After yesterday US officials reported that Iran conducted a nuclear ballistic missile test on Sunday, which some claimed would be another violation of the UN resolution and Obama’s nuclear deal, on Wednesday Iran’s defense minister admitted that the Islamic Republic had indeed tested a new missile, but added the test did not breach Tehran’s nuclear accord with world powers or a U.N. Security Council resolution endorsing the pact.
Iran has test-fired several ballistic missiles since the nuclear deal in 2015, but this is the first during U.S. President Donald Trump’s administration. Trump said in his election campaign that he would stop Iran’s missile program. Furthermore, the confirmed launch comes at a precarious time, with president Trump seemingly looking for excuses to scrap the Iran deal, which could potentially lead to the reestablishment of Iran sanctions and the halt of Iranian oil exports to global markets, taking away as much as 1 million barrels of daily supply.
The world today is overwhelmed with problems. Policymakers seem to be confused and at a loss.
But no problem is more urgent today than the militarization of politics and the new arms race. Stopping and reversing this ruinous race must be our top priority.
The current situation is too dangerous.
More troops, tanks and armored personnel carriers are being brought to Europe. NATO and Russian forces and weapons that used to be deployed at a distance are now placed closer to each other, as if to shoot point-blank.
While state budgets are struggling to fund people’s essential social needs, military spending is growing. Money is easily found for sophisticated weapons whose destructive power is comparable to that of the weapons of mass destruction; for submarines whose single salvo is capable of devastating half a continent; for missile defense systems that undermine strategic stability.
Politicians and military leaders sound increasingly belligerent and defense doctrines more dangerous. Commentators and TV personalities are joining the bellicose chorus. It all looks as if the world is preparing for war.
Did you ever notice that when you look at all the failed predictions in any given December, what ended up happening was the opposite of what everyone predicted?
Contrarian Economic Predictions
Given that most predictions end up being wrong, why not just take a look at what passes for conventional wisdom and do the opposite?
Warning: many of these involve Trump.
1. Trump is going to nuke somebody in 2017
It is true that Trump wants to increase, rather than decrease, our nuclear capabilities, which runs pretty much counter to anybody’s idea of what constitutes peaceful behavior in 2017.
The interesting thing about the nuclear threat is that as the popular perception of it has waned since the Cold War, the actual nuclear threat has increased as the number of nuclear weapons has declined.
What if the opposite happens—what if peace breaks out all over in 2017? And what if it is because of Trump?
In a special report by Barclays’ Michael Cohen, the analyst lays out what he believes are the 13 commodity “black swan threats” for the current year, divided into two “shock” categories: supply and demand, split evenly between bearish and bullish.
Investors, Barclays warns, will have to balance the risks of unforeseen macroeconomic shocks and their effect on demand (bearish price) with potential geopolitical shocks disrupting the supply side of the market (bullish price). A tightening commodity inventory picture, especially in oil, will likely exacerbate how the market prices supply risks even if no physical supply disruption occurs.
The potential threats, which range from a trade war with China, to a default in Venezuela, to riots in Chile, all have a common denominator: politics: “we assess several black swan threats to the supply, demand, and transit of commodities that could potentially move markets in 2017. Our analysis illustrates an important point: politics are likely to matter just as much as economics” and not just any politics: “in particular, the new politics of populism and protectionist trade policies have the potential to disrupt global supply and demand assumptions for various commodities.”
Those who have been following Trump’s twitter feed are all too aware of this.
While we realize the futility of “identifying” black swans in advance, something which is by definition impossible, nonetheless here is what Cohen warns:
In 2016, few people predicted a Trump election or Brexit, not to mention that the Chicago Cubs would win the World Series or that Leicester City would take the Premier League title. And commodities markets were not without their own set of surprises as well. OPEC cut production with non-OPEC countries for the first time in 10 years. Weather whipsawed natural gas, and Trump’s election inspired a late metals complex rally on the basis of hopes for new infrastructure spending. In fact, when all was said and done, 2016 was a pretty good year for commodities, with the asset class posting its first annual advance since 2010.
Commodity market black swan events come in many forms, and the market may take years or an instant to price them in. Technological innovation caused the US shale gas revolution, the Great Recession caused structural demand destruction, while geopolitical strife has disrupted commodity supplies overnight. We all know that markets will surprise in some fashion in 2017, so we attempt this review to shine a spotlight on the specific commodity market risks that clients should watch.
Where could the surprises come from: “Watch these spaces: China, Russia, the Middle East and Turkey are likely to surprise the commodity complex in 2017.”
Below is the summary list of the proposed “black swans”
Breaking down the list, Barclays says that generally “it sees risks skewed to the upside in 2017, based on several supply-side risks.”
Given the scenarios laid out below we view supply driven disruptions in 2017 as being more likely than demand side Black Swan events. Although commodity price disruptions may mean higher prices in the short-term there is a risk they result in lower medium-long-term prices. A supply disruption that results in a higher futures curve could result in the sanctioning of new projects or increased producer hedging activity, eventually putting downward pressure on prices in the long-dated contracts. There are, of course, supply-side risks that would be bearish for the market as well, such as higher production from Libya or the Neutral Zone.”
Demand events less likely but more structurally impactful. Given the relative liquidity in global commodity markets we see supply related outages being shorter in duration compared to potential demand side risks. We see demand side events, such as those driven by economic weakness, as less likely but events that would have a longer term structural impact on commodity prices to the downside.
As noted above, the two big categories laid out by Barclays are as follows:
The head of the International Atomic Energy Agency (IAEA) said Iran has shown commitment to its end of the nuclear deal struck last year while visiting Tehran December 18.
Iran has complained about the US extending a sanctions package for another decade. The US says these sanctions are unrelated to the deal; Iran disagrees.
“We are satisfied with the implementation of the [nuclear agreement] and hope that this process will continue,” IAEA Director General Yukiya Amano told the press in the Iranian capital, Reuters reports, citing the IRNA news agency.
“Iran has been committed to its engagement so far and this is important,” he said. Amano was in Tehran to meet head of Iran’s Atomic Energy Organization Ali Akbar Salehi. After the White House said earlier this week that the sanctions bill would become law even without President Barack Obama’s signature, Iran requested a meeting of the Joint Comprehensive Plan of Action (JCPOA) commission to discuss the situation and ordered its scientists to start developing nuclear systems to power ships. Salehi presented the maritime nuclear propulsion project to Amano and said the country would provide more details on it in three months, according to the Islamic Republic News Agency (IRNA). The initial outline did include what is so far the most controversial issue of the project: the level of uranium-enrichment powering the ships will require.
Iraqi security forces, assisted by the US-led coalition, the People’s Mobilization Forces (PMF) and Kurdish fighters are currently focused on liberating Mosul, the second largest city in the country and the last bastion of Daesh militants there.
Colonel Daniel Manning, deputy director of the Combined Air Operations Center, on Friday told Military.com in a telephone conversation that the intense bombing is what makes this anti-Daesh operation stand out, especially if you take into account that each of these bombs are precision-guided weapons. “It’s a really high rate to be concentrated over one city over a prolonged period of time,” he said, adding that the intensity and efficacy of airstrikes depends on many things, such as weather — storms slow down the offensive even though there are sensors helping to look through them — and determination of partner forces. “You tend to employ more weapons when the weather is better, and when your partner forces are on the move because when they’re on the move, they’re finding the enemy, forcing the enemy to reveal themselves, and we’re there to strike them,” Manning explained.
On October 17, Iraqi Prime Minister Haider Abadi announced the start of a military operation to retake Mosul from Daesh with the help of airstrikes by the US-led international coalition.
The air coalition conducted more than 191 strikes through November 1, employing over 1,352 weapons for operations, according to Air Forces Central Command spokeswoman Kiley Dougherty.
Fresh attempts at containing Russia and continuing the empire have been met with countermoves. Russia appears to be building strength in every way. Putin and his country have no intention of being under the American thumb, and are developing rapid resistance as the U.S. petrodollar loses its grip and China, Russia and the East shift into new currencies and shifting world order.
What lies ahead? It will be a strong hand for the countries that have the most significant backing in gold and hard assets; and China and Russia have positioned themselves very well. Prepare for a changing economic landscape, and one in which self-reliance might be all we have.
With all eyes on Russia’s unveiling their latest nuclear intercontinental ballistic missile (ICBM), which NATO has dubbed the “SATAN” missile, as tensions with the U.S. increase, Moscow’s most potent “weapon” may be something drastically different.
The rapidly evolving geopolitical “weapon” brandished by Russia is an ever increasing stockpile of gold, as well as Russia’s native currency, the ruble.
Take a look at the symbol below, as it could soon come to change the entire hierarchy of the international order – potentially ushering in a complete international paradigm shift – and much sooner than you might think.
The symbol is the new designation of the Russian ruble, Russia’s national currency.
State television threatens the West with nuclear weapons, the Kremlin halts a disarmament treaty, the army warns of shooting down US jets. As ties between Russia and the West have once again slumped, rhetoric in Moscow has peaked.
“Relations between Russia and the US, and the West in general, have been dragged down to the bottom, to a level below which it is difficult to fall,” Konstantin Kalachev, the head of the Moscow-based Political Expert Group think tank, told AFP.
But it wasn’t meant to be like this.
Just over a month ago Moscow and Washington inked a deal to revive a ceasefire in Syria and the Kremlin seemed to have scored a tactical win by getting the United States to open the door to coordinate strikes against jihadists.
The agreement, hammered out after repeated rounds of exhausting talks, appeared a potential breakthrough in Syria’s civil war and years of bad blood and furious mudslinging between Moscow and Washington sparked by the Ukraine crisis.
Many, however, were skeptical that the Kremlin and White House, on opposite sides in Syria, could begin to bury the hatchet – and so it proved.
Soon the truce collapsed and as the violence spiraled so did the ferocious acrimony.
Washington suspended talks with the Kremlin on Syria; Moscow tore up a treaty on disposing weapons-grade plutonium; the West accused Russia and Syria of potential war crimes in its brutal attacks on rebel-held east Aleppo.
As Russia and America creep ever closer to outright conflict, now that the diplomatic facade of the proxy war in Syria falls away with every passing day, one voice if calling for the world to stop and reassess what it is doing. Former USSR leader Mikhail Gorbachev warned on Monday that the world has reached a “dangerous point” as tensions between Russia and the United States surge over the Syria conflict; a conflict which if escalated even fractionally further, could result in all out war between the two superpowers according to General Joseph Dunford.
Gorbachev blamed the current state of affairs between Russia and US on the “collapse of mutual trust” and urged the sides to resume dialogue and push towards demilitarization and complete nuclear disarmament.
“I think the world has reached a dangerous point. I don’t want to give any concrete prescriptions but I do want to say that this needs to stop. We need to renew dialogue. Stopping it was the biggest mistake. Now we must return to the main priorities, such as nuclear disarmament, fighting terrorism and prevention of global environmental disasters. Compared to these challenges, all the rest slips into the background.” Gorbachev said in an interview with RIA Novosti.
Relations between Moscow and Washington, already at their lowest since the Cold War over the Ukraine conflict, deteriorated sharply in recent days as the United States pulled the plug on Syria talks and accused Russia of hacking attacks.
Soviet President Mikhail Gorbachev (L) and U.S. President Ronald Reagan begin their mini-summit talks in Reykjavik October 11, 1986.
Addressing the Petroleum Ministry officials, Kardor said that Iran was able to maintain its 14 percent quota in the Organization of the Petroleum Exporting Countries (OPEC), according to the IRNA news agency.
The official also announced further increase of oil production. “Our oil production capacity should reach 5.2 or 5.7 million bpd,” Kardor said. Iran has been re-entering the global oil market after in January the European Union, the United Nations, and partially the United States lifted their sanctions against the Islamic Republic after the International Atomic Energy Agency (IAEA) verified Tehran’s compliance with a nuclear agreement reached in July 2015.