Fri, 23rd June 2017

Anirudh Sethi Report


Archives of “June 6, 2017” Day

European Indices end mostly lower. 10 year yields lower too.

Dax gives up 1.04% on the day…

I know it is old news but for good order the European stock indices were mostly in trading today:
  • German Dax was the weakest as it lost -1.04% after closing at a record level on Friday. The German stock market was closed yesterday
  • France Cac fell -0.73%
  • Spain’s Ibex was down -0.05%
  • UK FTSE was down -0.01%
  • Italy’s FTSE MIB rose by +0.19%
  • Portugals PSI 20 rose by 0.78%
In the 10 year note sector, yields were mostly lower.
  • Germany 0.252%, -3.4 bp

“Forget Terrorism”: The Real Reason Behind The Qatar Crisis Is Natural Gas

According to the official narrative, the reason for the latest Gulf crisis in which a coalition of Saudi-led states cut off diplomatic and economic ties with Qatar, is because – to everyone’s “stunned amazement” – Qatar was funding terrorists, and after Trump’s recent visit to Saudi Arabia in which he urged a crackdown on financial support of terrorism, and also following the FT’s report that Qatar has directly provided $1 billion in funding to Iran and al-Qaeda spinoffs, Saudi Arabia finally had had enough of its “rogue” neighbor, which in recent years had made ideologically unacceptable overtures toward both Shia Iran and Russia.

However, as often happens, the official narrative is traditionally a misdirection from the real underlying tensions.

The real reason behind the diplomatic fallout may be far simpler, and once again has to do with a long-running and controversial topic, namely Qatar’s regional natural gas dominance.

Recall that many have speculated (with evidence going back as far back as 2012) that one of the reasons for the long-running Syria proxy war was nothing more complex than competing gas pipelines, with Qatar eager to pass its own pipeline, connecting Europe to its vast natural gas deposits, however as that would put Gazprom’s monopoly of European LNG supply in jeopardy, Russia had been firmly, and violently, against this strategy from the beginning and explains Putin’s firm support of the Assad regime and the Kremlin’s desire to prevent the replacement of the Syrian government with a puppet regime.

Note the purple line which traces the proposed Qatar-Turkey natural gas pipeline and note that all of the countries highlighted in red are part of a new coalition hastily put together after Turkey finally (in exchange for NATO’s acquiescence on Erdogan’s politically-motivated war with the PKK) agreed to allow the US to fly combat missions against ISIS targets from Incirlik. Now note which country along the purple line is not highlighted in red. That’s because Bashar al-Assad didn’t support the pipeline and now we’re seeing what happens when you’re a Mid-East strongman and you decide not to support something the US and Saudi Arabia want to get done.

Nikkei 225 closes down -0.95% at 19,979.90

Negative session for Japanese equities as USJPY falls 6 June

  • high 20152.95
  • low 19948.02
  • Topix -0.84% at 1569.44
  • USDJPY 109.71 just off session and 6-week lows

Expect offers/res 109.85 and 110.00. Demand/bids 109.50, larger into 109.30 and 109.00

Australia’s S&P/ASX200 closes down -1.37% at 5676.30



China today said India’s membership bid in the NSG has become “more complicated” under the “new circumstances” as it again ruled out backing New Delhi’s entry in the grouping, saying there should be non-discriminatory solution applicable to all non-NPT signatory countries.

China has been blocking India’s membership in the 48- nation grouping which controls the nuclear commerce even though India has the backing of majority of the members.

The group goes by consensus approach on the admission of new members.

“About the Nuclear Suppliers Group (NSG) it is a new issue under the new circumstances and it is more complicated than the previously imagined,” China’s Assistant Minister of Foreign Affairs Li Huilai told media briefing here.

He, however, did not elaborate what are the new circumstances and complications.

“China supports the NSG to have consultation for reaching non-discriminatory and universally applicable solution, applicable to all members of the NSG,” he said.

Pakistan has also applied for the NSG membership. While China has not openly supported Pakistan’s membership, it came with a two-step approach which stipulates that the NSG members first need to arrive at a set of principles for the admission of non-NPT states into the NSG and then move forward discussions of specific cases.

Apple Unveils “HomePod” Speaker, Long After Amazon, Google

Once again, it took Apple just a few years to catch up to Amazon and Google.

As was widely leaked in advance, during its annual developed conference in San Jose, Apple entered the field of voice-controlled, “internet of things” speakers for the home, when it unveiled a connected home speaker dubbed the HomePod, which however won’t be available until the end of the year. The speaker is Apple’s first major new hardware product since the Apple Watch’s release in 2015 – which has been classified by many as a dud – and comes at a time for the company when the tech giant is seeking new revenue streams after becoming heavily reliant on the success of the iPhone.

Overnight US Market :Dow closed -22 points

The major US stock indices are ending the session with modest losses.
  • The S&P is ending down -2.96 points or -0.12%
  • The Nasdaq is ending down -10.112 points or -0.16%
  • The Dow is ending down -22.12 points or -0.10%
The ranges were fairly narrow but most of the day was in the red.
In the US debt markets today, rates are up as the close approaches:
  • 2 year 1.302%, up 1.4 bp
  • 5 year 1.7385%, up 1.9 bp
  • 10 year 2.1782%, up 1.9 bp
  • 30 year 2.8373%, up 2.7 bp
Crude oil is lower by -$0.28 to $47.38
Spot gold is little changed (+$0.55 or +0.04%)