get supplies from ships to the people of Gaza.

Via Middle East Eye

Iranian military commanders and high-ranking officials have warned they could change their approach in developing the country’s nuclear program after increasing tensions with Israel, implicitly announcing their readiness to take it into a military phase.

Before the recent direct military confrontation with Israel, Iran had always insisted that its nuclear program solely had peaceful goals. This stance dramatically changed in recent weeks. Javad Karimi Qudousi, a member of the Iranian parliament’s National Security and Foreign Policy Commission, on Monday implicitly claimed that Iran was only one week away from its first nuclear weapon test. The lawmaker wrote on X: “If the order is issued, it will be one week before the first test.” 

Karimi Qudousi did not mention Ayatollah Ali Khamenei, but such an order would come from supreme leader who has a final say in all matters in Iran.

On Tuesday, in two videos posted on X, he stressed that the targets of Iran’s potential military nuclear program would not only be Israel but also European countries supporting Tel Aviv.

Moreover, hours after the Israeli attack on an air force base in Isfahan last Friday, Ahmad Haqtalab, the commander of the Nuclear Centers Protection and Security Corps, suggested the same idea. “It is possible and conceivable to revise the nuclear doctrine and policies of the Islamic Republic of Iran and deviate from previous considerations,” he was quoted as saying.

On Monday, the Javan daily, affiliated with the Islamic Revolutionary Guard Corps (IRGC), highlighted Haqtalab’s remarks, adding “Israel has taken this threat seriously and retreated from their [aggressive] stances.”

Teacher given 11 years for teaching Kurdish language

A teacher in the Kurdish regions of Iran has been handed an 11-year prison sentence by the Islamic Revolutionary Court for his role in establishing a cultural centre where the Kurdish language was taught, local media reported.

Soma Pourmohammadi, a Kurdish language educator and a board member of the Nozhin cultural and social organisation in Sanandaj, received the lengthy sentence along with exile in two separate cases. 

According to the verdict delivered on Saturday, he was convicted of “forming groups and factions with the intention of disrupting the security of the country” and given a 10-year prison term and exile to Kermanshah prison. 

Prior to this ruling, another court had sentenced Pourmohammadi to one year suspended imprisonment for “disturbance of public order”.

The Nozhin Social-Cultural Association, an independent cultural group, has been actively engaged in various cultural endeavors over recent years, including conducting free Kurdish language classes in different Kurdish cities.

Despite several languages such as Kurdish, Turkish, and Balouchi being spoken in different parts of Iran, Farsi remains the country’s only official language. 

https://t.co/hudKW8YQLk
UN nuclear chief: Iran is just weeks away to have enough enriched uranium to make a nuclear bomb

— Charlie (@Charlie007Girl) April 25, 2024

Private jet imports spark controversy

While government authorities have banned the import of many goods, such as expensive mobile phones, due to the economic crisis, the import of private jets has become the center of public attention.

Focus on the issue began when the head of the Civil Aviation Organisation, Mohammad Mohammadi Bakhsh, told the Ilna news agency: “The purchase and sale of seven-seater jet planes is open to the public. Many people are currently utilizing this option, including businessmen, officials, sports teams, and economic teams.”

The announcement sparked a widespread backlash in local media, with both reformist and conservative outlets criticizing it. 

On Monday, the pro-reformist daily Etemad published an article under the headline: “Goods for those who are better than us,” questioning why the purchase and sale of private jets was permitted for a select class amid the country’s economic crisis.

“Why, in the current tight currency situation where many goods are categorized as ‘luxury’ and importation is prohibited, is the purchase and sale of private jets unrestricted for a privileged few? This perpetuates inequality in society,” said the daily. The newspaper also demanded transparency, urging authorities to disclose the names of individuals who own private jets.

Rokna, another Farsi-language media outlet, characterized the publication of this news as emblematic of the profound social class divide. “While the purchase and sale of jet aircraft has been liberalized, the general public lacks the means to afford even a domestic car,” Rokna highlighted.

A reduced geopolitical risk premium for Brent crude this week is likely one of the main drivers resulting in the largest daily outflows for the US Oil Fund ETF. Tensions between Iran and Israel have subsided in recent days, and it’s entirely possible the White House is busy mediating both sides to ensure a wider conflict doesn’t rocket Brent prices above $100/bbl.

Bloomberg data shows that the US Oil Fund experienced the most massive daily outflow ever on Tuesday, with investors pulling a record $376 million, exceeding the outflow of $323 million set in 2009. Though as the chart below shows, there was a huge inflow just a day or two ago…

“The timing of this activity coincides with a general easing of immediate tension in the Middle East over the weekend,” John Love, chief executive officer of USCF Investments, told Bloomberg. USCF Investments is the firm that manages USO. 

What happened here? USO’s total assets decoupled and negatively diverges from oil prices (a similar picture to what we have seen in gold as physical demand soars as paper demand ebbs). 

Love said, “Given how high tensions were prior to the strike, it’s likely this was an event-driven selloff.”

Brent crude prices topped $91/bbl in early April and traded above the $90/bbl level through the mid-point of April as Iran and Israel volleyed missiles and bombs at each other in an unprecedented escalation between the two countries. However, the turmoil appeared more or less theatrics than anything else. Prices have since faded to the $87-$88/bbl level. 

“Brent crude oil prices have retreated from their recent highs following a perceived de-escalation in the Israel-Iran conflict, and we continue to expect prices to remain range-bound over the coming months given current fundamentals,” Goldman’s Jenny Grimberg wrote in a note to clients on Wednesday. 

Grimberg shifted up her Brent price floor to $75bbl from the previous line of $70/bbl to reflect OPEC’s increasingly strong influence on the market, softening US supply, a more robust demand outlook, and ongoing geopolitical risks. She also adjusted her price forecasts for 2H24/2025 to $86-$82/bbl (from $85-$80/bbl).

“That said, we maintain our $90/bbl ceiling on prices, owing partly to ample OPEC+ spare capacity, which limits upside price risk,” she added. 

On Thursday, in a separate note, MUFG Bank’s Ehsan Khoman outlined a “reduced geopolitical risk premium” impacting Brent prices but said, “a broader risk-off tone is being overshadowed by bullish US crude inventory numbers, with front-end Brent pricing consolidating below the USD90/b handle.”

Khoman pointed out that oil bulls are sitting comfortably with prices over the 50-day moving average of $86/bbl.

He expects Brent to trade between the $80/bbl and $100/bbl range for the rest of the year primarily because of “effective OPEC+ market management” on the supply side, adding that the lingering risk remains geopolitics in the Middle East. 

That said, the largest USO daily outflow ever is likely not an ominous sign of a major trend change in crude prices but rather just a cooling of the geopolitical risk premium. A combination of lingering threats in the Middle East and OPEC+ market management will keep prices elevated. 

Authored by Peter C. Earle via The American Institute for Economic Research,

Zimbabwe’s historical relationship with money has been inundated with mistakes, recklessness, and hardship. During the peak of its 2008 hyperinflation, the nation experienced a catastrophic economic downturn, characterized by the issuance of billion- and trillion-dollar banknotes that were, despite their nominal enormity, virtually worthless. Recent economic challenges have revived painful memories of that era with the resurgence of inflation (currently at 55 percent), a return to the US dollar, euro, and South African Rand as de facto currencies, and the necessity of using large physical stacks of bills to purchase basic commodities like bread and eggs.

On April 5, a new currency was announced.

Later this month, the ZiG (Zimbabwe Gold) will replace the current monetary unit, the Zimbabwean Real Time Gross Settlement dollar (RTGS). The ZiG marks a sixth attempt by the Zimbabwean government and central bank to introduce a currency unit that sets its monetary house in order. 

Upon declaring independence in 1980, the Reserve Bank of Zimbabwe (RBZ) issued the original Zimbabwe dollar (ZWD) to replace the Rhodesian dollar at par (1:1). Over the subsequent two decades, the money supply expanded amid fiscal mismanagement, policy errors, and authoritarian governance. Denominations of the ZWD grew from two, five, and 10 ZWD denominations into bills marking hundreds, thousands, and millions of units, each with precipitously dissipating purchasing power. 

In August 2006, the first attempt to reform the original ZWD was undertaken.

The RBZ recalled outstanding currency notes, replacing them with redenominated notes of one one-thousandth the value of the previous notes by slashing three decimal places.

Roughly two years later, in August 2008, a second redenomination marked the third ZWD reissue, this time slashing ten decimal places.

By this point, prices were at least doubling on a daily basis. Thus did each ten billion ZWD note become one ZWD to address the increasingly unwieldy terms of face-to-face market transactions. The apex of the hyperinflation was reached with the issue of the 100 trillion ZWD banknote, after which in February 2009 — barely six months later the previous redenomination — twelve zeros had to be removed from currency units. This was the fourth ZWD issue. By this point, the 1980 ZWD had been whittled down to one-sextillionth (0.000000000000000000001) of its initial value. Errors in simple transactions became commonplace, with both calculators and computers unable to handle fundamental accounting operations. Agriculture, a difficult commercial undertaking even with a stable currency, is all the more challenging when consummated in units usually reserved for astronomers.

By the end of 2008, 28 years of inflation topped a total 231 million percent.

The ZWD was demonetized in 2009, with the Euro, the South African Rand, and the US dollar as well as smaller, regional currencies supplanting it.

In 2015, that process was completed, with every 35 quadrillion ZWD presented at a bank being retired for a single US dollar.

Alongside a wide array of currencies in use throughout the next few years were Zimbabwean government bond notes.

In 2019, the Real Time Gross Settlement (RTGS) dollar was issued, but quickly ran into trouble — even before the COVID pandemic broke out. Inflation followed yet again, and the use of international currencies — which had been outlawed upon the introduction of the RTGS — was again legalized. When issued, the RTGS was set at an official exchange rate of 2.5 per US dollar. Since the start of 2024, though, it has lost 80 percent of its value, recently trading at 30,671 per US dollar. At this rate of inflation, an item that cost $100 US dollars in 1980 would have cost over $700 billion dollars by 2023. 

USD-ZIM/RTGS exchange rate (2022 – present)

(Source: Bloomberg Finance, LP)

On April 30, 2024, RTGS units will be exchangeable for ZiG as the new coins and bills begin circulating. RBZ Governor John Mushayavanhu has announced the initial exchange rate for the ZiG at 13.56 per US dollar, with subsequent rates to be determined through interbank markets. Hopes for the success of the ZiG are underpinned by a reputed $185 million worth of gold and other reserves backing it. There are practical hurdles, though.

The sustainability of a gold-backed currency like ZiG is uncertain considering the limited extent of Zimbabwe’s physical gold reserves relative to the desired exchange rate. Moreover, the absence of concurrent measures from its trading partners leaves the new currency susceptible to fluctuations in gold prices. Black markets, which speak truth to a fault, are registering doubt.

And investors in the Zimbabwe Stock Exchange in Harare have made no secret whatsoever about their cynicism, sending stock prices down 99 percent in several hours after the ZiG announcement.

Zimbabwe Stock Exchange (Jan 2024 – present)

(Source: Bloomberg Finance, LP)

Zimbabwe still relies upon printing money to finance its budget deficits. Although Mushayavanhu has adamantly pledged to avoid this practice, at the onset the ZiG faces an uphill battle to claim public trust, given nearly a half century of monetary disasters. Moreover, the government’s insistence on accepting payments for certain services exclusively in US dollars, such as road toll fees and passport processing, is undermining confidence in the new money even before it begins changing hands.

Reports indicating that the government will require tax payments in mixed currency are further dimming prospects for the ZiG’s acceptance and viability.

The Zimbabwean government has, in addition, associated the latest monetary project with the global dedollarization movement. While there remains a possibility for the ZiG to outperform its predecessors, the country’s tumultuous economic history, transitioning from hyperinflation to hyper-dollarization and currently grappling with double-digit inflation and interest rates, underscores deep-rooted issues beyond mere monetary policy, including governance deficiencies and corruption risks. Ruinous policies which have destroyed the productiveness of the nation’s economy, as well as the classic blame-mongering of businesses for the rising general price level (something Americans have borne witness to recently as well) have been commonplace. Without comprehensive fundamental reforms addressing these systemic challenges, Zimbabwe risks perpetuating its reliance on emigration as a coping mechanism alongside the enduring symbol of its economic turmoil, the multi trillion-dollar banknote. The efficacy of any monetary system, whether a commodity standard or any other, hinges singularly upon the integrity and competence of its custodians.

Dissipated Zimbabwean cash is thumbtacked to many a bulletin board, and fetches many more US dollars in exchange on eBay than it ever did in its circulatory prime. The trinketization of that money, however, has come at great human cost. According to the US Agency for International Development, a staggering 63 percent of Zimbabwean households endure poverty, with one in eight experiencing extreme deprivation. That juxtaposes with the nation’s abundant mineral resources, spanning over 40 distinct minerals: platinum group metals, gold, coal, lithium, and diamonds among others. Despite that potential wealth, the realization of economic advancement remains contingent upon substantive political reforms. 

Even the most faithfully implemented commodity-backed money standard is fundamentally predicated on the integrity and competence of its overseers. Successive waves of spectacular currency destruction speak to a deeper illness in economic and political institutions, strongly alluding to systemic vulnerabilities. One hopes, for the sake of the long-suffering citizens of Zimbabwe, that this time around the result of yet another monetary reconstitution is successful, fostering a stable general price level, a reliable monetary unit for saving and spending, and enhanced possibilities for economic calculation. Without fundamental changes guaranteeing private property protection, pro-market reforms, and safeguards against corruption, though, the ZiG is likely to retrace the unfortunate steps of its predecessors.

Baltimore City filed a lawsuit against the owner and operator of the container ship that crashed into the Francis Scott Key Bridge last month, causing it to collapse. 

Attorneys for Baltimore’s mayor and City Council claim the bridge collapse was caused by “negligence of the vessel’s crew and shoreside management,” according to the Washington Post. 

In the early morning hours of March 26, the Dali, a 213-million-pound container ship owned by Grace Ocean Private Limited and managed by Synergy Marine PTE LTD., lost power and slammed into one of the main pillars of the 1.6-mile long Key Bridge, instantly crumpling the bridge and blocking the only shipping channel in and out of the Port of Baltimore. 

“The Dali slammed into the bridge, causing the bridge’s immediate collapse, killing at least six individuals, destroying Baltimore property, and bringing the region’s primary economic engine to a grinding halt,” the city said in court filings. 

“None of this should have happened,” the attorneys said, adding, “Reporting has indicated that, even before leaving port, alarms showing an inconsistent power supply on the Dali had sounded. The Dali left port anyway, despite its clearly unseaworthy condition.”

Earlier this month, Grace Ocean and Synergy Marine submitted a request in federal court to cap their potential liability at $43.6 million. Baltimore on Monday requested that the court dismiss the companies’ petition to limit liability.

The court filing also called the crew of the Dali “incompetent” and lacked proper skill or training, adding they were “inattentive to their duties” and “failed to comply with local navigation customs.”

The source of the “inconsistent power supply” has yet to be identified, and the Federal Bureau of Investigation and the US Coast Guard have launched a criminal investigation into the crash. 

Meanwhile, the city of Baltimore failed to install fender systems to prevent ships from crashing into the bridge. These fenders could have prevented the collapse. 

Why did the city, county, or whoever manages the bridge fail to install fender systems? Were progressive lawmakers in the city and state too distracted with their socialist agenda to focus on upgrading critical infrastructure? 

Authored Robert Burrows via BondVigilantes.com,

Renowned for its role as a hedge against economic uncertainty and inflation, gold has long captivated investors. One key factor influencing gold’s price is the relationship between real yields and inflation. Over the long term, gold has protected one against the pernicious effects of inflation and remains a powerful diversifier within an investment portfolio:

Source: M&G, Bloomberg, 23 April 2024

Real yields, also known as inflation-adjusted yields, represent the return on an investment after accounting for inflation. They are calculated by subtracting the inflation rate from the nominal yield of a financial instrument, such as a government bond. Real yields provide a more accurate measure of an investor’s purchasing power and the true return on their investment. Historically, gold prices have exhibited an inverse correlation with real yields. When real yields are low or negative, indicating that inflation-adjusted returns on fixed-income investments are meagre or eroded by inflation, investors seek alternative stores of value, such as gold. Conversely, when real yields are high, offering attractive returns relative to inflation, the opportunity cost of holding gold increases, leading to downward pressure on the gold price.

The below chart demonstrates this general trend:

Source: M&G, Bloomberg, 23 April 2024

While the trend is not perfect, the following chart demonstrates that correlations have been negative for the bulk of the time:

Source: M&G, Bloomberg, 23 April 2024

So why is gold going up? If these correlations hold and real yields are moving higher, the gold price should be trending lower. There is something else at play. Investors will generally point to global instability, with geopolitical concerns being obvious. The other would be the challenging fiscal backdrop of many major economies, which I have written about. These concerns are well founded; however, they do not seem to be showing up in other risk assets.

BBB US corporates are trading at their all-time tights, so there is nothing to see here:

Source: M&G, Bloomberg, 23 April 2024

Volatility is not exploding, as shown by the volatility index VIX:

Source: M&G, Bloomberg, 23 April 2024

A quick look at China shows some interesting developments. We know why interest rates have gone up: to combat inflation. However, yields may still be pressured higher due to countries selling down their treasury reserves. China, for example, has been reducing its treasury reserves for some years. This is not the sole reason for higher yields but will be a contributory factor. The below chart shows Chinese treasury reserves falling plotted against the 10-year treasury yield (inverted):

Source: M&G, Bloomberg, 23 April 2024

Where are these funds going? Bolstering gold reserves it would seem…

Source: M&G, Bloomberg, 23 April 2024

…, and China is not alone in this thinking:

Source: M&G, Bloomberg, 23 April 2024

We have witnessed many responses with the onset of the war in Ukraine, one of which is sanctions. The sanctions have attempted to lock out a country from its reserves. The West’s freezing of Russia’s gold and forex reserves in response to the conflict appears to have triggered this shift. More recently, there have been threats to confiscate Russian reserves and use these funds to support Ukraine’s efforts. This will undoubtedly make other countries somewhat nervous, especially those not 100% aligned with the West’s worldview. 

Clearly, the Gold price is influenced by a multitude of factors, and one cannot point to any one single issue. However, it doesn’t seem as though gold is currently being bought for its safe-haven appeal at this stage. Where would the gold price be if the Fed starts cutting and the geopolitics worsen?

$1.027 million...or about 16 bitcoin.

That’s what the infamous ‘Buy Bitcoin’ scribble drawing on a yellow legal pad, once held up at a televised Congressional testimony behind Federal Reserve Chair Janet Yellen, just sold for at auction, according to Bloomberg. 

The report notes that the sign quickly became iconic in the crypto community, symbolizing the industry’s revival. Bitcoin’s price soared from about $2,300 to a peak of nearly $74,000 in March, boosted by major financial firms like Fidelity and BlackRock.

As retail interest came around, early Bitcoin memorabilia like the pad regained popularity. NFTs…well, not so much.

An anonymous buyer secured the item with a bid of 16 Bitcoin on the auction site Scare City, the report notes, although a temporary glitch suggested a mistaken bid of $6.4 million before correction.

Give them a break. After all, not everyone is on the bitcoin to USD conversion standard just yet…

But if the price of the pad is any indicator, interest in the crypto remains hot. 

“The page with the sign drawing was removed from the notepad shortly after the hearing. It has since been reattached with clear archival wire,” the item’s description read at the auction. 

Christian Langalis, a 22-year-old intern at the Cato Institute, created the sign during a 2017 House Financial Service Committee hearing featuring Janet Yellen. After being televised, Langalis was escorted out. The auctioned item, described as “Ink Drawing on Legal Pad,” also includes his notes from the session.

By Michael Every of Rabobank

The Golden Path

USD/JPY is at 155, a fresh 34-year high, with the Yen slumping 10.2% year-to-date and suggestion that intervention may not come until we get to 160, a level last seen in 1986. USD/CAD is off recent lows at 1.37 but under pressure (as noted by Christian Lawrence): some suggest the Loonie could fall as far as 2 (so CAD/USD at 0.5) a decade from now. So, a higher US dollar. Which FX dominoes haven’t fallen yet, and when might they?

Australian CPI data suggest it will be hard to cut rates in 2024, as the median Sydney house price moves up to A$1.6m with them at 4.35%. Mexican CPI surprised to the upside, also suggesting further rate cuts may not roll out as had been priced in. Bank Indonesia shocked markets with a 25bp rate hike to 6.25% to try to relieve downwards pressure on IDR. So, what looks like higher rates for longer than had been expected. What breaks where, and when?

Geopolitical tensions will also be higher for longer. Europe made a dawn raid on a Chinese firm as Politico says: ‘EU to China: Open your public markets or we’ll close ours’. US Secretary of State Blinken is in Beijing against headlines warning of US sanctions on Chinese banks for helping Russia. President Biden signed the TikTok divest-or-ban bill, which Bloomberg warns will see China target US firms in kind. US military aid is already flowing to Taiwan, Ukraine, and Israel: the US is planning to convert old Pacific oil platforms to military bases; Ukraine was striking Russian energy targets even before it got access to new, longer-range US missiles; and Israel is closer to moving against Hamas in Rafah and Hezbollah in Lebanon, if not Iran (for now). The New Statesman echoes warnings made here since the mid-2010s: ‘The age of danger: order is breaking down as the great powers take sides in multiple wars’.

Economic policy also continues to get more populist: although it has no chance of happening, President Biden has proposed a 44.6% capital gains tax, the highest in US history, and a 25% tax on unrealized gains by high net-worth individuals. More realistic, perhaps, France’s opposition has proposed financing the country’s green transition with entirely with QE.

Let’s be frank, it’s hard to see a ‘Golden Path’ for markets ahead. It’s even harder to see ‘The Golden Path’ – a global economic system that allows maximum market/personal freedoms, yet with minimal inequality both domestically and internationally, and so socioeconomic and geopolitical stability. Yet absent that Path, we end up Hamiltonianism or mercantilism, economic war, real war, and a Great-Power-struggle ‘age of danger’.

Bloomberg just made reference to this (‘Geostrategy Industrial Complex Is a Win-Win’) vis-à-vis the real economy, noting corporate and foreign policy elites are talking more to each other, “which is good for both sides”. Yet financial markets continue to ignore foreign policy elites! Where are the macro forecasts adjusted for a world of Great Power struggles? Most still look remarkably similar to ones without that backdrop. (By contrast, note our ‘geopolitical’ work on Europe’s growth and inflation.) Where are the FX, rates, equity, credit, commodity, and property scenarios for a world of Great Power struggles? Again, most still look remarkably similar to ones without that backdrop – correct me if I am wrong, but it seems only our Fed watcher Philip Marey is predicting Trump tariffs would be a roadblock to ongoing Fed cuts in 2025.

Let’s be Frank Herbert.

Bloomberg also praises Hollywood’s ‘Dune 2’ for predicting the future better than Fukuyama for its old-and-new high-tech, feuding Great Houses struggling for control of the Spice without which the economy can’t function, as religion sweeps people to violent jihad. That comparison is true, but there is a deeper parallel to our present situation. Those who have read the Dune series repeatedly know all that backdrop supports two central overarching themes:

• First: “Don’t follow charismatic leaders.” Paul Atreides is no hero: he is directly responsible for the deaths of 61 billion people.

• Second: “The Golden Path.” Paul doesn’t have the stomach to follow through on what he needs to do for mankind, but his son, Leto II, does. **SPOILER ALERT** He fuses himself with a sandworm to become a dictator for 3,500 years, destroying Spice, space travel, and the economy, to teach people “a lesson they will remember in their bones”: that once they can break free of his reign, which he eventually allows, they should become as diverse and far-flung as possible to never allow anyone or anything to threaten them in their entirety again.

The conflict between humanity’s stated desire for peace and their actual need for volatility is the central message of the Dune series.

We built a centralised neoliberal global system that repressed volatility as QE Spice flowed. But while Great Houses thrived, and some got very rich selling shadow-bank Spice derivatives, that system only increased, not decreased, our fundamental vulnerabilities to key threats. Returning to a world of Great Power struggles may ironically create healthier economic systems and societies over time, in some respects.

True, that likely won’t allow such free markets. But while we need some volatility to get stronger –think of Taleb’s anti-fragility– we don’t need other kinds, like a sandworm swallowing us whole (or the financial market equivalent as past vol-repression has to be unwound), or people launching jihads at home or abroad. Which there is rather too much of right now.

So, Trump fusing with a sandworm may teach us all a geopolitical lesson “in our bones”: does his orange skin reflect excess McMelange consumption even if his eyes aren’t blue-in-blue?

Back to markets: the God Emperor of Dune, Leto II, maintains a complete monopoly on melange, the real currency in the universe; but apart from that, the books don’t say much about rates or FX. I’m just not sure what the Golden Level of rates is on our Golden Path. Then again, neither do central banks. And financial markets mostly have their heads deep in the sand.

Hamas has rejected an urgent formal plea from world leaders to release all remaining Israeli hostages, with the designated terror group telling the West “you can’t force us to do anything.”

Earlier on Thursday the US was among a group of 17 countries which have citizens in Hamas custody that released a joint statement calling on Hamas to free them.

This was the first such international joint statement of the conflict, which has run for more than half a year. Prior attempts at similar statements never got past the draft phase as countries had vastly differing perspectives of the Gaza crisis.

“We call for the immediate release of all hostages held by Hamas and Gaza now for over 200 days. They include our citizens,” the statement said. “The fate of the hostages and the civilian population in Gaza who are protected under international law is of international concern.”

The leaders from the following countries were behind the statement: United States, Argentina, Austria, Brazil, Bulgaria, Canada, Colombia, Denmark, France, Germany, Hungary, Poland, Portugal, Romania, Serbia, Spain, Thailand and the United Kingdom.

They push for both warring parties to see through the deal that’s reportedly on the table: “Gazans would be able to return to their homes and their lands with preparations beforehand to ensure shelter and humanitarian provisions,” it said.

“We will emphasize that the pending deal for the release of the hostages will lead to an immediate and prolonged ceasefire in Gaza, which will facilitate the introduction of necessary humanitarian aid to be provided throughout Gaza and lead to a reliable end to hostilities,” the joint statement continued.

But Israeli officials have continued to lay blame on Hamas for their inability to reach a deal. One official privy to negotiation efforts described, “The core truth, there’s a deal on the table. It meets nearly all of the demands that Hamas has had, including in key elements, one of which I just spoke with.” The official added: “And what they need to do is release the vulnerable category of hostages to get things moving.'”

Seizing assets? Two can play at that game…

Just days after Washington voted to authorize the REPO Act – paving the way for the Biden administration confiscate billions in Russian sovereign assets which sit in US banks – it appears Moscow has a plan of its own (let’s call it the REVERSE REPO Act) as a Russian court has ordered the seizure of $440 million from JPMorgan.

The seizure order follows from Kremlin-run lender VTB launching legal action against the largest US bank to recoup money stuck under Washington’s sanctions regime.

As The FT reports, the order, published in the Russian court register on Wednesday, targets funds in JPMorgan’s accounts and shares in its Russian subsidiaries, according to the ruling issued by the arbitration court in St Petersburg.

The assets had been frozen by authorities in the wake of the western sanctions, and highlights some of the fallout western companies are feeling from the punitive measures against Moscow.

Specifically, The FT notes that the dispute centers on $439mn in funds that VTB held in a JPMorgan account in the US.

When Washington imposed sanctions on the Kremlin-run bank, JPMorgan had to move the funds to a separate escrow account. Under the US sanctions regime, neither VTB nor JPMorgan can access the funds.

In response, VTB last week filed a lawsuit against the New York-based group to get Russian authorities to freeze the equivalent amount in Russia, warning that JPMorgan was seeking to leave Russia and would refuse to pay any compensation.

The following day, JPMorgan filed its own lawsuit against the Russian lender in a US court to prevent a seizure of its assets, arguing that it had no way to reclaim VTB’s stranded US funds to compensate its own potential losses from the Russian lawsuit.

Yesterday’s decision sided with VTB, ordering the seizure of funds in JPMorgan’s Russian accounts and “movable and immovable property,” including its stake of a Russian subsidiary.

JPMorgan said it faced “certain and irreparable harm” from VTB’s efforts, exposed to a nearly half-billion-dollar loss, for merely abiding by U.S. sanctions.

The order was the latest example of American banks getting caught between the demands of Western sanctions regimes and overseas interests. Last summer, a Russian court froze about $36mn worth of assets owned by Goldman following a lawsuit by state-owned bank Otkritie. A few months later the court ruled that the Wall Street investment bank had to pay the funds to Otkritie.

The tit-for-tat continues.