Archive for February, 2017

Greece (again!)

Posted: February 8, 2017 in Uncategorized

As I told my clients earlier in the year, Greece is at odds again with the creditors.

The IMF and Greece again do not agree and, even with all austerity measures in place, by 2-13 (not a typo) the Greek debt will decrease from 179% to 160% (and then skyrocket again – by 2060 the IMF calculates that it will be 275% of the GDP).

Greece in July will not have Euro 7 billion to repay the creditors (which is a vicious circle…Greece borrows to repay creditors that then they give credit to Greece and make money on that).

PM Tsipras had a mandate from the public (referendum) and disavowed it. He should be booted from Greece or learn from Trump and his multiple bankruptcy (4 business filed for Chapter 11).

 

Middle East 2017

Posted: February 8, 2017 in Uncategorized

Middle East in 2017 will have a reset as everyone will have to consider the action of the new administration.

The most important development is the US-Iran relationship.

President Trump is making true of its promise to get tough on Iran and this does not bode well. It already declared that Iran is an exporter of terrorism (which is actually wrong as all terrorist are Sunni which have their ideological base in Saudi Arabia*) and against Obama’s nuclear deal.

Iran now is well entrenched in Iraq, Syria and Yemen and a core ally of Russia.

In Iraq there is even an alliance of Iran ground forces and US air force and elite units in fighting Islamic State.

Underestimating Iran as a military force, specially in an asymmetric war scenario, is hopefully such an idiocy that even President Trump will know.

Not only the Iranian Quds special  forces  are highly trained and specialized having fought (and won) in Syria and Iraq against Islamic State.

Even worse, the Hezbollah were the only fore that Israel could not defeat in the last Lebanon campaign.

If there is a showdown US/Iran it will probably start in Yemen. The Houthi at this moment are very lightly supported by Iran and still are resisting all the other Gulf States. Yemen can become easily a worst-than-Afghanistan issue for the new administration as oil is involved as both there are a lot of shipping lanes and Saudi oil infrastructures.

As there is a Turkey-Saudi Arabia re alignment, this could easily morph in the Middle East war.

Hopefully Russia will be able to be a mediator.

Oil can be one of the Black Swan this year.

Syria  has disappeared from Western media as the West backed insurgency is almost finish (currently encircled by Turkish and Syrian government forces backed by Russian warplane. Syria, Iran, Turkey, Russia and China are deciding how to cut the pie (of the reconstruction efforts).

Russia is quite friendly with Turkey, Iran, Iraq, Syria, Egypt and Western Libya (still amazes me how Clinton-Obama lost almost the entire Middle East in 8 years).

China is very close to Pakistan.

That is the Middle East for you…..not really.

Morocco has interestingly positive dynamic. It banned Burkas and just recently made it not punishable (with death sentence) apostasy (if someone converts from Islam to a different religion). Morocco has the highest number of request for new Catholic churches of the entire Africa.

  •  Iran sponsored terrorism does exist, but it is political not religious – so mostly against Israel and some US interest – but not about building a Muslim Caliphate

 

France Hunger Games

Posted: February 7, 2017 in Uncategorized

As we are heading towards the elections the heat starts to pick up…in a similar way to the US election.

Le Pen is slightly ahead and seen as winning the first round, but then losing to a more centrist candidate in the second round. Le Pen just issued her manifesto which in a very short summary spells the end of the European Union

-Protectionism

-EU overhaul (no single currency, no free movement), otherwise Frexit referendum

-Social benefits skewed towards French citizen (before you get angry about this – in Italy as the social benefits are skewed towards more children…more immigrants get public housing than Italian old couples on the brink of starvation)

She softened a bit the more some points of her 2012 agenda to appeal more to centrist base.

She has also a scandal ongoing for misuse of EU funds (she spent Euro 300,000 on Party staff instead of EU assistants), but as for the elections is not big deal.

Fillon, the Center Right candidate, and previously supposedly to win the race is mired in a scandal in which he paid his wife over Euro 900,000 in 10 years for an supposedly nonexistent personal assistant role and now it appears also his children got paid. He refuses to leave the race, but he is practically finished.

Macron, Center Left, again looked like to be the winner as new independent candidate (even if he is a banker and ex minister of Hollande Government). But Assange of Wikileaks (ops, him again) told the media that he is going to release interesting correspondence between Hillary Clinton and Macron including business (Macron was Rothschild banker) and personal (it seems there is something relating he and his wife and alternative gay circles).  Anyway the media are trying their best to depict an Hollande ex finance minister and Rothschild banker as an outsider (quite funny indeed).

Naturally voices are start rising about a Russian involvement (Russia Today last year started a French language channel). And the old KGB (now SVR) was, with the Israeli one, the best secret service in the world.

There will be only one winner.

Did we see it all before?

The start of the relationship with the new US Administration started on a rocky pattern, but geopolitical imperative will prevail.

Even if Australia enjoy a nice “far away” location it does not have the economic power to build  enough of a “blue sea” fleet to secure its critical commercial sea-lanes.

To this effect Australia is ” hostage” of the US. Even with an expanded military budget (+USD$26 Billion planned for the next decade in 2016) it cannot dream to create a force against China and the like.

So it will maintain its alliance with the US, but also trying to maintain a low profile – avoiding joint exercises with the US in the South China Sea and avoiding with alliances with Japan or other countries that could bring Australian forces closer to a potential flash point.

Anyway, Australia, and the entire Pacific region, is entering in a new phase where situations and alliances are quite fluid after over 50 years of status quo.

US Economy

Posted: February 1, 2017 in Uncategorized

While the headlines are all focusing on Trump…how is really going the US economy (still from Obama legacy).

The US economy is encountering a very small soft patch (GDP Q4 1.9% versus expected 2.2% and Q3 3.5%)

The companies in general are beating expectations at an healthy rate 65%, but under the long term average of 67%).

The main beat were in materials and financials.

It does not paint a bad picture – but it does not give much room for error either and that is why the market is so attentive to what President Trump is saying.