Tag: Southeast Asia (page 1 of 2)

50,000 Evacuated From Bali As Nation Faces Imminent Volcanic Eruption

Authored by Mac Slavo via SHTFplan.com,

Fears of an imminent eruption on the Indonesian tourist island of Bali have led to the evacuation of an estimated 50,000 people.  

The Mount Agung volcano is going to erupt, scientists say.

Waskita Sutadewa, the spokesman for the disaster mitigation agency in Bali, said people have scattered to all corners of the island and some have crossed to the neighboring island of Lombok.

Indonesian authorities raised the volcano’s alert status to the highest level on Friday following a dramatic increase in seismic activity. It last erupted in 1963, killing about 1,100 people.

Villagers are staying in temporary camps, sports centers, village halls, or with friends and relatives. Some do return to the exclusion zone during the day to tend to their livestock or shift the animals to areas further from the volcano for their safety. Others say they are selling their cows because they don’t know when they’ll be able to return.

“It’s obviously an awful thing. We want to be out of here just to be safe,” said an Australian woman at Bali’s airport who identified herself as Miriam. National Disaster Mitigation Agency spokesman Sutopo Purwo Nugroho said hundreds of thousands of face masks will be distributed in Bali as part of government humanitarian assistance that includes thousands of mattresses and blankets. Indonesia is prone to seismic upheaval due to its location on the Pacific “Ring of Fire,” an arc of volcanoes and fault lines encircling the Pacific Basin.

Government volcanologist Surono, who uses one name, said the feared eruption could be huge and potentially also close airports in East Java and Lombok, according to local media reports. Agung is in the north of the island about 43 miles from the tourist hotspot of Kuta. People have been told to stay at least 6 miles from the crater, but to stay 7.5 miles away when to the north, northeast, southeast, and south-southwest.

Over the past 5,000 years, Agung has erupted once a century on average and about a quarter of its eruptions have been a similar or stronger strength than 1963. Macquarie University volcanologist Heather Handley said the eruptions in 1843 and 1963 had a Volcanic Explosivity Index of about 5 on a scale where 8 would be the strength of an ancient supervolcano eruption such as Yellowstone in the U.S. or Toba in Indonesia.

Although officials have said there is no immediate threat to tourists, a significant eruption would force the closure of Bali’s international airport, stranding thousands. The island is famous for its surfing, beaches and its elegant Hindu culture is still safe to visit. Bali’s Ngurah rai International Airport has been operating normally since the alert status for Mount Agung was raised to the highest level on Friday.

Nearly 5 million tourists visited Bali last year.

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Ethereum (ETHUSD) Testing 61.8% Fib Retrace of 2 Month Upchannel

Ethereum (ETHUSD) Weekly/Daily

Ethereum (ETHUSD) is falling more than 10% today as at the time of writing, after getting rejected Tuesday at the point ETHUSD broke below prior upchannel support (on the daily chart).  Upchannel support breaks tend to be followed by at least one attempt to break higher back into the upchannel, which offer a high probability short setup as these reclaims of prior upchannel support are often fleeting as seen with Tuesday’s rejection.  Further downside may be limited today though as the steeply downsloping daily RSI and Stochastics are deeply oversold, and may soon find a bounce.  ETHUSD is also testing the 61.8% Fib retrace of the 2 month long upchannel, suggesting potential near-term support in the next day or so.  Any bounce off the 61.8% Fib will be increasingly regarded as a dead cat bounce, likely not lasting more than several days into mid next week given the longer term bearish implication of the weekly RSI and Stochastics turning lower from overbought levels, and the weekly MACD negatively crossing.

ETHUSD (Ethereum) Weekly Technical Analysis

 

ETHUSD (Ethereum) Daily Technical Analysis

 

Bitcoin (BTCUSD) Weekly/Daily

Bitcoin (BTCUSD) is falling over 8% today as at the time of writing, after getting rejected Tuesday near the point BTCUSD broke below prior upchannel support (on the daily chart).  Upchannel support breaks (on daily charts) tend to be followed by at least one attempt over a span of days to break higher back into the upchannel.  These bounces tend to offer a high probability short setup as these reclaims of prior upchannel support are often fleeting as seen with Tuesday’s rejection.  Given the steeply downsloping daily RSI, Stochastics and MACD, there is still more downside pressure today, although with BTCUSD testing the 50% Fib retrace of the 2 month long upchannel, near-term support at this 50% Fib should not be ruled out for today or tomorrow.  Any bounce off the 50% Fib will be increasingly regarded as a dead cat bounce, and will likely be shortlived (not lasting more than several days into mid next week) given the longer term bearish implication of the fatigued weekly RSI and Stochastics turning lower from overbought levels, and weekly MACD poised to negatively cross.

 

BTCUSD (Bitcoin) Weekly Technical Analysis

 

BTCUSD (Bitcoin) Daily Technical Analysis

Click here for today’s technical analysis on GBPAUD

 Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and cryptocurrency markets can be analyzed to enhance trading performance. Tradable Patterns’ daily newsletter provides technical analysis on a subset of three CME/ICE/Eurex futures (commodities, equity indices, and interest rates), spot FX and cryptocurrency markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

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Myanmar’s Rohingya Crisis: George Soros, Oil, & Lessons For India

Authored by Shelley Kasli via GGINews.com,

"When George Soros comes to this or that country… he looks for religious, ethnic or social contradictions, chooses the model of action for one of these options or their combination and tries to 'warm them up'," Egorchenkov explained…

 The ongoing crisis in Myanmar including tensions between Buddhist and Muslim communities and the military crackdown by Myanmar Army and police seems to be a multidimensional crisis with major geopolitical players involved according to a report by Sputnik International.

As per the report Dmitry Mosyakov, director of the Centre for Southeast Asia, Australia and Oceania at the Institute of Oriental Studies of the Russian Academy of Sciences, told RT that the conflict “was apparently fanned by external global players” and “has at least three dimensions”.

First, this is a game against China, as China has very large investments in Arakan [Rakhine],” Mosyakov told RT.

 

“Second, it is aimed at fuelling Muslim extremism in Southeast Asia….

 

Third, it’s the attempt to sow discord within ASEAN [between Myanmar and Muslim-dominated Indonesia and Malaysia].”

The conflict is mostly concentrated in the country’s northwestern region in the Rakhine State which consists of vast reserves of hydrocarbons located offshore. This vast reserve of hydrocarbon is the major reason why external players are using the conflict to undermine Southeast Asian stability, according to Mosyakov.

“There’s a huge gas field named Than Shwe after the general who had long ruled Burma,” Mosyakov said.

In 2004 this massive Rakhine energy reserves were discovered and by 2013 China had connected Myanmar’s port of Kyaukphyu with the Chinese city of Kunming in Yunnan province with oil and natural gas pipelines. Through this oil pipeline China can bypass the world’s most congested shipping choke points – the Malacca Straits, while through the gas pipeline hydrocarbons from Myanmar’s offshore fields are transported to China.

The development of the Sino-Myanmar energy project coincided with the intensification of the Rohingya conflict in 2011-2012 when 120,000 asylum seekers left the country escaping the bloodshed.

Dmitry Egorchenkov, deputy director of the Institute for Strategic Studies and Prognosis at the Peoples’ Friendship University of Russia doesn’t believe that this is a coincidence. Although there are certain internal causes behind the Rohingya crisis, Dmitry believes that the crisis might be fueled by external players, most notably, George Soros.

By destabilizing Myanmar they could directly target China’s energy projects.

George Soros funded Burma Task Force has been actively operating in Myanmar since 2013 although Soros interference in Myanmar’s domestic affairs goes deeper than that.

In 2003, George Soros joined a US Task Force group aimed at increasing “US cooperation with other countries to bring about a long overdue political, economic and social transformation in Burma [Myanmar].”

A document published by the Council of Foreign Relation’s (CFR) in 2003 entitled “Burma: Time For Change,” states that “democracy… cannot survive in Burma without the help of the United States and the international community” and calls for an establishment of a group to implement the project.

“When George Soros comes to this or that country… he looks for religious, ethnic or social contradictions, chooses the model of action for one of these options or their combination and tries to ‘warm them up,'” Egorchenkov explained, speaking with RT.

According to Mosyakov, it is a globalist management policy to sow discord in nations by fuelling regional conflicts which allows them to exert pressure on those nations and ultimately gain control over their sovereignty. A recent example is the Ukrainian Crisis and the Greek Crisis before that. When the flames are out and the country ravaged with the crisis, it is time for the vultures to descend.

“BUY WHEN THERE IS BLOOD ON THE STREETS, EVEN IF THE BLOOD IS YOUR OWN”

 

– THESE ARE THE WORDS OF NATHAN MAYER ROTHSCHILD OF THE HOUSE OF ROTHSCHILD, ONE OF THE FAMILY BLOODLINES THAT CONTROLLED THE EAST INDIA COMPANIES.

What one should understand is that a crisis just doesn’t take a toll on the infrastructure and human lives but it also ruptures the economy and puts the country in huge debt. And it is through this debt that the global players dictate their terms to sovereign nations for decades or even centuries if there is no course correction. That is the reason why both Ukraine and Greece appointed Rothschild as their debt adviser to assist with their growing debt crisis.

Lesson for India

 

Even India is hunting for a solution to its Bad-Debt Crisis (read the corporate loans that state-owned banks wrote off, which were taken by arousing nationalistic sentiments in the media) which is a Rs 1.14 lakh crore (this is a conservative figure) scam as we explained in our special Demonetization issue War on Cash. However, a solution has already been prescribed by the deputy governor of Reserve Bank of India, Viral Acharya. His solution is to simple sell-off state owned units to foreign players bankrupted in the 2008 crisis. You can read all about it here – PARA – A New Central Bank For Strategic Sale Of India.

These Money Masters doesn’t lose anything in case the situation escalates and war erupts between China and Myanmar, infact they have everything to gain from it; just like they had everything to gain from the Russian-Ukrainian conflict. Educated folks call it Balance of Power. It is through this same strategy of Balance of Power that even the India-China conflict is being orchestrated. But we don’t have to rely on war to be in debt, our policy makers are already doing a good job at it. We are already in the midst of a major crisis, be it agriculture, economy, civil society and press or defense and security. This is the direction our policy makers have set for us, and it leads directly to destruction, unless we do a major course correction.

Could such a crisis be orchestrated in India?

This is the hypothetical question we raised after Liquor baron Vijay Mallya was allowed to flee India to take refuge in London. This was not the first time a person fleeing local law in foreign countries had taken shelter in London. Since decades, high-profile foreign offenders with considerable wealth have found refuge and a safe place to park their assets and enjoy a peaceful life in Britain.

Similar is the case of Russia. Immediately after the collapse of the Soviet Union large-scale privatization of state-owned assets was implemented. From Glasnost and Perestroika (liberalization and privatization or globalization) – the tools created by the East India Company for enslavement of their colonies (known at the time as Free Trade) emerged the Oligarchs – who amassed vast wealth by acquiring state assets very cheaply (or for free) during the privatization process.

After coming to power Vladimir Putin set about on a massive purging of these oligarchs from Russia, the power struggle that continues to this day. The most famous case is that of Mikhail Khodorkovsky. In 2003, Khodorkovsky was believed to be the wealthiest man in Russia (with a fortune estimated to be worth $15 billion) who accumulated considerable wealth through obtaining control of a series of Siberian oil fields unified under the name Yukos, one of the major companies to emerge from the privatization of state assets during the 1990s. Khodorkovsky was later backed up by Henry Kissinger, George Soros and Rothschilds as a candidate to run for a Presidential election against Putin as well as for an attempted revolution.

UK has been traditionally the largest sanctuary to not just money launderers and fraudsters but foreign terrorists and extremists as well. Everybody, who is somebody in the world of terrorism, has found a rear base in the UK.

There are as many as 131 pending pleas for extradition of wanted criminals from Britain by India alone.

Below are just some of the cases of individuals wanted in India and living in Britain:

  1. Vijay Mallya (financial offences)
  2. Lalit Modi (financial offences)
  3. Ravi Shankaran (accused in the Indian Navy war room leak case)
  4. Tiger Hanif (wanted in connection with two bomb attacks in Gujarat in 1993)
  5. Nadeem Saifi (music director accused and acquitted in the Gulshan Kumar murder)
  6. Raymond Varley (accused in child abuse cases in Goa)
  7. Lord Sudhir Choudhrie (one of India’s most notorious arms-dealers and Italian consortium’s middleman in Finmeccanica helicopter scandal)
  8. Several individuals related to the Khalistan movement
  9. Several individuals related to the LTTE
  10. Several individuals related to ISIS

Even MQM leader Altaf Hussein resides in London, under the protection of the British government, which has refused Pakistani government requests for his extradition to face trial for murder.

Last year, Khodorkovsky said Open Russia (a George Soros funded organisation) would provide logistical backing to 230 candidates running from various opposition parties or on independent tickets in September from the headquarters of his Open Russia foundation in London. With rise of Indian Oligarchs increasingly finding asylum in Britain, is it a far-fetched scenario for India as well when these Indian Oligarchs would be used for inciting revolution in India or even orchestrating elections – that is in case India goes for course correction?

Even so, there is a way to avert such a scenario as well as the impending crisis.

After Putin kicked them out of Russia the same Oligarchs setup shop in India under the same tried and tested ideology of enslavement – Glasnost and Perestroika (called in India as Liberalization and Privatization) during the 90s.

It is this group of Oligarchs or Robber Barons (as they are known in the United States of America) that is still operational in India.

What our intelligence agencies should be doing instead of spying on opposition political parties and depending on foreign agencies for information and direction is to track this shadow network and dismantle its grip on India as was done in America (the process that still continues to this day).

 

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Endless Regional Chaos: American Presence In Afghanistan Explained

Authored by Federico Pieraccini via The Strategic Culture Foundation,

The geographic location of Afghanistan has always occupied a central role in many geopolitical studies. Donald Trump’s reasons for reinforcing US troops in the region are driven by the continuing US need to prevent a complete Eurasian integration among regional powers.

The April peace talks between Afghanistan, India, Pakistan, Russia and China seemed to have put an end to the persistent and dominant American presence in the country. In Washington, following fifteen years of war and a series of failures, many had come to the conclusion that the time had come for the United States to return home.

Trump had throughout his electoral campaign criticized the foreign policy of his predecessors, giving the indication that he would be looking to leave Afghanistan once he assumed the presidency.

The road plan for Afghanistan laid out by the April peace talks seemed to offer the prospect of national reconciliation between the Taliban and the central authority in Kabul, assisted by parties with great interest in the country like India and Pakistan, given their geographic proximity, as well as Russia, China and Turkey.

The first talks in April 2017 capitalized on America's absence at the conference as well as on the will of the protagonists to reach an agreement after fifteen years of war and terror. Afghanistan is a key crossroad in the eastward expansion strategy that illustrates the special partnership between Russia and China, as seen with the steady progress of the Silk Road 2.0 initiative and the Eurasian Economic Union. Given Afghanistan’s geographic position, sharing boundaries with Pakistan, Turkmenistan, Iran, Tajikistan, Uzbekistan, it is useful to emphasize the role the country could play as a commercial and energy hub in the not too distant future.

Due to incompetence or perhaps due to facing insurmountable pressures, Donald Trump is undergoing a gradual and inexorable diminution with the elimination of all the most representative members of his administration. At the same time, the appointment of military personnel to civilian roles has pushed the administration into unexplored directions not foreshadowed in the electoral campaign. Trump spoke of less US military presence in the internal affairs of other nations. But as we shall see, nothing could be further from the truth.

The appointment of Generals McMaster, Kelly and Mattis (Mattis perhaps being the most powerful US defense secretary since the end of World War II) is Trump's attempt to withstand and bargain with the most significant elements of America’s deep state. A strong military component in the White House helps ensure continuity in US foreign policy. Contrary to what was professed during the elections, Donald Trump immediately traded American foreign policy in exchange for explicit GOP backing for key legislation that will help secure a 2020 re-election. Without bills on health, tax and immigration reform being passed, there will be no arguments in favor of the GOP and Trump during the midterm and presidential elections in 2018 and 2020 respectively.

The deep state in Washington has slowly but inexorably taken over Trump's presidency, a task made all the simpler by Trump’s character, which dismisses his lack of experience with an overweening self-confidence. The military component of the deep state, in concert with GOP leaders, took less than six months to quash Trump's electoral promises and turn the president’s foreign policy into a dangerous reprise of the Obama and Bush years.

More and more frequently, American intervention in foreign lands lead to situations of uncontrollable chaos, with no real central authority able to govern and obey Washington’s orders. The current state of the Middle East is reflective of this. In Afghanistan, Washington, especially Mattis, is cognizant of the country's rebirth under Sino-Russian leadership after fifteen years of America’s presence. This is a scenario that the US deep state is not willing to tolerate.

Leaving aside Afghanistan’s huge amounts of natural resources (about one trillion in precious metals), as well as its strategic location linking east and west, a peaceful Afghanistan led by a single central authority would hardly cohere with US objectives in the country. The US loves to consider itself the indispensable nation for peace in Afghanistan, when actually it is the main obstacle to peace.

For American foreign policy continuity, Afghanistan needs to remain in a chaotic situation. Above all, the US military industrial complex is not willing to surrender its political and military power in the country, only to be substituted by Moscow or Beijing. With these unofficial motives, General Mattis announced a surge of several thousand American troops to the country. It is immediately clear that numerically and tactically, four or five thousand soldiers will make no difference. The intent is purely demonstrative, as seen in Syria with a few missiles lobbed at an empty airbase. The purpose is to send a clear and unambiguous message to Russia, China, Pakistan and even India, to the effect that without American consensus, no strategic reorganization is permissible in Afghanistan.

General Mattis and all those who for decades have been constantly thinking of MacKinder's geopolitical theory (Heartland Theory) are aware of the strategic importance of keeping Afghanistan hostile towards regional powers like China and Russia. The USSR's war in defense of the country, and the socialist superpower’s subsequent collapse, offers a historical warning.

In April, Moscow and Beijing, with the tacit approval of New Delhi and Islamabad, launched a peace process in Kabul that should have facilitated talks between the central authority and the Taliban to bring about a truce that would bring to an end the violence and destruction that had over fifteen years left the country bleeding in endless poverty and suffering.

The American surge will not advance American interests in the country. It will not change the delicate balance negotiated between the parties back in April. It will not affect the efforts of Moscow and Beijing to stabilize the country. It will only buy Washington more time by bombing and killing civilians, always viewed by American generals as an acceptable and privileged option available to them.

Like in other parts of the world, the presence of American troops does not fully explain the long-term goals of military planners. Afghanistan in some respects resembles a similar situation to Southeast Asia. In South Korea, the American presence has persisted since 1950, and with it the destabilization of the Korean peninsula. As in Asia, the central purpose of the American presence in Afghanistan is to occupy geo-strategic zones in order to prevent Eurasian integration between powers like India, China and Russia. Secondly, it is the constant presence of troops and military bases in locations close to or around the two major powers of China and Russia that aims to overburden and thereby diminish the defensive capabilities of these two strategic threats. In 1962, when the USSR did something similar in response to the US deployment of patriot missiles in Turkey, it started building up its offensive capability in the Western Hemisphere using Cuba as a military base. The US was willing to go to war to halt this domestic threat and for weeks the world was on the verge of a nuclear conflict. Only dialogue between American and Soviet leaders averted this threat to human existence.

Conclusions

Washington cares for nothing other than its own interests. But twenty-five years after the end of the Cold War, the world is changing, and more and more fruitful efforts to replace the chaos wrought by US policies can be seen with peaceful, mutually beneficial cooperation increasingly being the order of the day. The road to economic prosperity and a re-established unity among the Afghan people is still a work in progress, but once the country manages to establish its independence, Washington will have a hard time dictating conditions. Countries like Russia, China and India have every intention of using diplomacy and peacekeeping to prevent a dangerous escalation in Afghanistan.

India and China have some divergence over the future of the region, but by the start of the 2017 BRICS conference, they had already resolved a border dispute that lasted over two months. The ability to create diverse organizations like BRICS, AIIB and SCO provides the opportunity to begin any kind of negotiation with a legal and economic foundation. This represents a commendable example of overcoming differences through diplomacy and economic benefits.

While the United States exhales the last breaths as a declining global power, no longer able to impose its will, it lashes out in pointless acts like lobbing 60 cruise missiles at Syria or sending 4000 troops to Afghanistan. Such acts do not change anything on the ground or modify the balance of forces in Washington’s favor. They do, however, have a strong impact on further reducing whatever confidence remains in the US, closing the door to opportunities for dialogue and cooperation that may otherwise have offered themselves.

Trump promised isolationism. His generals, behind the scenes, have managed to make this electoral promise come true, leaving Washington alone in the international arena in the near term.

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Ethereum (ETHUSD) Island Reversal Forming in Weekly Chart

Ethereum (ETHUSD) Weekly/Daily

Ethereum (ETHUSD) is forming its 1st red weekly candle in 6 weeks as profittaking kicks in after ETHUSD briefly tested the psychologically key 400 whole figure resistance level. With the current red weekly candle quickly lengthening reversing most gains over the last 2 weeks, a bearish Island Reversal is forming. Significantly, ETHUSD is arguably breaking upchannel support (on the weekly and daily chart). The daily chart provides a clearer set of warnings for bulls with the RSI, Stochastics and MACD decisively sliding lower. Nevertheless, with the weekly MACD red line still flattish and yet to turn down, bears may soon lock in profits and trigger a short-covering rally at some point in the next day or so.  Any bounce will be short-lived with longer term bears having gotten the upper hand with today’s weekly/daily chart upchannel support break.

ETHUSD (Ethereum) Weekly Technical Analysis

 

ETHUSD (Ethereum) Daily Technical Analysis

 

 

Bitcoin (BTCUSD) Weekly/Daily

 

Bitcoin (BTCUSD) is forming its 1st red weekly candle in 6 weeks as profittaking kicks in after BTCUSD briefly tested the psychologically key 5000 whole figure resistance level. While the red weekly candle is still just beginning to form, and far from being bearish just yet (given its small body so far), the technicals on BTCUSD can rapidly change within a day given its volatility. Although the daily chart is appearing bearish with the RSI, Stochastics and MACD tiring, the weekly MACD continues sloping up suggesting there may be a bit more upside in the next day or so before the bulls throw in the towel and bears become more aggressive. Significantly, BTCUSD is testing upchannel support (on the weekly and daily chart), and has a high likelihood of breaking upchannel support based on Ethereum (ETHUSD)’s break today of a similar upchannel support on its weekly/daily chart.

BTCUSD (Bitcoin) Weekly Technical Analysis

 

BTCUSD (Bitcoin) Daily Technical Analysis

Click here for today’s technical analysis on USDJPY

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and cryptocurrency markets can be analyzed to enhance trading performance. Tradable Patterns’ daily newsletter provides technical analysis on a subset of three CME/ICE/Eurex futures (commodities, equity indices, and interest rates), spot FX and cryptocurrency markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

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World Stocks Rebound, Dollar Rises As Korea Nuclear War Fears Recede

S&P futures are higher in early Wednesday trading, alongside Asian stocks and European bourses, both solidly in the green as the EURUSD drifts below the 1.20 “redline” while the dollar rebounds off a two and a half year low following the US “measured” response to North Korea’s missile test, which soothed jittery investors who now turn their focus to US economic data. Equity indexes in Japan, Hong Kong and South Korea also rose while 10Y US Treasuries are steady before the release of ADP employment and GDP data, both of which are expected to show an increase. The VIX is down fractionally to 11.60.

European stocks rose higher, tracking counterparts in Asia and the United States and reversing losses from the day before when investors were spooked by Pyongyang’s firing of a ballistic missile over Japan. Fears that this could trigger an aggressive response receded on Wednesday after the United Nations – in a statement drafted by the United States – condemned North Korea’s latest missile launch but held back any threat of new sanctions.

Trump, who previously vowed not to let North Korea develop nuclear missiles that can hit the mainland United States, said the world had received North Korea’s latest message “loud and clear”.

“Instead of the (U.S.) President responding to the escalation via Twitter, as has happened on many recent occasions, the White House issued an official statement to condemn the action,” said IronFX analyst Charalambos Pissouros. “This may have been interpreted by investors as a sign that the US will approach the situation in a more measured and diplomatic manner, as opposed to raining down ’fire and fury’.” North Korean media reports on the launch also lacked their usual claims of technical advances, indicating the test may not have succeeded as planned.

Boosted by this optimism from Trump’s response, European markets rebounded after yesterday’s U.S.-led unwind of the North Korea related risk-off move. DXY holds at overnight strongest levels; AUD marginally outperforms after solid construction data; USD/JPY briefly traded above 110.00 through the European open which also provides a lift to U.S. equity futures.

In Europe, the pan-European STOXX 600 gained 0.5%, recovering nearly all the ground lost in the previous session and banking stocks – which had led the risk-averse move lower on Tuesday – were up nearly 1 percent, while the utilities sector lags after France warns on eventual closure of nuclear plants. European strength emerged after the stronger dollar pushed the EURUSD off the 1.20 ledg, trading below 1.950 last. The U.K.’s FTSE 100 Index increased 0.2%. Germany’s DAX Index rose 0.4 percent, the largest advance in more than a week.

European upside followed gains in Asia, where MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6% while Japan’s Nikkei rose 0.7%. The Hang Seng Index rose 1.2%, closing above 28,000 for the first time in two years as concern over North Korea tensions waned and China Shenhua Energy led power producers higher, while banks rose ahead of earnings results.  The Shanghai Composite Index fluctuated before edging lower. The MSCI Asia Pacific Index rose 0.2 percent.

The Chinese currency extended a surge that made it Asia’s best performer this month, rising to its highest level since June 2016 amid a weak dollar, following 11 consecutive days of increases in the offshore CNH. The CNY strengthens 0.05% to 6.5923 per dollar as of late afternoon trading in Shanghai in fourth day of gains; the currency has climbed 2.1% this month. On Wednesday, the PBOC strengthened the yuan reference rate for the third day, raising it by 0.29% to 6.6102, meanwhile the Bloomberg replica of CFETS index, which tracks the yuan against 24 currencies, climbed 0.37% to 94.0325, highest since Aug. 11

Meanwhile, Bund futures edged higher as German regional CPIs indicated a national reading broadly in-line with consensus, German and U.K. curves slightly steeper.  Euro zone government bond yields, which fell to fresh lows on Tuesday, edged up on Wednesday as forecast-beating inflation in Spain was expected to be followed by similar data in Germany, defying the euro’s recent strength. The yield on 10-year Treasuries climbed less than one basis point to 2.13%. Germany’s 10-year Bunds increased one basis point to 0.35%, while Britain’s 10-year yield gained two basis points to 1.019%, the largest advance in more than a week.

In commodities, gasoline hit a two-year high, rallying another 2.8%, after Hurricane Harvey shut down nearly a fifth of U.S refining capacity, and more closures are expected.

However, the rising crude inventories as a result of refinery shutdowns, weighed on oil prices. U.S. crude futures fell 0.6 percent to $46.17 a barrel, after touching a five-week low on Tuesday. Brent slipped 0.6 percent to $51.67. Spot gold edged marginally lower to $1,309.39 an ounce on Wednesday. On Tuesday, the precious metal jumped to its highest since Trump was elected U.S. president.

Economic data include second print on GDP growth, weekly MBA mortgage applications and August ADP employment. Analog Devices Inc. and Workday Inc. are among companies reporting earnings.

Bulletin Healine Summary from RanSquawk

  • European equities enter the North American crossover higher as markets look through some of the recent NKrelated
    tensions
  • USD is trading at better levels against its major counterparts to pare yesterday’s declines. USD/JPY briefly back above
    110.0, although under now
  • Looking ahead, highlights include national German CPI, US ADP, PCE, DoEs and Fed’s Powell

Market Snapshot

  • S&P 500 futures up 0.1% to 2,450.50
  • VIX -0.10 or -0.85%, to 11.60
  • STOXX Europe 600 up 0.5% to 370.15
  • MSCI Asia up 0.2% to 160.47
  • MSCI Asia ex Japan up 0.6% to 531.87
  • Nikkei up 0.7% to 19,506.54
  • Topix up 0.6% to 1,607.65
  • Hang Seng Index up 1.2% to 28,094.61
  • Shanghai Composite down 0.05% to 3,363.63
  • Sensex up 0.9% to 31,681.89
  • Australia S&P/ASX 200 up 0.01% to 5,669.72
  • Kospi up 0.3% to 2,372.29
  • German 10Y yield rose 1.3 bps to 0.355%
  • Euro down 0.2% to $1.1944
  • Brent Futures down 0.9% to $51.56/bbl
  • US 10Y yield rose 2bp to 2.13%
  • Italian 10Y yield fell 1.6 bps to 1.774%
  • Spanish 10Y yield rose 1.7 bps to 1.579%
  • Brent Futures down 1.1% to $51.41/bbl
  • Gold spot up 0.2% to $1,311.67
  • U.S. Dollar Index up 0.3% to 92.51

Top Overnight News

  • Euro-area economic confidence rose to the highest level in a decade as European Central Bank policy makers prepare for a discussion next week about whether and how to pare back stimulus
  • With floodwaters still rising and damage estimates piling up, analysts expect just a modest dent in the U.S. economy from Hurricane Harvey this quarter, with reconstruction efforts likely to be substantial enough to boost growth later this year
  • North Korea’s Kim says IRBM firing is ’prelude’ to containing Guam; Yonhap says possibility that North Korea launches missile into the Pacific Ocean to show off ability to strike U.S. mainland cannot be excluded
  • On Tuesday morning, disaster analyst Chuck Watson had pegged $42 billion as a reasonable estimate for the cost of destruction Tropical Storm Harvey would leave in its wake. By the end of the day, he’d added another $10 billion
  • With floodwaters still rising and damage estimates piling up, analysts expect just a modest dent in the U.S. economy from Hurricane Harvey this quarter, with reconstruction efforts likely to be substantial enough to boost growth later this year
  • Fed policy makers hoping for a pick-up in inflation in the coming months may end up being frustrated by a quirk in the price data
  • Resilient economic growth and a government campaign against excessive leverage are helping China’s largest banks, curbing their bad loans and underpinning their net interest margins
  • Euro-area economic confidence rose to the highest level in a decade as European Central Bank policy makers prepare for a discussion next week about whether and how to pare back stimulus
  • Banks have a challenge when Congress returns from summer recess next week. His name is John Neely Kennedy. The freshman Republican senator from Louisiana is one of a handful of lawmakers who could squash the finance industry’s dream of tweaking a key Consumer Financial Protection Bureau regulation
  • Toyota Tsusho Corp., the automaker’s trading arm, will invest an undisclosed amount in Grab, Southeast Asia’s leading ride-hailing operator
  • German Aug. Regional CPIs y/y (National est. 1.8%): Saxony 1.9%; Brandenburg 1.8%; Hesse 1.8%; Bavaria 1.8%; NRW 1.9%
  • U.K. PM May: no Brexit deal is still better than a bad deal; wants a smooth Brexit and implementation period
  • ‘Apocalyptic’ Flooding Has Harvey Damages Rising by the Hour
  • Kim Says Missile Over Japan Was ‘Prelude’ to Containing Guam
  • Latest North Korea Missile Launch Spurred White House Game Plan
  • United Technologies Nears $20 Billion Rockwell Deal, WSJ Says
  • Uber Draws Justice Department Inquiry Over Foreign Payments
  • Uber CEO Pick Embraces Job as ‘Opportunity of a Lifetime’
  • RBNZ’s Wheeler says lower NZD needed; scope for easing if growth slows
  • Amazon, Microsoft to Enable Alexa, Cortana to Communicate: NYT
  • China Regulator Is Said to Review Antitrust Complaint on Apple
  • Tillerson to Meet With Heads of Delta, United, American: State
  • Goldman to Detail Bond-Trading Unit Strategy in Sept.: Reuters
  • Equipment Rentals Are Unlikely to Rise From Harvey: Wells Fargo

Asia equities traded mostly positive as the region followed suit from the improvement in sentiment seen in US, where
markets ignored the geopolitical concerns and bought the dip. This saw a rebound in Asia stocks with Nikkei 225 (+0.7%)
underpinned as the USD/JPY-risk relationship took full effect and with better than expected Retail Sales adding to the optimism.
ASX 200 (flat) lagged and was negative for most of the day as continued weakness in financials and hefty losses in telecoms
dragged, with Telstra the worst performer as it traded ex-dividend and after the NBN rejected Co.’s monetisation plan. Elsewhere,
Shanghai Comp. (flat) and Hang Seng (+1.2%) benefited from the increased risk appetite and after a firmer liquidity operation by
the PBoC, although gains in the mainland were later pared amid weakness in Chinese commodity prices. Finally, 10yr JGBs were
lower amid flows into riskier assets, while a lukewarm BoJ Rinban announcement also failed to spur demand.

Top Asian News

  • China’s $2 Trillion of Shadow Lending Throws Focus on Rust Belt
  • Japan Stocks to Watch: Fujifilm, Mitsubishi Motors, Nitto Denko
  • Foreign Banks Chase Panda Bond Deals as Chinese Market Grows
  • Rio Tinto Weighs ‘Stay-or-Go’ Call on Indonesia’s Grasberg
  • Yuan Strength Helps Chinese Airlines Soar Amid Mixed Earnings
  • Japan Stocks Blasé After North Korean Missile Launches This Year
  • M&S in Talks to Sell Hong Kong, Macau Units to Al- Futtaim
  • Hong Kong’s H-Share Index Trailing in Hang Seng’s Wake
  • India Dodgy Contracts Record Risks Turning Away Investors

Modest relief bounce in European equities (Eurostoxx 50 +0.4%) this morning following yesterday’s fall to 6-month lows with all
sectors (with the exception of utilities) trading in positive territory. Jitters regarding North Korea are somewhat dissipating slightly.
EGB yields ticking higher this morning amid the reversal in price action across equity markets, while slight
underperformance has been observed in the belly of the curve with the 10Y yield tracking higher by 2.1bps. Peripheral spreads vs
Germany are slightly narrower today with the German/Portuguese spread tighter by 0.3bps. Supply from Italy was relatively well
absorbed by the market.

Top European News

  • U.K. Asked EU for More Time to Talk Brexit as Reality Sinks in
  • Cryptocurrencies Are New Barbarians at the Gate of Central Banks
  • Russia Readies Emergency Loans to Contain Bank Otkritie Crisis
  • U.K. Consumer Borrowing Cools Slightly as Business Loans Jump
  • Ocado Rises as Citi Sees Amazon-Whole Foods Piquing Interest
  • Siemens Extends Push Into Driverless Cars With TASS Acquisition
  • NordLB First Half Net Interest Income EU731 Mln
  • Fortum May Be Eyeing PVO or Uniper Acquisition, Nordea Says

In currencies, USD trading at better levels against its major counterparts to pare yesterday’s declines. USD/JPY back above 110.00 amid the
slight improvement in risk sentiment, next resistance in the pair resides around 110.35-40.
EUR is lower this morning, albeit mildly so, despite the first of the regional German CPI data (Saxony) showing an increase in Y/Y
inflation, which is also above analyst estimates for the national figure. As such, a continuation of this trend among other regions
could see EUR better supported throughout the session. Slight profit taking has been seen in EUR after yesterday hitting a new 2
and a half year high at 1.2070.
AUD: Main mover overnight had been the AUD, which approached 0.80 having reached a high of 0.7995. This followed some
relatively strong data in the form of building and construction data, while gains against the JPY and NZD further underpinned AUD.
AUD/NZD briefly broke above 1.10 before running into resistance at the YTD high of 1.1020.

In commodities, crude oil prices continuing to feel the pressure from Hurricane Harvey with a 5th of US refining capacity now shut and as
such, likely to reduce demand from refineries. Gasoline however, has hit two year highs given the risk of fuel shortages. Of
note, last night’s API report showed a drawdown of 5.7mln in US crude. Elsewhere, gold has faced some selling pressure amid the
resurgence of the USD and mild reprieve in NK-related tensions. Chinese iron ore prices were also seen lower overnight in a pullback
from some of the recent sharp gains.
Libya’s NOC says 360kbpd of crude production shutdown by pipeline blockades that have closed 3 fields. US API weekly crude stocks (21 Aug, w/e) -5780K (Prev. -3595K). Valero Port Arthur refinery is shutting large crude unit and gasoline unit, due to Harvey. Motiva states that although weather conditions continue to deteriorate, Port Arthur refinery remains stable at 40% of capacity.

Looking at the day ahead, US’s ADP employment change for August (185k expected) will be worth watching in the context of Friday’s payrolls while the second readings for 2Q GDP (2.7% expected) and core PCE are due. Away from the data, the Fed’s Powell will speak today.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior -0.5%
  • 8:15am: ADP Employment Change, est. 185,000, prior 178,000
  • 8:30am: GDP Annualized QoQ, est. 2.7%, prior 2.6%
  • 8:30am: Personal Consumption, est. 3.0%, prior 2.8%
  • 8:30am: GDP Price Index, est. 1.0%, prior 1.0%
  • 8:30am: Core PCE QoQ, est. 0.9%, prior 0.9%

DB’s Jim Reid concludes the overnight wrap

With geopolitics back in the spotlight and markets somewhat treading on eggshells again the most eye-catching move for us yesterday was seeing Treasury yields dart back below their pre-Sintra levels. Indeed at one stage 10y Treasuries touched as low as 2.084% yesterday morning before ending last night a bit higher at 2.129%. On an intraday basis the low for the year had been 2.101% back in the middle of June before the coordinated hawkish message in Portugal later that month. 10y Bunds (-3.4bps to 0.338%) are now also less than 10bps away from their pre-Sintra levels after topping out at 0.597% just over a month ago. Benchmark OATs are also within 6bps of their YTD lows while bond markets in the Netherlands and the UK are also near their lows.

A decent run for DM bond markets then which is noticeable when you consider that global growth signals (recent PMIs) have been robust, commodity prices ex oil are either at or around YTD highs for the most part and the expectation is still that the ECB is likely to signal a tapering this autumn and the Fed might still hike again in December (albeit with market pricing down to just 30% based on Bloomberg’s calculator). All these factors have been put to one side however as politics has taken center stage through the northern hemisphere summer. Concerns firstly about President Trump’s political agenda and more recently the debt ceiling and now the latest North Korea developments have certainly all played a role in the recent moves. Regarding the latter, the response by President Trump yesterday to North Korea firing a missile over Japan was to say that “all options are on the table” for a response while North Korea’s Kim Jong Un has said overnight that the missile test was a “meaningful prelude to containing Guam” according to North Korean state media.

The response from markets meanwhile has actually been more of a tale of two halves. The initial reaction was to see safe havens rally and European equities selloff. Indeed the Stoxx 600 ended -1.04% although in fairness that wasn’t helped by another strong session for the Euro which smashed through 1.200 versus the Dollar before softening a bit into the evening to close at 1.1972 (-0.06%). After the S&P 500 initially opened -0.66% the tone swiftly reversed with the view that the response from world leaders was fairly measured and further escalation was unlikely. The S&P closed +0.08% by the end of play with losses for banks and Best Buy (-12% post results) offset by gains from the industrials and tech sectors. The VIX, which topped out at 14.34 intraday and the highest in over a week, finished up ‘just’ +3.36% at 11.70 and well below  the two peaks of earlier this month (15.55 and 15.51). Other safe havens yesterday pared gains with Gold down -0.07% after being up +1.20% and the Swiss Franc +0.05% after being up +1.32%.

This morning in Asia markets have broadly followed the US lead and are trading higher, with the Kospi (+0.08%), Nikkei (+0.58%) and Hang Seng (+0.75%) all firmer, while only the ASX 200 (-0.20%) is struggling for traction. The Korean Won is also +0.40% this morning while US equity futures are pointing towards a positive start. The other notable mover is US gasoline prices which having rallied over +4% yesterday are up another +3.21% this morning in the wake of Tropical Storm Harvey.

Moving on. One thing worth highlighting this morning is a Politico story which ran last night suggesting that Trump will today launch a “major push for a sweeping tax overhaul” at a speech in Missouri. The article suggests that the speech is to be focused on the US corporate system and making it more competitive on a global scale, as well as wiping out deductions that benefit higher-income tax payers. So we’ll see what that has in store.

Jumping to the latest on Brexit now where there are only two more rounds of talks penciled in before an EU summit and things do not appear to be going smoothly based on the reports that have emerged. The UK has reportedly asked for more negotiating time with the EU to pick up the pace, but the EU first wants to settle the terms of the split, particularly the financial settlement and seems happy to shift to more talks in December. To put it into context, European Commission President Juncker said “I’ve read all (UK government’s) position papers and none of them is satisfactory”. A spokesman for UK PM Theresa May said “we believe we’re in a good position and we would like to move on to discuss our future relationship”.

Staying in Europe, German Chancellor Angela Merkel spoke at her annual summer press conference and covered a range of topics. On the rising Euro, Merkel highlighted that it is almost certain to have an impact on exports, but the trade surplus is the result of solid demand for German products and “does not view the trade surplus as so dramatic”. Elsewhere, Merkel noted that she “doesn’t have anything against the concept of an EU finance minister”, but “you just have to work out what he/she could do and we’re not at that point yet in our talks with France”.

Across the pond the Treasury’s four week $25bn bill sale went smoothly yesterday at a yield of 0.960% and achieved the highest bid-to-cover ratio since the 7th March auction. The notes mature just before the US potentially facing a funding shortfall if the debt ceiling was not raised.

Wrapping up yesterday’s macro data in the US which was largely in-line to slightly firmer than expected. The August Conference Board consumer confidence index was up 2.9pts to 122.9 (vs 120.7), which is the highest reading since December 2000 (excluding March this year) and could have been stronger if factoring in the small downward revision to the prior reading. Elsewhere, the June Case-Shiller house price index was broadly in line at 0.11% mom (vs 0.10% expected) and 5.65% yoy (vs 5.60% expected).

Over inFrance, 2Q GDP was in line at 0.5% qoq, but revisions nudged the annual growth rate down slightly to 1.7% yoy (vs 1.8%). Consumer spending for July was in line at 0.7% mom, lifting the annual growth rate to 2.1% yoy (vs 1.8%), which is the highest reading for this year. InGermany, the consumer confidence index was slightly ahead of expectations at 10.9 (vs 10.8), which marks a fresh 16-year high. In the UK, the August Nationwide house price index was slightly lower than expected at -0.1% mom (vs 0% expected) and 2.1% yoy (vs 2.5%).

Before we look at the day ahead, a quick mention that on credit derivatives, Michal in our team published a report “iTraxx Main: Buy the 3s5s10s Fly” yesterday. He fleshes out his latest views on CDS index curves and provides a detailed analysis of the trade, including recent regulatory developments that should support its performance. You should find the note in your inbox or email Michal.Jezek@db.com for a copy if not.

Looking at the day ahead,Germany’s preliminary inflation readings for August (0.1% mom and 1.8% yoy expected) and Italy’s July PPI data are due. In the UK, the July mortgage approvals and data on money supply as well as net credit lending are also due. Elsewhere, the Eurozone’s August confidence indicators for business, consumer and the economy are also due. Across the pond, US’s ADP employment change for August (185k expected) will be worth watching in the context of Friday’s payrolls while the second readings for 2Q GDP (2.7% expected) and core PCE are due. Away from the data, the Fed’s Powell will speak today.

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Philippines’ Duterte To Police After Teen Killed: “You Are Free To Kill Idiots”

Though recent polls suggest broad public support in the Philippines for President Rodrigo Duterte's controversial war on drugs, the recent death of a 17-year-old boy in what appears to be an execution style killing by police, has resulted in mass public backlash and has dominated headlines since the boy's August 16th death. But in typical Duterte style, instead of dialing down his rhetoric he went off script Monday while delivering a prepared speech and addressed police across the nation with the directive, "you are free to kill idiots."

The inflammatory words came just two days after the funeral-turned-protest of 17-year-old Kian Delos Santos, who was laid to rest in a Manila cemetery Saturday. The funeral procession quickly became one of the largest protests to date against Duterte's drug war, as it was joined by thousands expressing anger at what is widely perceived as a national police force run wild which kills innocents with impunity while targeting poorer neighborhoods.


17-year-old Kian Delos Santos. Image source: Facebook

Such domestic opposition had been largely muted until the Delos Santos case. Released CCTV footage now featured frequently in national TV broadcasts is likely what has galvanized people to take to the streets after particularly bloody summer. According to reports, the police say they have killed 3,500 people in anti-drug operations, though many others have died in mysterious circumstances, including in some cases children caught in the cross-fire.

According to Reuters, the circumstances of the Delos Santos killing were particular heinous:

Delos Santos was dragged by plain-clothes policemen to a dark, trash-filled alley in Manila before he was shot in the head and left next to a pigsty, according to witnesses whose accounts appeared to be backed up by CCTV footage.

 

Police say they acted in self defense after delos Santos opened fire on them, and Duterte’s spokesman and the justice minister have described the killing of the teenager as an “isolated” case.

Philippine broadcast featuring the CCTV footage purporting to show high school student Kian Delos Santos escorted by police shortly before his death, which begins at the :30 mark.

While Duterte appeared to feel the increased political pressure of late, telling police last Wednesday that they should only kill in self-defense and that he would not protect those found guilty of killing unarmed suspects, his off the cuff words Monday are sure to inflame tensions further, especially his use of the word 'idiots'. He told police what he described as an "order" that:

"Your duty requires you to overcome the resistance of the person you are arresting. If he resists, and it is a violent one, you are free to kill the idiots. That is my order to you."

Duterte has been in office for 14 months and his iron fisted anti-drugs campaign has continued strong and is generally backed by a Philippine public weary of criminals running the streets and a slow moving judicial system. But the Delos Santos killing is the first major incident pitting the official police narrative against video footage, which appears to show the unarmed teen being escorted to his death. 

Delos Santos was reportedly found with a gun in his left hand, but his family testified that he is right-handed and has no involvement with drugs. Three police officers admit to being the officers shown on the CCTV tape, but that the suspect they were escorting was not Delos Santos. The Philippine justice department is currently investigating the killing.

But critics are now seizing the opportunity to highlight police brutality. The Delos Santos killing came amidst a week of intensified raids which authorities called "One Time, Big Time", which reportedly had Duterte's wholehearted support. The operation targeted a particular drug infested district.

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Embracing A Multipolar World Order: How Rodrigo Duterte Is Revolutionizing The Philippines

Authored by Federico Pieraccini via The Stratgaic Culture Foundation,

In a new global environment, centered on a multipolar world order, the Philippines offers a unique perspective for understanding the changes occurring in international relations.

With the victory of Rodrigo Duterte in May 2016, many anticipated a major change in Manila's relations with such countries as the United States and China. The Philippines has always enjoyed a privileged role in the containment strategy directed by Washington against the People's Republic of China. Since the very beginning of Duterte’s presidency, and especially during Obama's final months in office, Duterte displayed his disappointment with the United States’ use of the Philippines as a bulwark against Chinese expansion in the region. Such a role is something that a pragmatic leader like Duterte, with the interests of his nation at heart, would never accept to adopt.

Duterte’s first diplomatic visits and statements confirmed this direction, with blunt words confirming his intentions to widen cooperation and alliances with the major countries of China and Russia, as demonstrated during Duterte's visit to Beijing and Moscow.

In the months that followed, with Trump as the new occupant of the White House, Duterte greatly softened his rhetoric and moves against the United States, sensing some sort of natural affinity with Trump. Although Duterte has repeatedly shown an aversion to the imperialist policies of the American colonial masters, he seems to have a high regard for strongmen like Putin, Xi and, of course, Donald Trump, among whose company he includes himself.

Trump's victory in the 2016 election has created a common ground with Duterte: both oppose their internal establishment and have a tough way of getting along with their political enemies. Besides this, Trump is much less interested in pursuing Obama's 'Asian Pivot', a policy based on the containment of China through economic and military pressure from US allies in the region like the Philippines. Trumps looks more interested in using existing trade between the US and China as a means of harassing Beijing.

One of the main events that appears to have shaken the Duterte presidency, in addition to the internal political struggles and pressure from opposing political parties, is the terrorist attacks and clashes with Daesh in the city of Marawi on the island of Mindanao. What was meant to be a rapid operation to liberate the city from Daesh is turning out to be an urban counter-guerrilla operation with an unknown end date.

With internal pressure building up against Duterte, both from within his party and from the opposition, stemming from the difficult relationship with Washington, the North Korean crisis seems like the perfect opportunity to ease relations with Washington and seize the opportunity to silence his domestic critics.

Manila, being marginally involved in this crisis, has allowed Duterte, showing brilliant intuition, to seize this opportunity to criticize Kim Jong-un (without risking a worsening of the overall situation with the DPRK), openly supporting Donald Trump's policy as well as Beijing's diplomatic efforts. It is a win-win situation for Duterte, at once placating internal critics, following Beijing's lead, and giving credit to Trump.

Duterte seems to have realized that rather than a firm stance against Washington, a disinterested dialogue may be the best option for alleviating internal criticism by US-influenced lobbies within the Philippine establishment.

The good news for Trump's strategic planners ends here.

In addition to purchases of arms from Russia, still unclear in terms of quantity but certainly imminent, Manila and Beijing have begun a slow but inexorable rapprochement. In recent months, the discussions surrounding the Scarborough Shoal have progressed from rhetoric involving threats to cooperation and dialogue. The situation has shifted from a possible war to a major agreement summed up by the Foreign Minister of Manila, Delfin Lorenzana, thusly: «The Chinese will not occupy new features in the South China Sea nor will they build structures in Scarborough Shoal».

This statement, agreed on with Beijing, is the basis of a new conception of the multipolar world order that heavily relies on a respect for international relations. Fair negotiations grounded on common interests shared by all parties involved are what unite different countries. It represents a striking difference to the old unipolar world order where military force and power is imposed by Washington on practically every other state. Manila has every interest in developing a new and fruitful dialogue with Beijing, hoping to solve all controversies related to contested areas. The impetus for such talks seems to be economic.

The areas disputed by China and the Philippines in the South China Sea, besides being important for geostrategic reasons, contain considerable reserves of natural resources. What appears to be on the cards is an agreement between Manila and the Philippines to jointly explore territories that are undisputed by the Philippine oil and gas firm PXP Energy Corp and the China National Offshore Oil Corp. Revenues are to be divided to the effect of «60% to Manila and 40% to Beijing in any areas under the control of the Philippines authorities.”

This clarification from Alan Peter Cayetano, Secretary of Foreign Affairs, seems to have every intention of preventing internal criticism coming from politicians and entrepreneurs opposed to any collaboration or de-escalation with Beijing. Critics are using harsh rhetoric, as seen with minority lawmakers Gary Alejano and Edcel Lagman, who are opposed to the energy plan, saying it would be illegal: «This is contrary to our Constitution because these areas should be exclusively for the Filipinos,» Lagman said.

Despite the misgivings of Duterte's opponents, joint explorations are a starting point for re-establishing relations between the two countries, and seem to be a sensible choice with potential economic benefits for both countries. As explained by an administration official who prefers to remain anonymous: «What we are looking at is a deal that will first cover exploration activities in uncontested areas, areas closer to the Philippines, including Recto Bank».

Manila does not possess the technological capacity to carry out such explorations on its own, and for Beijing this strengthens its position in the South China Sea vis-a-vis other disputing countries in the region. Joint explorations highlight the benefits that arise from mutually beneficial economic cooperation with China. Overcoming tensions and conflict while making money looks like an offer too good for any country in the region to refuse. It is easy to deduce that this an asymmetrical response from Beijing in response to the American attempt to increase tensions in the region, such as with the recent appearance of Daesh on the Philippine peninsula, or with the DPRK issue.

The scope of projects between Manila and Beijing seem to indicate a clear path ahead. Using the joint exploration of important energy resources, and creating new investment projects, it looks like a clever way to create economic and political conditions for tackling more pressing issues like disputed territorial areas. Normally these diplomatic negotiations are unsuccessful and often inconclusive, since both factions are unable to make concessions to their opponents, having nothing to gain and everything to lose.

Manila and Beijing are using a common approach to reach an agreement over disputed territories, with economic plans to jointly exploit the many resources in the area being an incentive to pursue negotiations. With the alternative to cooperation, prosperity and dialogue being hostility, with the possibility of war, there is no other choice other than to cooperate to smooth out their differences.

In observing mandarin diplomacy, one will see that this is Beijing's primary strategic approach to all sorts of matters. The Belt and Road Initiative is the ultimate expression of this approach, complemented by a series of infrastructure investments in countries involved in the project that will significantly improve living conditions of their citizens.

Besides joint explorations, Beijing's infrastructure projects in the Philippines also seem to be heading in this direction. Without being naive, Manila also understands that the more China becomes important to the Philippine economy, the more leverage Beijing has over its strategic decisions. These projects all look good for their economic revenues, but China also has a broader objective, namely safeguarding its interests in what it defines as its own “backyard», referring to the South China Sea.

Duterte seems to have understood, probably better than any other leader of the multipolar international order, the opportunity to counterbalance American influence in the region through Chinese investments. In addition, asking Moscow for some help in tackling the Mindanao terror crisis could be crucial in the future. All these factors seem to have greatly strengthened Duterte’s position and that of Manila on the Asian chessboard, granting a degree of independence that has not been enjoyed over the past decade in the Philippines.

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How The US Deep State Accidentally Forged A Multipolar World Order

Authored by Federico Pieraccini via The Strategic Culture Foundation,

In every nation there are power conglomerates that determine and influence the domestic and foreign policy choices their nations. In the United States, it is important to highlight the concept known as American exceptionalism that accompanies these power centers, often called the deep state. According to this principle, the United States alone has been chosen by God to lead mankind.

After the World War II, a notion very similar to that of Nazi Aryan racial supremacy was born – that of the chosen people. In this case, however, the chosen people were Americans, who emerged victorious at the end of the Second World War II, ready to face the «existential danger» of the USSR, a society and culture that was different from that of the US. With such mental imprinting, the trend over the following decades was predictable. What followed was war after war, the capitalist economic system sustained by the US war machine widening its sphere all over the globe, reaching Southeast Asia, but then being forced back by the failure of the Vietnam War, signaling the first sign of the end of American omnipotence.

As the Berlin Wall fell and eliminated the Soviet «threat», American expansion had almost reached its existential limit. What has been a constant element during all of these US presidencies, during various wars and economic growth thanks to a rising capitalism, has been the presence of the deep state, a set of neural centers that make up real US power. In order to understand the failure of the deep state to achieve its goals to exercise full-spectrum control over the globe, it is crucial to trace the connections between past and the present presidencies from the fall of the Berlin Wall.

When thinking of the deep state, it is easy to identify the major players – the mainstream media, think-tanks, central and private banks, foreign-state lobbyists, politicians, intelligence agencies, large industrial groups, and the military-industrial complex (MIC). These are the inner circles that hold the true levers of power in the United States. Often, by analyzing past events over a long period of time, it becomes easier to identify motivations and goals behind specific actions, and the manner in which the various members of the deep state have often accompanied, influenced and sometimes sabotaged various administrations – such as is currently the case with the current Trump administration – for the sole purpose of advancing their economic interests.

During the Clinton and Bush administrations, the deep state was able to maintain a united and compact front, counting on the economic and military power of what was still a rising global power. The mainstream media, the intelligence agencies, the military and the financial and political centers supported both presidents in their ambitious plans to expand American hegemony. From intervention in Yugoslavia to the bombing to Afghanistan through to the war in Iraq, the refrain has been conflict and devastation in exchange for financial impositions that were focused on maintaining the dollar as the reserve or exchange currency for such assets as oil. In Yugoslavia, the strategy also aimed at dismantling the last block linked to the former Soviet Union, the last act of the end of the Cold War. Even the control of opium trading routes from Afghanistan has been of great importance, becoming a key element in US expansion and control plans, other than maintaining a foothold in central Asia for further destabilization attempts.

The war in Iraq, engineered by three fundamental elements of the deep state (false intelligence services, journalists with a specific agenda, and the military straining at the leash to bomb a hostile nation), has produced a number of consequences, primarily the disintegration of the country, leaving the door open to Iranian influence. Over the course of 15 years, Tehran's influence has grown to such an extent that it engages Iraq in a Shiite arch that starts from Iran, passes through Iraq, and ends in Syria, reaching the Mediterranean. In terms of the effect intended and the result actually obtained, the Iraq war may be considered the largest strategic failure of the US deep state since Vietnam.

In addition to a loss of American influence with the petro-monarchies, Iraq has highlighted the American inability to conquer and hold a territory when the population is hostile. Facing local and Shiite militias, the United States paid a heavy human toll, shocking the American population during the ten-year war with planes returning home to deliver flag-draped coffins. This is not to mention the creation of the Afghan and Iraq wars of hundreds of billions of dollars of debt, all placed on the shoulders of the American taxpayer.

In a sense, Obama owes much of his victory in 2008 to the financial crisis and the American defeat in Iraq. Even today, the debate about the role of the deep state in Obama's election is open. The most plausible explanation is based on Obama's telegenic appeal over Senator McCain, likely a decisive factor for Americans. As many Americans did not admit, Obama's election, after eight years of Bush, was a break with the past, a clear message to the elite, especially after Obama's victory over Clinton during the Democratic primaries.

Obama's victory was immediately accompanied by a strategic recalculation by the deep state, which sensed the new opportunity linked to Obama's nature as well as ongoing changes. There were to be no more explicit wars of the type that involve tank divisions. After the disaster in Iraq, even the deep state understood how American military power was unable to prevail over a hostile local population. For this reason, the neoconservatives have been progressively displaced by the liberal, human-rights brigade. Their new approach has turned the Middle East upside down through the Arab Spring, creating a new balance in the region and causing the situation to degenerate in Egypt, destabilizing neighboring countries, ending up human-rights dystopias in places like Libya and Syria, both victims of direct or indirect military aggression on the grounds of protecting human rights.

In this scenario, the most important components of the deep state are the media that, by disseminating false intelligence information through manipulation and disinformation for the purposes of justifying military aggression, conditions the populations of Europe and the US to attack sovereign countries like Libya. During the Obama administration, the deep state rarely faced a hostile presidency, demonstrated by the bank bailout during the 2008 crisis. A few months after the election, it became apparent how empty Obama’s election promises had been, representing the triumph of marketing over substance. By printing money at zero interest, Obama allowed the Fed to donate almost $800 billion to the banks, saving them from a collapse and postponing the consequences of the next financial crisis, which will likely be irreparable. Obama preferred to follow the dictates of the Fed, a key component of the deep state, instead of reforming the banking sector.

The underlying mistakes of the last months of the Obama administration continue to affect Trump's new presidency. Obama's attempt to placate the deep state by arming terrorists in the Middle East, putting neo-Nazis in Ukraine, bombing Libya, and bailing out the banks has only increased the appetite of the deep state, which has progressed to more explicit demands like an attack on Iran and direct intervention in Syria. From this moment on, after having granted virtually all the wishes of the deep state, Obama pulled the handbrake and activated a couple of countermeasures to rebalance the legacy of his presidency. He opposed a direct intervention in Syria following the false-flag chemical attacks, signing and implementing the nuclear agreement with Iran and he restoring relations with Cuba.

It was at this very moment that the deep state declared war on Obama, relying on the indispensable support of intelligence agencies, the mainstream media, and the most conservative wing of the American establishment. Attacks on Obama's presumed weaknesses as president, his inability to defend American interests, and his lack of courage characterized the last two years of his presidency.

It was this perennial state of siege during Obama's presidency that created the conditions for Trump's electoral ascent. The deep state has for years insisted on the need for a strong and determined leader representative of the spirit of American exceptionalism. Initially, the deep state focused on Hillary Clinton, but Trump had the intuition to emphasize the military and industrial aspects of the country, appealing to the yearning of the population for a rebuilding of domestic industry, and opening new opportunities for the deep state. This served to drive a split within the intelligence agencies, the mainstream media, and a good deal of the domestic political class, leaving them in open warfare. Russia's affairs and Trump’s alleged connections to Putin are false news, created to sabotage Trump's presidency.

In the 2016 Republican primaries, Americans voted for a leader who promised to improve their livelihoods by boosting the domestic economy and placing the interests of their country first. This promise almost immediately captured the working component of the population and large industrial conglomerates. Trump later gained the support of another fundamental component of the deep state, the military wing, thanks to the proclamation that the United States will be returned to the role they deserve in the world, salvaging the perverse idea of American exceptionalism.

Trump's decision to embrace the MIC is particularly controversial and represents the beginning of a deep-state faction built upon Trump's presidency. The daily din surrounding his presidency, with constant attacks from the opposing faction of the deep state, became intense with fake news alleging Trump’s links with Russia. With the appointment of generals who subscribe to the idea of American exceptionalism, it can be debated whether Trump intentionally wanted to give a leadership role to his own generals or whether he had no choice, having to associate with some of these deep-state members in order to defend himself against the assaults of opposing deep-state factions.

Recent Trump-related events are all based on these factors, namely a deep state driven by the neoliberal faction that has never stopped attacking Trump, and a neoconservative deep-state faction that has been tightening the noose around Trump.

The immediate results have been a level of chaos that has been unprecedented in a US administration, with continuous appointments and layoffs, the latest one Steve Bannon, not to mention the impossibility of abolishing Obamacare with all the forces arrayed against Trump’s legislative agenda. Trump has progressively had to concede more power and authority to his generals, acceding to bombing Syria and passing sanctions that worsen relations between Moscow and Washington. A self-destructive spiral began with the granting of a primary role to those nominated to key positions.

The final effect of this ongoing sabotage ever since the Obama presidency is a bankrupt US foreign policy and a continuing fratricidal struggle within the deep state. America’s European allies are in revolt over anti-Russia sanctions, which is their main source of energy. Countries like Russia, China and Iran are beginning to undergo an economic revolution as they progressively abandon the dollar; and as these countries take over a Middle East devastated by years of American wars, Moscow gains significant influence in the region. The crisis engulfing the Gulf Cooperation Council, increasingly beset with fickle fractures between Riyadh and Doha.

One of the consequences of two decades of the US deep state’s brazen foreign policy has been the birth of a multipolar world order, with US superpower status being challenged by competing powers like China and Russia. Indeed, Washington’s historic allies in the Middle East, Israel and Saudi Arabia, have borne the consequences of the disastrous policies of the US, with Iran rising to be one of the power centers of the region destined to dominate the Middle East militarily and even economically.

The incredible paradox of the failure of deep state is represented by the emergence of two alternative poles to the American one, increasingly allied with each other to counter the chaotic retreat of a unipolar world order. In this scenario, Washington and all its power centers are in an unprecedented situation, where their desire does not match their abilities. A sense of frustration is increasingly evident, from the incredible statements of many American political representatives on Russian influence in US elections, to the threats of aggression against North Korea, or the game of chicken with the nuclear powers of Russia and China.

If the deep state continues to hamstring the presidency, and the military wing succeeds in pressuring Trump, there are likely to be a number of indirectly linked effects. There will be an exponential increase in synergies between nations not aligned with American interests. In economic terms, there are alternative systems to that centered on the dollar; in terms of energy, there are a host of new agreements with European, Turkish or Russian partners; and in political terms, there is a more or less explicit alliance between Russia and China, with a strong contribution from Iran, as will soon become more evident with Tehran's entry into the Shanghai Cooperation Organization (SCO).

By the end of the 1980s, the United States was the only world power destined for a future of unchallenged global hegemony. The deep state’s greed, as well as the utopian desire to control every decision in every corner of the world, has ended up consuming the ability of the US to influence events, serving only to draw Russia and China closer together with the shared interest of halting America’s heedless advance. It is thanks to the firmly ensconced American deep state that Moscow and Beijing are now coordinating together in order to put to an end the United States’ unipolar moment as soon as possible.

It is not entirely wrong to say that the American unipolar moment is coming to an end, with the deep state’s attacks on the Trump presidency preventing any rapprochement with Moscow.

The stronger the pressure of the deep state on the multipolar powers, the greater the speed with which the advance of the multipolar world will replace the unipolar one. Early effects will appear in the economic sphere, particularly in relation to movement towards de-dollarisation, which may mark the beginning of a long-awaited change.

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Bitcoin (BTCUSD) Breaks Below 4000, Testing Month Plus Upchannel Support

Bitcoin (BTC/USD) Weekly/Daily

Bitcoin (BTCUSD) appears to be ending its month long rally from just below the 2k level, as it threatens to break an upchannel support (on the weekly and daily charts). Significantly, BTCUSD is forming a red weekly candle with its trading range thus far below last week’s Doji body. If BTCUSD breaches the weekly/daily chart upchannel support today, the current weekly red candle will likely continue lengthening potentially forming an Island Reversal pattern consisting of the last 2 weekly candles (and the current). Significantly, the all-time peak last week coincides with the 2.618 Fib extension that could have been drawn based on the May to July sideways channel low and high. With the daily RSI and Stochastics turning down from overbought levels, and the daily MACD negatively crossing, a decent chance exists for the daily/weekly chart upchannel support to be breached today. An upchannel support break would accelerate profittaking resulting in the weekly MACD blue line quickly flattening and turning down perhaps by late week.

 

Bitcoin (BTC/USD) Weekly

 

Bitcoin (BTC/USD) Daily

 

Click here for today’s technical analysis on Raw Sugar, Cocoa


 

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