By Michael Every of Rabobank

Navel-gazers in a cul-de-sac

‘Do Androids Dream of Electric Sheep?’ asked Philip K. Dick in 1968, long before AI was on our mobiles and scientists could create artificial human embryos. Markets are very excited about AI now; Replicants will come later. Yet while ethical concerns are raised by some, X is asking questions about the underlying “authenticity of demand” for AI chips: on Wall Street, ‘Do Electric Sheep Dream of Androids?’

Dick’s ahead-of-his-time thinking “made most of the European avantgarde look like navel-gazers in a cul-de-sac.” That dynamic still holds true today in you look around carefully. The safe narratives are rarely right anymore.

How many expected Eurozone’s revised August services PMI at 47.9, despite a tourism boom, while in the US it’s 54.5, with prices paid up to 58.9? Or the Eurozone manufacturing PMI at 43.5 while the US is 47.6, with German factory orders -11.7% m-o-m and -10.5% y-o-y, and auto orders echoing the collapses of Covid, 2012, or 2008?

How many would have expected that despite those data, both the Fed and the ECB are still talking about potentially raising rates again? Not the avantgarde economists who wrote this paper at the Chicago Fed arguing that alongside slowdowns in some sectors –see the Fed Beige Book– inflation is *finally* ‘transitory’. Maybe the ones who wrote this paper at the New York Fed admitting they have no idea what the post-Covid R* is, but it might be higher.

We flagged stagflation and US outperformance risks earlier this year, and our energy analyst Joe DeLaura is still beating the drum for structurally higher energy prices going forwards. Tellingly, yesterday saw the White House ban oil drilling in Alaska, as Saudi Arabia raises its official selling price to the US to $7.45 above benchmark, and to Asia to $3.60. With a largely-drained US Strategic Petroleum Reserve, if the Fed really are active in oil futures, as some whisper, they need to get busy again soon.

After all, Riyadh needs the money. Not only are they building the world’s least-practical, most-lucrative-for-architects linear city, ‘NFTom’, but they are to host the Asian Winter Games in 2029. Yes, *winter* games. With snow. At a “year-round ski resort” near NFTom – I’m not sure even Philip K. Dick would have dared pen that idea. Re-invented solid-gold wheels are really turning in the region. Likewise, the US, Saudis, and Israelis seem to be moving closer to extending the Abraham Accords which could transform global supply chains. Presumably the White House would expect help in capping oil prices, and a Saudi promise to back away from China and Russia, as a quid pro quo for a NATO-style defence guarantee. Yet how long would BRICS11 bonhomie with Iran then last, and wouldn’t Russia meddle? That again suggests higher, not lower oil prices.

Of course, there is always green tech. But how many expected the CEO of Orsted, the world’s largest offshore wind developer, to says he’s prepared to abandon US wind projects entirely unless the White House guarantees more fiscal support? The same thing has already happened in Sweden and the UK. Equally China is having to tell people to remove solar panels from roofs in some areas due to grid overload at peak times. This all underlines the –vast– expenditure that will be required to make everything green work, and/or higher energy costs, which is inflationary or stagflationary.

A cul-de-sac is also where US-China relations now are. No sooner did we get a slew of ‘Serenity now!’ op-eds from US thinktanks funded by Serenity, Inc., than China announced a ban on made-in-China iPhones and other foreign brands in government offices. Apple being among the most pro-China US firms is more than ironic: who is next, as China’s share of US imports falls to its lowest level since 2005? Meanwhile, China is celebrating achieving domestic 7nm chip technology in its latest Huawei phone. How many US policy hawks expected that? Yet the logical conclusions are that the US will increase trade sanctions further, so more decoupling, and more inflation; and China’s achievements may be at a very high cost per unit, so more decoupling, and more inflation.

Relatedly, the Financial Times has an op-ed arguing that ‘China’s demand dilemma could spell trouble for the world’, making the point that “The other G20 countries should signal consensus against Beijing running a big surplus.” In short, no Japan redux for China in terms of relying on global demand over domestic. However, Xi isn’t even coming to the G20, underlining a rapidly-accelerating Global South – G7 fragmentation underway; which is again inflationary or stagflationary.

More broadly, almost every day now I see a Wall Street Journal, FT, or serious media op-ed or article underlining that we are close to some form of structural crisis; that the global architecture is breaking; that norms are being subverted; that economics doesn’t work as a subject (as if it ever did!); neither does macro forecasting; that science has been corrupted; and that the media can’t be trusted; and neither can social media.

The New Statesman, for example, today offers ‘The great crack-up: We inhabit an economy too small to deliver the social goods British people expect’ and ‘The parallels between Argentina and Britain’s inept political class’ – which sounds a lot like my meme of EM = DM (and so stagflation).

It also says ‘Economic orthodoxy is a trap’ – which it is, Admiral Akbar. Which is largely why we are where we are.

Indeed, the RBA’s Lowe, as often with central bankers, telling the truth on the way out the door, noted today that he sees supply disruptions, global warming, an ageing population, and deglobalisation all leading to more volatile inflation in coming years: either steeper supply curves or more variable supply curves lie ahead. Now let’s all welcome Michelle Bullock, who coming in the door with a declared A$6m personal property portfolio, will no doubt tell us inflation is going back to 2% and don’t panic.   

Indeed, those who consider themselves to be avantgarde still prefer the safe consensus of gazing at their navels in a cul-de-sac. On the that note, and playing with another classic Philip K. Dick title, they are saying, ‘We Can Forget It For You Wholesale’, which became the movie Total Recall – in this case though, Total Lack of Recall.

The National Hurricane Center warned Hurricane Lee is intensifying, and computer models suggest it might reach “major hurricane” status by early Friday. 

Lee is located 965 miles from the northern Leeward Islands in open waters with maximum sustained winds of 80 mph. The Category 1 storm is moving west-northwest at 13 mph.

“The environment around the cyclone looks ideal for rapid intensification. The models are in fairly good agreement that significant strengthening should begin later today and continue into the weekend, when Lee will likely reach its peak intensity,” NHC said. 

NHC warned, “Fluctuations in strength are likely from days 3 to 5 due to potential eyewall replacements, but Lee is still expected to be a dangerous hurricane over the southwestern Atlantic early next week.” 

Computer models show Lee “slowing down before making a turn to the north in response to steering currents around it, particularly a dip in the jet stream moving toward the East Coast,” said Axios. 

Late next week, it’s possible that Hurricane Lee tracks close to New England and/or Atlantic Canada.

The path out to sea may be blocked by a ridge of high pressure.

A long time to go, but I’d say the trend is not our friend with regard to land impacts 😬

Tracking @ECMWFbot 👇 pic.twitter.com/vNrZOhfSPQ

— Ben Noll (@BenNollWeather) September 7, 2023

Possible Cat. 5?

There is a chance that #Lee could be a Cat5 hurricane. We have one in the Pacific now called #Jova which has nearly doubled its wind speed in 24 hours.( 85 to 160mph). No threat to land with Jova. pic.twitter.com/knoCjsdF4c

— Jim Cantore (@JimCantore) September 7, 2023

Axios noted Lee is about “week to 10 days away from a potential threat to the U.S. mainland.” 

Authored by Frank Fang via The Epoch Times (emphasis ours),

A city in Wyoming has been overwhelmed with a growing number of homeless people, who have damaged a local hotel that would require millions of dollars to fix and left hundreds of pounds of human feces in the downtown area, according to its mayor.

Casper Mayor Bruce Knell, in an interview with local news media Cowboy State Daily published on Aug. 31, said the city’s homeless population had topped about 200 people, creating “a mess” as they roam the city’s parks and streets.

“It’s like nothing I’ve ever seen. It’s third-world country stuff happening in Casper, Wyoming,” Mr. Knell said.

“They destroyed everything,” he added. “It’s horrible.”

Casper is Wyoming’s second most populous city, with a population of nearly 60,000, second behind the state’s capital, Cheyenne.

According to the mayor, the city’s vacant Econo Lodge motel, which had been closed due to flooding, was taken over by homeless people, who caused millions in destruction.

Pictures of the motel rooms published by the outlet show trash, towels, and bed sheets littered across the floors.

The city subsequently condemned the motel, and the bank that owned the property had to board it up to prevent homeless people from entering.

“It was inhabitable, and it was unsafe,” Mr. Knell said.

Other homeless people have moved into abandoned properties with no electricity or running water, the mayor said.

Many homeless people loiter in the city’s downtown area, the mayor added, leaving behind about 500 pounds of human feces that city staffers cleaned up. The loiterers have occupied parks and bike paths, while others choose to sleep in their cars, Mr. Knell added.

“In desperate times, people do desperate things, and unfortunately, we’re the ones left having to deal with it,” he said, adding the homeless population was responsible for some of the city’s crimes.

“We know very well we cannot litigate our way or arrest our way out of the problem, but our police need some teeth to start dealing with the squatting,” Mr. Knell said. “They’re just causing so many problems.”

The mayor explained that there has always been a small population of homeless people in Casper, given the existence of Wyoming Rescue Mission, a homeless shelter founded in 1978. As a result, the problem with the current growing homeless population lies with those deciding to stay in the city after either failing to get admitted into the shelter or getting kicked out of it, according to Mr. Knell.

“There’s a certain part of the homeless population, whether substance abuse or mental illness, that is getting them to where they don’t want to conform to society’s rules,” Mr. Knell said. “When they do that, they’re not allowed to go in the shelter, which means they’re just out and about in our community raising hell.”

There have been some legislative proposals to tackle the homeless problem, the mayor added, and the city council could vote on them as soon as Sept. 5.

These proposals include modifying the city code that requires suspected squatters to get written consent from a property owner and establishing a time limit on how long they could stay on private property, according to Cowboy State Daily.

By Russell Clark of the Capital Flows and Asset Markets substack

This week’s Economist has a leader, criticizing America’s new drug-pricing rules. I knew this was going to be a subpar article when the first line is “A quirk of American law long barred Medicare, the public-health insurer for the elderly, from negotiating with drug firms over prices.” To describe this as a quirk is a stretch. It is almost certainly the product of lobbying buy US drug companies, and at odds with the VA prescription system, also state funded, which is allowed to negotiate drug prices on behalf of its members.

Back in 2017, I published a note on the US healthcare system, explaining how exactly Medicare had come to be abused by many of the drug companies now complaining. I republish it now, as I am working on updating it, and having the old note on the website will be helpful, when I finish the update. I generally don’t like reposts, but this one is useful.

The US Healthcare system is truly extraordinary.  Per capita spending on healthcare is double the levels seen in most other developed countries.  This is in part driven by a very different set up.  Key differences are the private sector has far more freedom to market drugs directly to consumers, and Medicare, the largest buyer of drugs, is prohibited by law from negotiating lower prices.  The result is that the US has higher prices for drugs, and due to the extra spend, also has the most innovative drug market.  It can be argued that the US subsidises drug development for the rest of the world.  However, recent increases in drug prices seem to have been driven by regulatory changes due to the Affordable Care Act (Obamacare), rather than market forces. 

In 2016, total US health expenditures were USD 3.3 trillion.  US citizens directly paid (out of pocket) for USD 350bn, with the remainder paid by third parties.  USD 1.1 trillion was paid for by private health insurance, with Medicare and Medicaid paying USD 1.2 trillion.  Finally, USD528 billion was met by a mixture of other government programs, privately raised funds and charities.     

Of the total USD 3.3 trillion spent on healthcare, USD600 bn was spent on drugs, with half on prescription drugs.  The other half was spent on drugs used in procedures, and not procured via a prescription. While drug spending has doubled since 2007, we have seen a steady increase in the use of generics at the expense of branded drugs. 

However, even as we have seen volumes decline for branded drugs, we have seen an increase in total spend for branded drugs. 

Generic drug spend has also increased significantly in the last few years.  Both generic and branded drugs have seen price increases. 

The above graphs, would imply that all prescription drugs, both branded and generics have seen price increases.  However when we consult data from independent US advisory agency, MEDpac and from the Centre of Medicare and Medicaid Studies (CMS) a different picture appears. 

MEDpac looks at Medicare Part D (the part of Medicare that pays for prescription drugs) data from 2009 to 2014.  The most striking feature is how the average price for a prescription for a low cost beneficiary has fallen by 24% over the period, while the average drug cost for high cost beneficiaries has risen by 50% over the same period. 

One of the reasons for the increase in high cost beneficiaries has been the development of a new drugs that cure hepatitis C.  The main drugs used here are Solvadi and Harvoni, and according to data from CMS, total Medicare spending on these drugs in 2014 was 3.8bn USD from nothing in 2009.  Total high cost spending without the hepatitis C drugs would have still risen to 60.8bn USD, or a doubling of spending on high cost drugs compared to a 27% rise on low cost drugs.  Excluding the hepatitis drugs, we can see that drug spend rose 14% for Medicare in 2015 from 2014, while it rose 25% for Medicaid over the same period.    Given that volumes have been flat, and we have excluded the big increase from hepatitis C drugs, the growth in spending has been driven by drug prices. 

Drug cost increases at Medicare and Medicaid have been driven by long standing issues, that were exacerbated by the changes brought about by Obamacare.  Government run pharmaceutical plans such as Medicare and Medicaid are banned from negotiating drug prices with manufacturers.  This is at odds with other government run healthcare programs such as the UK’s NHS, which use their buying power to drive prices down.   

There are two big drivers to recent drug increases in my view.  There has been changes in how Medicare pays for drugs, creating an incentive for drug companies to raise prices.  The second has been the increase in the number of orphan drugs being developed, which has put upward pressure on drug prices.  Both factors now look to be coming under regulatory pressure. 

For Medicare Part D spending, high cost beneficiaries are defined as those beneficiaries who spend over USD6154 a year on drugs.  Spending in excess of USD6154 is 95% covered by Medicare.  However spending from USD2700 to USD6154 is not covered at all by Medicare.  Spending from USD 295 to 2700 is 75% covered by Medicare, while the first USD 295 is not covered at all by Medicare.  The gap from USD 2700 to USD 6154 is known as the Medicare Donut Hole.  Changes under Affordable Care Act, allowed for some drugs to be purchased at a 50% discount to list price, while the full list price could be counted towards Medicare Donut Hole.  Below graph shows the out of pocket spending for a given level of drug spending. 

For drugs with little or no competition, prices could be raised without effecting demand, as the drug consumer would potentially see marginal prices fall dramatically if this pushed them in to the top tier of Medicare benefits where costs are 95% covered.  This can be most clearly seen in the graph below where out of pocket spending on drugs fell even as health insurance spending on drugs rose.    According to the Medicare (a federally run health program for the old) drug spending dashboard, 29 of the 70 drugs details saw 50% price increase over 5 years.  Medicaid (state run health program that targets the poor) saw ever larger number of drugs with big price increases. 

The FDA is starting to take aim at rising drug prices, particular older drugs that have recently seen drug prices increase by speeding up the approval of generic drugs https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm564725.htm 

This has a detrimental effect on the share prices of generic drug makers, as increasing competition is being priced in. 

Orphan drugs, are drugs that are designed for conditions with relatively small numbers of sufferers.  In the US this is defined as having less than 200,000 potential patients.  If orphan drug status is granted by the FDA, then 7 years marketing exclusivity is given as well as 50% tax credit on R&D, plus other grants.  The rising share of orphan drugs has also been a big driver of higher costs.  According to the EvaluatePharma Orphan Drug report 2017, the average cost per patient of orphan drugs is USD 140,000 vs USD 28,000 for non-orphan drugs.  The same report notes that orphan drug sales now make up nearly 20% of all drugs sales worldwide, up from 11% in 2008. 

There is an issue with the Orphan Drug Act, as highlighted by this blog post from the relatively new head of the FDA, Scott Gottlieb.  See here. (Note Scott Gottlieb stepped down as FDA head in April 2019) The post states that Orphan Drug status has been granted for many paediatric treatments.  There were pre-existing laws that were intended to stimulate paediatric drug studies.  However, the use of paediatric sub-groups to gain orphan status has actually led to less paediatric studies.  This would imply that the FDA is looking to greatly tighten up the issuance of Orphan Drug status.  Orphan Drug status has conveyed great benefits on the pharmaceutical industry.  Firstly, it allows drugs to be tested on smaller populations, greatly reducing costs.  Secondly, it has allowed some drugs to be granted orphan drug status, but then go on to be used for treatment of much wider patient population.  Thirdly, some large pharmaceutical companies have sought and received orphan drug status for the some of the best-selling drugs in the world.  These highly profitable drugs, then received favourable tax credits and exclusivity on marketing in this area for 7 years.  The Kaiser Health Network found that about a third of orphan drug approvals have either been repurposed for all users or have received multiple orphan drug status to market so different subsets of patients.  

Rising drug costs have been one cause of rising insurance premiums in the US, which have risen faster than income and inflation over the last 10 years.  The new head of the FDA is looking to foster competition to reverse these effects, and his efforts have already lead to weakness in generic pharmaceutical companies. Investors should exercise caution with branded pharmaceutical companies. 

Authored by James Durso via OilPrice.com,

• Irrigating northern Afghanistan has been a priority for Kabul since Afghanistan’s first president, Mohammad Daud Khan, planned the canal in the 1970s.

• The Taliban is working on completing a canal that brings water from the Amu Darya to Afghanistan’s north, claiming that the canal with improve food security.

• Uzbekistan and Turkmenistan, which could lose 15% of irrigation water from the Amu Darya have expressed their concerns to Kabul, but there’s little they can do.

Recently, Radio Free Europe/Radio Liberty reported the progress of Afghanistan’s Qosh Tepa Irrigation Canal, $670 million, 285-kilometer canal to irrigate 550,000 hectares of land by diverting 25% of the flow of the Amu Darya River.

Irrigating northern Afghanistan has been a priority for Kabul since Afghanistan’s first president, Mohammad Daud Khan, planned the canal in the 1970s. The Amu Darya, which is Afghanistan’s border with Tajikistan, Uzbekistan, and Turkmenistan, originates in the Hindu Kush and Wakhan in the Pamir Highlands of Afghanistan, and flows 2,540 kilometers to the Aral Sea, between Uzbekistan and Kazakhstan.  

In 2018, the U.S. Agency for International Development announced a feasibility study for the canal, but NATO evacuated the country before the study was complete. The Taliban resumed the project in March 2022 and has completed about 100 kilometers of the canal. The Taliban claim the canal will help ensure food security and will benefit farmers, many of them their Pashtun supporters who will migrate to the area, which is mostly inhabited by ethnic Uzbeks and Tajiks.   

Uzbekistan and Turkmenistan, which could lose 15% of irrigation water from the Amu Darya, addressed their concerns to the Taliban, and haven’t commented on the negotiations. But the Taliban claimed Tashkent’s envoy said Uzbekistan was “ready to work with the Islamic emirate (the Taliban-ruled Afghanistan) through technical teams in order to maximize the benefits of the Qosh Tepa canal project.” 

Uzbekistan’s concern is the health of the cotton industry, and the impact on water-stressed Karakalpakstan, an autonomous republic of Uzbekistan that was the scene of disturbances in July 2022 when the government announced a constitutional amendment to eliminate Karakalpakstan’s autonomy. The change was withdrawn after unrest that saw 18 killed and hundreds wounded.  

The existing agreement on sharing Amu Darya water is the 1996 Almaty Agreement signed by the Central Asian republics, but not Afghanistan. The Agreement retains the water allocation quotas established by the Soviets, and Turkmenistan, Uzbekistan, Tajikistan, and Kyrgyzstan consume more than 80% of the river’s water. The republics have established modalities to manage the Amu Darya, but Afghanistan is not included. The Taliban say they will responsibly use the water to the benefit of all, though they probably privately feel that the other states got the advantage of 100% of the water for several decades and now it is Afghanistan’s turn to take what it feels it is due.   

What can the Central Asian republics do? 

Not much; Afghanistan is the head of the watercourse, and it is not a signatory to the UN Convention on the Protection and Use of Transboundary Watercourses and International Lakes (adopted in 1992). But offering Kabul formal participation in a water sharing arrangement will give the Taliban what it craves – legitimacy. According to the Food and Agriculture Organization, Central Asia has a high level of water stress and the World Bank reports, “many as 22 million people in Central Asia – nearly one-third of the region’s population – lack access to safe water.”  

Uzbekistan and Turkmenistan can make solo deals, but why not use the Interstate Commission for Water Coordination of Central Asia (ICWC) to negotiate an arrangement with the Taliban?  The Commission was formed in 1992 by the newly independent Central Asian republics with the mission of “the adoption of principles of collective decision making on common water-related issues” and it recognizes that water is a “limiting factor in development.” 

The Commission operates on the basis of “equity, equality and consensus” and its decisions are binding. It has decades of water management experience that it can share with Afghanistan. Engaging with the Commission, perhaps as an observer, will start to introduce the Taliban to the governing structures of the region, and is an opportunity to make its case to the neighbors – an audition on the most important issue, access to water. 

If the Taliban negotiates in bad faith, some options are:

• to stop (or renegotiate) selling electricity to Afghanistan which imports 80% of its power from Uzbekistan, Turkmenistan, Tajikistan, and Iran;

• route surface freight traffic via Iran and the International North-South Transport Corridor which will allow connections to Russia, the Caspian region, the markets of the southern Persian Gulf, and India;

• attach additional conditions to the Turkmenistan–Afghanistan–Pakistan–India (TAPI) natural gas pipeline;

• and increase counter-narcotics activity and cooperation among the republics and with Europe, Russia, the U.S., Iran, China, and Pakistan. 

The Taliban is reportedly financing the canal with sales of coal to Pakistan, but coal prices are expected to decline by 42% in 2023 according to the World Bank.

In August, Afghanistan’s Ministry of Mines and Petroleum announced a significant reduction in the royalties and customs duty for coal, so falling revenue may slow the project.  

And, after the canal is complete, comes the Dasht-i-Jun hydroelectric complex.

The filling volume of the dam will take most of the summer flow of the Pyanj River, a tributary of the Amu Darya River, harming agriculture in Tajikistan which, ironically, just joined a sustainable cotton initiative.

Thus, the Talban will control the lion’s share of Central Asia’s transboundary waters. 

 What Washington can do:  

• Don’t obstruct negotiations between the republics and the Taliban, even if it gives the Taliban a momentary fillip. There’s no better way to publicly prove malign intent than to oppose food security.  

• Support water resource management projects by the World Bank, the Asian Development Bank, and UN-Water.  

• Provide information and tools to the republics, such as the collaboration between the National Geospatial-Intelligence Agency and the College of William & Mary that provided a detailed report on Afghanistan’s water management under the Taliban. 

How will the U.S. react to increased Taliban engagement with the Central Asian republics? Though Washington will sympathize with the republics, Central Asia is not a priority as it is busy with a war in Ukraine and preparing for conflict with China. That said, America needs to make good on its declared policy of supporting the “security, development, and prosperity” of the republics.   

Both Mercedes and BMW have their sights set on growth in China and taking down the industry leader, Tesla, new reports revealed this week.

Mercedes is going to try and count on a range boost to beat out Tesla’s Model 3. The company’s near-production concept of its CLA sedan has 466 miles of range on a single charge, Bloomberg reported this week. 

It’s said to be able to add 400km of range in just a 15 minute charge. 

Mercedes Chief Technology Officer Markus Schäfer commented last weekend: “We’re taking it to the next level. This car is extremely important for innovation reasons and to push the limits for what we can do with a series car.”

The company is dealing with “disappointing sales” in China, where it is trying to keep up with both domestic auto manufacturers and lower priced Tesla vehicles. 

Mercedes Chief Executive Officer Ola Källenius has said he thinks the “rapid growth” in the industry is over and that it’s time to focus on quality, stating: “After 30, 40 years of an economic wonder, they’re reaching a level of maturity where you’re dealing with structural issues. We have to take a little bit of a cautious stance on that and see how things develop, and not expect rapid growth as far as the economy is concerned in the short term.”

For this reason, he believes Mercedes will be able to sidestep the price war currently taking place in EVs. 

BMW is also hoping its new vehicles can make inroads in China. The automaker presented a prototype of its future electric-vehicle lineup this week, including its Vision Neue Klasse concept car, which will be on display at next week’s IAA show in Munich. 

The vehicle is slated to be released in 2025 and sports a “digital display projected onto the entire width of the windscreen” and goes full Minority Report with ” software that can process voice commands and hand gestures”, according to Bloomberg. 

The idea is to appeal to Chinese customers, who tend to like more “gadgets” with their EVs, the report says. 

BMW CEO Chief Executive Officer Oliver Zipse said the vehicle will set BMW’s course for “the next decades”. 

He has also said that BMW continues to grow in China and isn’t negatively affected by the ongoing price war, started by Tesla this year, because of the brand’s positioning in the premium market. 

The top-end Neue Klasse models reportedly are going to have a range of up to 497 miles and will be able to charge from 10% to 80% in under 30 minutes. 

Authored by John Cody via Remix News,

Polling has consistently shown that France is one of the most anti-immigrant countries in Western Europe…

A new poll shows 72 percent of French believe that the government offers too much aid to migrants, and the same percentage think they pose security problems.

According to the research by French consumer and public opinion firm Toluna, 61 percent believe that immigrants are a cultural threat and 56 percent that they are a threat to the social fabric, French news portal Fdesouche reports.

📊 Opinion dégradée des Français sur les immigrés

Trop aidés par l’État 72%
Posent des problèmes de sécurité 72%
Menace culturelle 61%
Menace sociale 56%

E!, LR, R et RN se retrouvent sur ces affirmations

Mais 66% reconnaissent qu’ils sont souvent victimes de discriminations pic.twitter.com/HWs17fECDH

— Paul Cébille (@Ellibec) August 31, 2023

The research also shows that only 14 percent of French citizens approve of the unconditional acceptance of migrants, while 24 percent, mostly voters of the National Rally and the Republicans, reject any form of migrant intake.

Seuls 14% des Français souhaiteraient un accueil sans conditions des étrangers et 24% aucun accueil d’étrangers du tout (majorité de RN et de R) pic.twitter.com/9ucXShvTIP

— Paul Cébille (@Ellibec) August 31, 2023

The polling fits with a broad, decades-long trend of the French public rejecting mass immigration.

Another poll this year found that 64 percent of French are against non-European immigration.

However, this trend may eventually reverse over the coming decades as the native French population is continuously displaced, in which case the “new French” may tip the polls in favor of more immigration, as they have a strong incentive to bring family members and fellow countrymen and women into France.

Already, what academics, politicians and journalists have labeled the “Great Replacement” is happening in France’s major cities, but it is also now in the countryside, where native Europeans are being replaced by non-Europeans at a rapid pace.

“This is in fact a fragmentation and yes, this risk does exist and in any case, I think the demographic change of Europe is extremely spectacular. The historical peoples in certain municipalities and regions are becoming a minority,” said influential French philosopher Alain Finkielkraut while discussing the Great Replacement on the Europe 1 channel in 2022.

“A whole part of French people now live not in the suburbs, but beyond the suburbs, because they are no longer the cultural reference they used to be, because all the butchers are, for example, Halal.”

In fact, the trend of the Great Replacement is so well recognized in France that a majority of French people, 61 percent, said in 2021 that they believe in the Great Replacement theory.

 

A Bloomberg report that workers on Chevron’s Gorgon and Wheatstone LNG projects have delayed strike action until Friday is being viewed as a sign talks are going well, as strikes were meant to begin Thursday. The positive conclusion to last week’s talks between Woodside and unions is another indication the worst-case scenario is unlikely.

The new deadline for industrial action at the Gorgon and Wheatstone plants is 6 a.m. local time Friday, a Chevron Australia spokesperson told Bloomberg. The unions previously threatened to start partial strikes on Sept. 7 and then escalate to full stoppages that would begin Sept. 14 and last two weeks.

“We will continue to work through the bargaining process as we seek outcomes that are in the interests of both employees and the company,” the company said in the statement. “We will also continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities.”

“It really is essential to explore all avenues to avoid industrial action,” said Richard Pratt, a consultant for Precision LNG. “Once strikes start, the parties are driven further apart so this is a welcome development.”

The two Australian LNG plants operated by Chevron made up about 7% of global LNG supply last year (see “Q&A On Australia’s LNG Strike Risks“). The extension of talks follows a compromise that another Australian exporter, Woodside Energy Group Ltd., reached with workers last month to prevent industrial action at its own plant.

Meanwhile, Bloomberg notes that the impact of any industrial action may be limited at first because demand is muted in Europe and Asia, but a prolonged disruption may have sparked a bidding war between the two regions for alternative cargoes in peak winter season.

The threat of strikes had roiled global gas markets since early August, when unions first voted for potential labor actions at the three plants. The European gas benchmark surged 40% at one point, highlighting the continent’s heavy dependence on LNG after the curtailment of Russian pipeline gas flows. Imports of LNG in Europe are recovering after a recent dip, helping offset reduced pipeline-gas flows from Norway amid maintenance there. Still, traders remain on high alert for any prolonged blips in supplies.

In immediate response, Dutch front-month futures, Europe’s gas benchmark, traded 10% lower at €30.90 a megawatt-hour…

… and with EU natural gas storage now above 93%, could fall further in the near-term unless the situation in Australia deteriorates.