HSBC Crashes To 11 Year Low As Profit Plunges And Loss Reserves SoarTyler DurdenMon, 08/03/2020 – 07:30
HSBC Holdings shares tumbled 6.4% Monday morning, hitting 11 year lows not seen since the 2008-09 financial crisis, following the bank’s latest earnings report that warned the virus-induced global downturn might trigger $ 13 billion in loan losses.
Investors were spooked after HSBC increased the range of loan losses to $ 8 billion-$ 13 billion from $ 7 billion-$ 11 illion, reflecting a challenging second quarter and even more challenging, well, future quarters. Bloomberg Intelligence said the new credit loss guidance for 2020 was $ 2 billion more at the top end, while Jefferies said the bank’s management “unhelpfully” increased the range of credit loss guidance.
“What we have seen this quarter is quite a sharp shift in the economic outlook for the global economy, the famous ‘V’ has got a lot sharper, and as a result, we have materially increased our provisions,” CFO Ewen Stevenson told Reuters.
For the current quarter, the bank reported a pre-tax profit of $ 4.32 billion in 1H20, down from $ 12.41 billion a year ago, which missed the average of analysts’ forecasts of $ 5.67 billion. Morgan Stanley’s Magdalena Stoklosa wrote in a note that pretax profit missed consensus by 12%, driven mostly by provision.
The bank’s revenue fell 9% to $ 26.7 billion over the first half, slightly above analysts’ expectations of $ 26.41 billion.
Stevenson said HSBC’s business in the U.K. was hit hard, took a $ 1.5 billion charge against expected credit losses.
CEO Noel Quinn wrote in the earnings update that HSBC was severely “impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk, and heightened levels of market volatility.”
“The first six months of 2020 have been some of the most challenging in living memory. Due to the Covid-19 pandemic, much of the global economy slowed significantly, and some sectors drew to a near-total halt,” Quinn said.
He cited tensions between China and the U.S. that challenged banking operations:
“Current tensions between China and the U.S. inevitably create challenging situations for an organization with HSBC’s footprint. We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors.”
Quinn expects to “accelerate implementation” of a restructuring plan announced earlier this year will allow it to pivot away from Europe and the U.S. to focus on the Chinese market.
RBC analyst Benjamin Toms said the results reflect a “bleak outlook” for the bank…
As the White House teased in a media trial balloon yesterday, the administration has just announced its latest initiative to hector Beijing, and the Chinese technology sector, as the Trump Administration ratchets up the retaliatory pressure in a burst of election-year fervor.
The Trump administration will announce measures shortly against “a broad array” of Chinese-owned software that pose a “national security risk”, according to Mike Pompeo, Trump’s Secretary of State.
But those talks have apparently stalled. Treasury Secretary Steven Mnuchin said earlier that the app must either be “sold or blocked”, and it appears that Beijing has soured on the optics of appearing to kowtow to Trump just before the election – god forbid President Xi be accused of intervening on Trump’s behalf.
Pompeo signaled he expects a Trump announcement “shortly.” He added that Chinese software companies doing business in the US are working with Chinese State Security: “whether it’s TikTok or WeChat, there are countless more,” Pompeo said during an interview on Fox New’s “Sunday Morning Futures” program.
Trump “will take action in the coming days with respect to a broad array of national-security risks that are presented by software connected to the Chinese Communist Party,” Pompeo added.
From placing new restrictions and pressures on Huawei – including successfully pressing allies like the UK to walk back their earlier support for allowing Huawei parts to be incorporated into “non-core” parts of their 5G networks – as well as taking shots at foreign students studying in the US, among other things.
Well, the Virus Patrol sure has done it. In a fit of reckless overkill they have managed to vaporize six years of economic growth during the last 90 days. And that’s just by the mechanical reckoning of the GDP accounts, where total output in Q2 weighed in at essentially the same level as Q4 2014.
The real damage is far deeper, however, and is reflected in millions of small businesses permanently destroyed, tens of millions of households wiped-out financially and the vicious daisy chain of delinquencies, deferrals and defaults just beginning to rip through the $ 78 trillion edifice of debt which entombs the US economy.
Real GDP Level
Of course, most of the Wall Street talking heads were nonplussed by this week’s release because, well, Q2 results are claimed to be ancient history: Reality is purportedly the “V”-shaped recovery on their spreadsheets, which really can’t fail to happen because it’s always two quarters out regardless of conditions at the moment.
So let’s get something straight. What is happening is an economic catastrophe the likes of which we have never seen before, even during the Great Depression of the 1930s.
In fact, the worst annual decline back then was a 14.8 percent drop in 1932, while the entire peak-to-trough real GDP decline between 1929 and the 1933 bottom was 30.5 percent.
So it would be fair to say that measured at an annualized rate, the idiotic Dr. Fauci and his Virus Patrol have now delivered a 32.9 percent GDP plunge, which single-handedly tops the entire contraction of the Great Depression.
Needless to say, the Q2 result also leaves the recessionary drops since 1950 way back in the dust. Even the auto industry induced plunge of Q1 1958 didn’t make the double-digit threshold. It clocked in at a 9.986 percent annualized decline or less than one-third of today’s cliff dive.
What was especially notable, however, was the vaporization of personal consumption spending on services, which ordinarily accounts for upwards of 70 percent of total PCE; and which is also ballyhooed by the paint-by-the-numbers Wall Street economist as the ballast the keeps GDP moving ever higher.
Not this time!
Services spending literally fell through the trapdoor, contracting at a 43.4 percent annualized rate. That compares with the 11 recessions since 1950 where real spending on services never went negative, save for the pinprick decline of -1.6 percent annualized during the Q1 2009 bottom of the Great Recession.
By every account, the economic plunge in the winter of 2008-2009 was the worst since the 1930s, but this week the Commerce Department reported a PCE-services drop that was 28X deeper!
Our purpose here is not to marshal scary numbers, even as they surely are.
Rather, our point is that what is coursing through the Q2 numbers is not anything that resembles a normal chain-of-reactions macroeconomic cycle. For instance, where job losses cascade through to shrinking incomes, thereby causing consumer confidence and spending wherewithal to diminish and household spending to be curtailed.
To the contrary, what is depicted below is essentially economic martial law. Agencies of the state commanded airports, restaurants, bars, hair salons, gyms, movies, dentist offices, theme parks, sporting events etc. to close or operate at drastically reduced capacity, which meant, in turn, that day-in-and-day out commerce and economic output vanished instantly.
Stated differently, this 43 percent plunge in services spending didn’t happen for the ordinary reason that people were short on cash. As we show below, personal income during the quarter – thanks to the massive flow of free stuff from Washington (aka government transfer payments) – clocked in at a record level!
Consequently, there will be no rebound in the plunging red line below no matter how much fiscal and monetary “stimulus” Washington pumps into the main street economy.
The services sector accounts for nearly 66 percent of total PCE, which, in turn, accounts for 68 percent of measured GDP. So the latter will not recover until the Virus Patrol gets its foot off the neck of what we call the social congregation activities of daily economic life; and also until it and its MSM collaborationist desist from fanning the false claim that the Covid is the equivalent of the Black Plague, thereby causing people to voluntarily quarantine out of misplaced fear.
Of course, you don’t have to listen to Dr. Fauci and the Scarf Lady for long – yes, they have not yet been locked up in padded cells where they belong – to realize that the Virus Patrol is on a once-in-a lifetime power trip.
In ultra-busy body/Nanny State fashion they are virtually regimenting the comings and goings of a $ 20 trillion economy – even as they keep the US economy on indefinite idle waiting for the vaccines and antivirals from their allies in Big Pharma and the Gates Complex to ride to the (mandatory) rescue.
Annualized Change In Personal Consumption Expenditures, Services, 1950-2020
We don’t expect the Virus Patrol to be put out of business any time soon because the Donald is too confused and weak to shut them down.
Moreover, if he keeps shooting himself in the kneecaps via tweets like this week’s “lets-postpone-the-election” numbskullery, he will guarantee an even worse scenario: Namely, that while Sleepy Joe is being oxygenated and propped-up behind the Resolute Desk for daily Oval Office photo ops, the left-wing health Nazis who surround him will really go to town on Lockdown Nation.
Nor is that any kind of unhinged trashing of the camarilla of out-and-out statists who will form the core of the Biden Administration. The fact is, the Donald’s malpacticing doctors, the MSM and the Blue State mayors and governors have now unleashed a full-on public hysteria that is self-fueling.
It is now transforming ordinary sheeples into obedient and unquestioning brown-shirts. Even in the purportedly enlightened, socialist republic of Aspen, where we are sheltering for the duration, we see them “mask-up” even with no one in sight, while pumping strenuously up the mountain side on a fat-tired bike.
One manifestation of the Covid-Hysteria is the soaring level of “testing” going on as people either try to get a hall pass in order to return to work or just plain run to the nearest testing station every time the media sends off new alarm bells.
During April, for instance, which was the very worst month of the contagion in terms of serious illnesses and deaths, 5.2 million new tests were reported or 175,000 per day.
By contrast, in July to date (thru the 29th), there have been 21.5 million new tests reported or an average of 745,000 per day.
In a population that has been thoroughly exposed to the virus after five months, it is a given that with the number of tests soaring, the number of positive cases will rise proportionately. But that’s a misdirection because the real issue is the true medical severity of the new cases, and that has dropped precipitously.
The death rate has dropped from 1,800 per day in April to 780 in July; and whereas 15-20 percent of new cases were being hospitalized in most states during April, that figure has now fallen to 2-4 percent.
That is, after the Grim Reaper’s original romp through the most vulnerable populations – especially the nursing homes and long-term care facilities in March/April – the preponderant share of the remaining populations being infected and testing positive appear to have stronger immune defenses, and are mainly either asymptomatic or treating and recovering at home in the normal flu-season manner.
So on the facts, the Hysteria should be dying out, but, alas, the facts are of small moment in the context of a runaway public hysteria that is being turbocharged by a severely aggravated anti-Trump partisanship that has no modern precedent, or any at all.
We are constantly reminded that there are less than 100 days until the election, but probably of even more salience is that the next flu season will be arriving even sooner in October. And it won’t matter whether the obvious herd immunities building up against the SARS-Cov-2 cause the next flu season to be unusually mild or not.
That’s because the Virus Patrol will be at shrill alert for the “second wave” in the run-up to October, keeping the suffocated economy evident in today’s GDP report on its back foot for the balance of the year, at least. That means the ballyhooed V is now surely dead-as-a-door nail.
In this context, it needs be recalled that the services sector of the US economy is bearing the brunt of the Lockdown orders, but that it now counts for fully $ 8.7 trillion or 45 percent of GDP. That compares to a mere 26 percent back in the days of America’s industrial might in the mid-1950s.
In the big picture context, therefore, national policy – especially at the Eccles Building – caused the off-shoring and hollowing-out of the US industrial economy over the last three decades. In turn, that has left main street especially vulnerable to a state-orchestrated attack on its new services sector center of gravity such as outpatient surgery clinics, Pilates studios and tapas bars.
Again, an economic martial law attack on the new epicenter of the US economy means that the issue is not traditional stimulus, but clearing the decks and clearing the air of the Virus Patrol orders and Covid-Hysteria, which was the real culprit behind the Q2 GDP disaster.
Nominal GDP (light brown) Versus Service Sector PCE (dark brown), 1955-2020
Perhaps nowhere is the impact of economic martial law more evident, ironically, than in the health care sub-sector of the services economy.
The former, of course, has been the workhorse of US GDP growth for decades. However, after peaking at $ 2.50 trillion in Q4 2019, it weighed in at just $ 1.89 trillion in Q2 2020. That’s a $ 608 billion decline, reflecting an astounding -24 percent contraction.
And this is supposed to be the worst medical crisis to hit America since the Spanish Flu of 1918!
But, actually, the government’s data mill is telling an absolutely opposite, nay crazy, story. Namely, that the single largest sector of the US economy plunged at a 61.6 percent annualized rate in Q2 – meaning that the figure gives the notion of being “off the charts” of history an altogether new definition.
Needless to say, health care spending is not now and never has been amenable to Washington’s vaunted stimulus machines. The overwhelming share of spending is government funded directly through Medicare/Medicaid et al or through the $ 300 billion per year tax shelter for employer health plans; and whether public or private, consumer health payments are overwhelming made by third-parties, thereby further limiting the efficacy of the cheap money from the Fed and free money from Uncle Sam.
The plunging red line below, therefore, is the doing of the Virus Patrol and its orders to shutdown most so-called discretionary healthy care services, such as cancer screenings. So until it is put out of business and the public Covid-Hysteria is substantially abated, the rebound of the health services sector is likely to the contained and protracted.
In short, what we have is a government-ordered depression, not a macroeconomic recession that is purportedly remediable by a huge dose of monetary and fiscal stimulus. So the truth is, the Virus Patrol, not the Fed and Washington’s everything bailout brigade, is in charge of the recovery from the Q2 disaster, and they are not much interested in letting it happen.
To take another salient example, the go-to strategy of the Virus Patrol has been to shutdown large scale public gatherings entirely, but that’s obviously the venue of the recreation sector.
So it is not surprising that the PCE spending rate for this sector has given “cliff-diving” a run for its money. Compared to the $ 590 billion annualized rate of spending in Q4 2019, the current quarter clocked in at just $ 272 trillion.
The amounted to a 53.4 percent decline from Q4 and an out-of-this-world contraction of 61 percent annualized in the current quarter. Or alternatively, recreation spending in Lockdown Nation during Q2 reverted to the level first crossed in Q2 2002.
That’s 18 year’s worth of growth gone in a virtual economic heartbeat.
Of course, there was one thing that was way up in Q2 – transfer payments and personal income. And every dime of the massive increase in transfer payments shown below was borrowed by Uncle Sam and monetized by the Fed.
Yet the only thing it accomplished was to further balloon the public debt because the current depression does not flow from the want of means or desire to spend: It’s the product of economic martial law ordered up by the Virus Patrol.
Still, it is worth noting that wage and salary income (brown line) was down by $ 680 billion at an annual rate in Q2, while the Washington spending machine boosted transfer payments at a $ 2.4 trillion annual rate, or by nearly four times more!
Once upon a time, that would have been considered insane overkill, and at least caused Republicans to screech at the top of their lungs about fiscal profligacy.
Alas, as they put up their $ 1.2 trillion Everything Bailout 5.0 against the House Dems’ $ 3.3 trillion alternative in the days just ahead, the chart below will be nowhere seen in the porkers’ lounges of Capitol Hill.
Change From Prior Quarter In Billions: Transfer Payments (purple line) Versus Wages and Salaries (brown line)
Traders Will Soon Be Able To Buy CLOs & Other Risky Debt Products On RobinhoodTyler DurdenMon, 08/03/2020 – 05:30
Esoteric credit products like CDOs and CLOs gained mainstream notoriety ten years ago as politicians, pundits and a deeply humbled Wall Street accused them of helping to nearly destroy the global economy. But a few years ago, banks started looking for new ways to package and sell “safe” high-rated CLOs and other products based on the newly ascendant leveraged loans.
Now, it seems, lenders are facing a perfect storm: With the Fed making a foray into the corporate credit market, part of the central bank’s quest to make investing losses a thing of the past (at least for now – or for as long as it can) and Robinhood-enabled retail traders buy up tech stocks, bitcoin, gold (or at least the precious metals ETFs that offer ‘easy exposure’ to gold and silver), ETF sponsors are quickly dreaming up new products to hawk to this newly invigorated generation of retail bagholders traders who understand only one thing about market dynamics: Prices simply don’t go down.
And with brokerages now relying on bundling retail trades and selling ‘order flow’ to the big HFT firms – all of Robinhood’s established competitors have now adopted this business model as commissions have gone out of fashion – there’s a new perverse incentive to create products that will encourage mom-and-pop traders to play in markets previously reserved for institutional traders. And the latest example of this comes via Janus Henderson, the $ 337 billion asset manager that just filed to launch a new ETF that will allow Robinhood traders to buy into the highest-quality AAA-rated CLOs.
At a time of mounting corporate defaults and deepening economic gloom, a new fund may be about to bring collateralized loan obligations to the masses.
Janus Henderson is planning a U.S. exchange-traded fund that will seek floating-rate exposure to the highest-quality CLOs, according to a filing with the Securities and Exchange Commission this week. While many loan ETFs exist, there are currently none dedicated to CLOs.
CLOs, which package and sell leveraged loans into chunks of varying risk and return, have drawn scrutiny in recent months as the coronavirus pandemic spurs a wave of corporate distress. They typically don’t attract retail investors, though an ETF would in theory make them far more accessible.
Wary day traders can rest assured: because the loans comprising these CLOs are among the safest and most highly rated on the market.
The riskiest corners of the $ 700 billion CLO market may be signaling trouble, but the highest-rated tier tends to be a safe space, he said.
“In the case of AAA CLOs, it’s a safe and low-risk asset class,” said the chief investment officer. “Yields are fairly low on AAA CLOs in the first place, but if investors can earn 150 to 175 basis points of spread on a short duration asset, it can be attractive.”
And with the Fed bent on keeping rates low until things get “back to normal”, this might be only the beginning.
The central bank’s intent to keep them low for the foreseeable future could mean the more-than $ 4 trillion U.S. ETF market sees a spate of launches like the fund planned by Janus Henderson, according to Ken Monahan at Greenwich Associates.
“Given that yield suppression is here to stay it would seem, you’ll probably see a lot more of this,” said the senior analyst covering market structure and technology. “RMBS and CMBS are probably not far off.”
CLOs are a cousin of collateralized debt obligations, which became notorious for their starring role in the 2008 financial crisis.
There are several major differences, however, not least that CDOs bundle loans to consumers rather than businesses.
But once the Fed backstop is removed – if that ever happens – the only real beneficiaries of this product will be the fund sponsors who collect the management fees, and the HFT firms who front-run the order flow in the underlying CLOs.
Pre-COVID, the bull case for shipping rates was all about plunging newbuild orders. A drop in orders in 2019 pointed to rising freight rates in 2021, given the lag between contract signing and delivery. Mid-COVID, the bull case for rates is even more about plunging newbuild orders than before. There will be a lot fewer vessels on the water in 2021, 2022 and beyond than previously thought.
New data provided to FreightWaves by U.K.-based VesselsValue confirms that 2020 is shaping up to be an exceptionally weak year for tanker, bulker and container-ship orders.
New data from Alphaliner shows that container-ship newbuild capacity is down to just 9.4% of capacity on the water. “For the first time in more than 20 years, the global newbuilding pipeline fell below the 10% threshold,” reported Alphaliner on Wednesday, calling it a “historic low.”
Tanker and bulker orderbooks
According to VesselsValue, the tanker orderbook has fallen to 9% of the operating fleet in terms of capacity (measured in deadweight tons or DWT) as of July. This is down sharply from a high of 23% in January 2016.
The dry bulk orderbook is only 7% of the on-the-water fleet. This is down from 24% in January 2015 and an even higher peak — 27% — in January 2010.
The number of ship orders year-to-date is extremely low. VesselsValue data shows just 134 tanker orders through July, 28% below last year’s pace, despite historically high spot rates. Only 88 bulkers are on order, 31% below last year’s pace.
Clarksons Platou Securities has released data for specific tanker and bulker segments. For very large crude carriers (VLCCs, 200,000-plus DWT), the orderbook is only 7.4% of the on-the-water fleet. For Suezmaxes (120,000-199,999 DWT), it’s 11.3%.
In the products sector, the ratio is just 6.5% for medium-range (MR) tankers (30,000-59,999 DWT). It is 0.8% for long-range 1 (LR1) tankers (60,000-79,999 DWT) and 9.6% for LR2s (80,000-119,999 DWT).
In the dry bulk sector, Clarksons puts the orderbook-to-fleet ratio at 10% for Capesizes (120,000-plus DWT). It is 8% for Post-Panamaxes (85,000-119,999 DWT) and 6.8% for Panamaxes/Kamsarmaxes (65,000-84,999 DWT).
According to Alphaliner, the container-ship orderbook is down to just 2.21 million twenty-foot equivalent units (TEUs). This contrasts to a high of around 7 million TEUs in 2008. In that year, orderbook capacity was more than 60% of on-the-water capacity.
Of ships on order, virtually all are in the 10,000-plus TEU category or the 3,999-TEU-or-less category. There are effectively no orders in the midsized 4,000-9,999 TEU category.
As Star Bulk (NASDAQ: SBLK) President Hamish Norton explained during a Marine Money virtual forum in June, “What may be legal today may not be legal in five years. In the old days, ships were grandfathered in until the end of their useful life. Given the political situation, people are afraid — I think with good reason — that a ship they order today will not be grandfathered in, and will become obsolete.”
The second reason for the orderbook shortfall is COVID-19. Travel restrictions in the first half of the year made newbuild contracting extremely impractical. Furthermore, current and future economic fallout make it much tougher to pull the trigger on orders and get financing. “If economic uncertainty can be measured by ship-ordering activity, then shipowners must be feeling completely lost at the moment,” wrote Stifel analyst Ben Nolan in a recent research note.
The pricing of secondhand ships is also undercutting the case for newbuilds. Newbuild prices are at too high a premium to secondhand prices for most orders to make sense.
Stamatis Tsantanis, CEO of Seanergy (NASDAQ: SHIP), explained during a Capital Link webinar last week that a secondhand 5-year-old Capesize costs around $ 30 million, whereas a newbuild costs $ 50 million. “The price differential is not justified by the incremental earnings [of the newbuild],” he pointed out.
Risks to rate upside
The IMO 2050-coronavirus one-two punch sounds like a guaranteed recipe for future freight-rate strength. But there are no guarantees in ocean shipping. Following is a devil’s advocate list of things that could go wrong:
Cargo demand could slump — A multiyear virus-induced recession or depression could cut cargo demand as much or more than vessel capacity. This would erase owners’ future rate-negotiation advantage.
Another demand risk relates to GHG emissions. If the world’s governments are serious about forcing GHG cuts by shipowners, wouldn’t they also force cuts of fossil-fuel consumption? And if so, wouldn’t this reduce future demand for tankers, bulkers and gas carriers?
The coronavirus changes the equation. One theory is that the cleaner post-lockdown skies and waters will drive momentum for environmentalism and GHG regulation. In this scenario, shipping decarbonization is more likely.
Another theory is that the outbreak will spur an extended period of economic pain and geopolitical unrest. In this scenario, countries would focus on rescuing economies and keeping transport costs cheap, making shipping decarbonization less likely.
If owners believe GHG regulations face significant delays, or may not happen at all, they could lose their fear of ordering.
Orders may go forward regardless of IMO 2050 and COVID headwinds — If rates jump in 2021-22 due to lower vessel supply, owners could decide to order regardless of the premature-obsolescence risk, on the belief that they’ll earn sufficient returns before obsolescence strikes. This would limit the duration of the upcycle.
Alternatively, if there is a deep economic slump due to the coronavirus and owners do not order ships, there could still be newbuilds — a lot of newbuilds.
Commercial shipbuilding is almost entirely based in China, South Korea and Japan. Asian governments could fill yard slots with orders by state-controlled shipowners tapping state-backed financing.
This would not only preserve Asian shipbuilding jobs, it would also depress freight rates — a plus for economies that benefit from cheap transport of raw-material imports and finished-goods exports. Economies like China’s.
Talk to a shipping veteran who has been around since the 1980s and the conversation will often turn to the infamous Sanko orders. In 1983, Japan’s Sanko Steamship Co. placed a $ 1.25 billion order at Japanese yards for 103 dry bulk newbuilds totaling 4 million DWT. The order helped Japanese yards but crippled rates for years.
The fear, if orders don’t pick up, is that an Asian shipbuilding nation will “pull a Sanko.” Most likely, China.
“Protecting NATO’s Eastern Flank”: Poland To Host 1,000 US Troops Leaving GermanyTyler DurdenMon, 08/03/2020 – 04:15
Judging by recent statements out of Russian media, the Kremlin has been closely monitoring just where the Pentagon intends to send the some 12,000 troops ordered to permanently depart Germany, after the Trump administration slammed Berlin for not shouldering its fair share of NATO defense spending.
While its believed the majority will be returning home, with a little less than half to return be redeployed around Europe, on Friday Poland indicated some will be deployed right near Russia’s doorstep. As the Defense Postreported:
Washington will deploy at least 1,000 soldiers in Poland and oversee forces on NATO’s eastern flank, Defense Minister Mariusz Blaszczak said Friday after the US announced a massive troop pullout from Germany.
Blaszczak told a Polish public radio broadcaster, “At least 1,000 new soldiers will be deployed in our country,”
“We will have an American command in Poland. This command will manage the troops deployed along NATO’s eastern flank,” he said.
“It will be the most important center for ground forces in our region,” he said. “We will soon sign the final pact with the Americans.” The Trump administration has long been in negotiations as part of an ongoing deal with Warsaw which cements closer defense ties, something which has riled Moscow.
Further angering the Kremlin is that Secretary of Defense Mark Esper last week said the Germany withdrawal will reinforce NATO’s south-eastern flank near the Black Sea, due to the redistribution of American forces. It’s expected that many could go to Baltic countries as well as Italy.
Meanwhile, last month it was reported that the Polish proposal to rename a base “Fort Trump” – which would host US troops in the East European country – has crumbled over disagreements over funding and precisely where the soldiers would be garrisoned.
Microsoft Says Talks To Buy TikTok Are Back On As White House Ups PressureTyler DurdenSun, 08/02/2020 – 19:44
Word on the street – according to WSJ – is that Microsoft and TikTok-owner ByteDance were on the cusp of a deal for the software giant to buy TikTok’s business (which encompasses all global markets except China) when President Trump’s comment about barring the app from the US (which followed repeated hints that the administration was “looking into” some kind of action) prompted both sides to put things on hold, barring more concrete guidance from the administration.
It’s reasonable to suspect that any deal for Microsoft to buy TikTok would require dependable assurances from the administration that Microsoft would be protected should lawmakers try to turn around and target Microsoft alongside Amazon, Facebook and Alphabet, as anti-trust probes into the Silicon Valley titans ramp up.
In sum: At a time when Congress is beating the tech antitrust drum louder than at any other time since the late 1990s during the landmark Microsoft antitrust case, the tech giant, which has a market cap of $ 1.6 trillion and already owns one social media platform with more than half a billion members (LinkedIn), is about to get even bigger.
To be sure, even with Trump’s blessing, a deal with TikTok would still be a risk for Microsoft, should Democrats take back control and redouble their anti-trust efforts. But right now, with the administration threatening to drop the hammer, the company might be able to get a reasonably good deal.
Microsoft is now planning to wrap up the deal talks by the middle of September:
MICROSOFT SAYS IT WILL CONTINUE TALKS ABOUT US TIKTOK BUY
MICROSOFT SAYS IT WILL MOVE QUICKLY ON TIKTOK TALKS
MICROSOFT SAYS IT WILL FINISH TALKS NO LATER THAN SEPT 15
MICROSOFT SAYS DEAL WOULD ALSO INCLUDE TIKTOK IN CA, NZ AND AUS
MICROSOFT SAYS MAY INVITE OTHER U.S. INVESTORS FOR TIKTOK DEAL
Workers at a popular safari park are on edge after baboons were spotted wielding tools like knives, screwdrivers, and even a chainsaw. And to make matters worse, the primates are having a blast using the tools to terrorize visitors’ cars.
The baboons at Knowsley Safari Park in Merseyside, England, have long enjoyed the ignominious reputation of being extremely destructive mischief-makers who were previously infamous for nabbing objects from the cars of visitors, including side-view mirrors and windshield wipers.
One mechanic in nearby Sale said that he’s had two customers this year alone who needed work done after the monkeys went to town on their cars.
“The kids start chirping up saying they want monkeys all over the car, and the next thing you know, you’re driving home with no registration plate,” the mechanic said.
However, some local workers worry that the creatures are possibly being given the weapons and power-tools “for a laugh” by equally mischievous park-goers, reports the Sunday Times.
“We’re not sure if they are being given weapons by some of the guests who want to see them attack cars, or if they’re fishing them out of pick-up trucks and vans,” one worker said.
Given the primates’ history of thievery, it would make sense that the baboons themselves are taing it upon themselves to find goods hidden in toolboxes scattered across the 550-acre safari park.
“One of the baboons was seen lugging around a chainsaw,”the worker added.
However, given the frequency with which the baboons have been sighted walking about with knives or screwdrivers in-hand, suspicion has been raised about how they are suddenly so well-supplied to wreak havoc.
“The baboons have been found with knives and screwdrivers. I do wonder if it’s some of the guests handing them out,”a source told Daily Record.
The safari park, which hosts a range of individual creatures including rhinos, lions and tigers, reopened last month after being closed due to the coronavirus pandemic. Aquariums and other zoos were also given the green light by the U.K. government to resume operations following the lockdown.
On the park’s website, potential visitors are assured that while proper public health measures are in place and people are restricted to their cars, a similar guarantee can’t be made about the problems caused by the baboobs.
“If you take a drive through our Baboon Jungle, we’re unable to return any car parts that our cheeky baboons may take,” the website noted, adding that a “car friendly route” is also an option.
Managers at the safari park are skeptical about whether the tales of knife-wielding baboons stalking park grounds is true, shrugging it off as an urban myth.
“We believe many of these stories have grown in exaggeration as they’ve been retold, with embellishment to make the objects that are sometimes found in the enclosure seem more exciting and unbelievable,” the park said.
France Remains The World’s Most Nuclear-Dependent NationTyler DurdenMon, 08/03/2020 – 02:45
France is getting greener.
A series of measures have been announced aimed at making the economy more environmentally friendly such as a ban on outdoor heaters at bars and restaurants, more efficient domestic heating systems and two regional parks. Most importantly though, as Statista’s Niall McCarthy notes, the country has set a goal to reduce nuclear’s share of electricity generation from its current 70 percent to 50 percent by 2035.
The change in direction comes amid the controversial construction of the Flamanville EPR nuclear reactor by state-utility EDF which is more than a decade over schedule and is expected to cost €12.4 billion compared to an initial budget of €3.5 billion. It is finally expected to start operation in 2023. France also appointed former green politician and nuclear critic Barbara Pompili minister for the environment earlier this month.
It operated 58 reactors last year, second only to the United States’ 97, and they accounted for 71.7 percent of total electricity generation. The U.S. reactors had a 19.3 percent share of total electricity generation.
After France, the countries most reliant on nuclear power are all concentrated in Eastern Europe. Reactors generate between 50 and 55 percent of all electricity in Slovakia, Ukraine and Hungary. Sweden is also high up on the list with just over 40 percent, with Belgium (39 percent) and Switzerland (37.7 percent) close behind.
Is there any good reason why Germany is still occupied by the United States? After 75+ years one could make a strong argument that the Nazi threat is over. Donald Trump would seem to agree with this sentiment and directly stated that he wants to continue to reduce the number of American soldiers on the territory of today’s friendlier tolerant and geopolitically submissive Deutschland. The logic by which U.S. forces are stationed across the globe has been called into question many times and very often has no sellable answer. Trump himself agrees with the dubious nature of the need to have an American army base in every possible location. He even told the graduates of West Point that “We are not the policeman of the world”. This a very unusual statement from an American President, so is Trump’s threat to remove troops from Germany practical, ideological, or some odd reflection of his famed narcissism?
So how exactly did Trump threaten Germany with a troop withdrawal? On his most beloved platform of communication with the masses the President of the United States recently tweeted the following…
Germany pays Russia billions of dollars a year for Energy, and we are supposed to protect Germany from Russia. What’s that all about? Also, Germany is very delinquent in their 2% fee to NATO. We are therefore moving some troops out of Germany!
The amount of U.S. forces in Germany, even before this demand by Trump was a good number for a flaccid superficial occupation but not a real determining factor in preventing a foreign invasion, but then again Germany is surrounded by allies and Switzerland so maybe one soldier would be good enough. With the Cold War having ended in the early 90s, from 2006-2018 the number of American personal occupying Germany went from around 72,000 to a bit over 32,000. A month before this historic tweet Trump had already threatened to remove 9,500 U.S. soldiers from Germany, shifting many to Poland, i.e. closer to Russia.
Since Germany did not pay up, after having a month to think about it, it would seem that the manpower shift has been increased to 12,000 men. So if this is a mob-style threat of “pay for protection or pay the price” then it really doesn’t seem worth it for Germany to bother, if they actually have the free will not to pay.
So what is the difference if Berlin does or does not pay their tribute to NATO?
Germany refuses to pay up
They remain occupied but by less men.
They become marginally weaker to a proposed highly unlikely Russian threat.
Germany decides to pay up
They remain occupied by the current number of men.
They remain as weak/strong to proposed highly unlikely Russian threat as they were before.
The threat traditional land based invasion happening between major powers in the 21st century seems impossible. No matter how much the clowns in the Mainstream Media portray modern war through a filter of WWII understanding, this does not make it true.
Photo: Men with guns provide no protection for Germany in a WWIII scenario.
A conflict between Russia and the West would be conducted by missiles with nuclear warheads. But for the sake of argument let’s say things change and infantry become a viable means of winning big wars again. In this instance having your troops deep in the heartland of the EU away from the Russian front makes no sense. The exception to this would be air force bases as having one’s fighters and bombers off the front line is not a problem, but the idea that “guys with guns” is somehow protecting Germany from Russia is mental even if infantry warfare became viable again.
Furthermore, what exactly would Russia gain by making a bayonet push the Reichstag actually get Moscow? The opportunity to occupy territory with no resources that traditionally hate them? Moscow has neither the means nor the motive to bother, making a Russian threat a very weak justification to do anything with tanks and men. Soft Power works against Russia, Hard Power cannot.If we look at things from this perspective this threat from Trump, it all seems rather empty and pointless, but if we take a look at it from the perspective of NATO’s future and not Germany’s national security we get a much different picture.
Germany refuses to pay up
They and any who refuse to pay are slowly weaned off of NATO.
This can weaken an organization Trump does not like or force the weaker nations to beg for American protection from the Chinese/Russians who are scarier overlords.
Germany decides to pay up
NATO becomes a profitable protection racket that continues to serve American interests without putting so much burden on the back of the core of the organization.
Trump was very critical of NATO during his electoral campaign and seems to continue to be a skeptic. And perhaps this pressure on the big anti-Russian alliance could be a win-win scenario for Trump. If the member nations start paying up/contributing then this no longer becomes a burden for America while providing the same benefits that it always did. If the nations do not pay up, which could be bad for their health, then Trump does not seem particularly worried about this troublesome organization changing or dying out.
Certain member nations, especially those close to Russia are very weak and very poor, if they lose NATO protection then their destiny will be in their own hands which should prove to be a very terrifying thought to the leadership of these micronations – having to deal with great powers on their own two feet and not as a vassal of greatness.
It is obvious to everyone that the U.S. has long overstayed its “10-year Allied occupation” of then Nazi Germany, which is a country unrecognizable in comparison to today’s core of the EU. Presenting the need to protect Germany from the Russians makes little sense, but a little is infinitely more than zero.
Being occupied by ~20,000 U.S. soldiers is not much different than paying up to be occupied by ~30,000 U.S. soldiers from a German perspective.
Airbases in Germany could matter in a theoretical (and extremely unlikely) traditional conflict with Russia. Posting infantry in the country would contribute nothing in a conflict.
As a NATO skeptic, putting pressure on the organization is a win-win scenario for Trump as either he pushes it towards the breaking point to get rid of it or forces it to become profitable/beneficial to the United States and thus worth keeping.
Weaker NATO nations near Russia have no choice but to pay up to the West because their stability rests on being a complete part of it and having its protection.
Trump may want to coerce the Germans to buy oil/gas products from someone else.