Archive for April, 2017

The following is not a conspiracy theory, but a possibility as in geopolitics seldom things are clear as they seem.

The North Korean issue has been long boiling and going unscathed through a lot of US Presidents. North Korea shelled a South Korean island, sank a South Korea  military vessell with almost 50 sailors lost and nothing happened. The first nuclear test was in 2006.

Now we are at the verge of a military conflict on nothing.

Why? The normal reasons you can read it on BBC. The second normal reason is that the North Korean in maximum 3 years will have ICBM missiles that can hit the US mainland.

There is also an alternative reason. China now is for real becoming a strategic threat to the US. Building island in the Pacific, but also in the Atlantic (more commercial apparently ,  Cabo Verde)  and the new Chinese Silk Road.

A conflict in North Korea could have several disruptive issues for China.

-Mass immigration from.North Korea

-Potential trade disruptions (specially considering the NK submarine fleet)

– large war side effects

-allow the US an excuse for a large presence of military forces in the South China Sea

-Push the US allies to major military expenses (specially Japan, South Korea, Taiwan).

As negative there is always the large amount of casualties…but, as Macchiavelli teaches, those are mere side effects.

As you see, unfortunately,  it is less crazy than you think.


Trump tax plan

Posted: April 27, 2017 in Uncategorized

Another conference on tax without any meaningful details.

As I wrote yesterday – as it is it is only a negotiating tactic as it will not pass the Congress.

Details are very scarce (it does not even include the income ranges of the three personal taxes and then goes even vaguer as providing tax relief for families).

The few things that made sense would not be paid by other offset or growth, but adding at least USD $5.5 trillion to the US Deficit (more likely USD$7).

And this without addressing Obamacare or the Border Adjustment Tax.

So the market is starting to get skeptic (and Friday there is the US Tax Ceiling – probably not an issue)

The Chinese market fell over 5% since 7 April, but it very good.

The authority started a serious clampdown  addressing regulation in the banking, insurance and securities systems and clampdown in off-balance  sheet risks (shadow lending, contagion risk and entrusted investment).

This is a very positive outcome as it is a stepping stone for the China mainland to be included in the World indexes and open to foreigners in general.

It is quite a few weeks that I am looking in who is the real Macron, as I suspected that he was an elite puppet created to create havoc in the populist European movement – a more sophisticated version of what happened with Syriza-Greece.

Now finally I found what it seems to be close to the truth. He has been created by the best (or worst) bankers in the world – so that the banks can continue to have their way.

which is an in depth repeat of what the Finacial Times (not a conspiracy theory newspaper) says.

At least now you know what/who you are voting for!

The first 100 days of President Trump have passed and presented quite a few kept promises on the internal matters (job creation etc) and a few back flip on international issues (Middle East, Russia and China). President Trump showed that is a negotiating President

But mainly the market went up on a good economy and expectations.

The next 100 days will be the test to see if the promises are real or not.

Tomorrow there will be its tax reform – probably will be liked by the market…and bogged down in Congress. And the 28th the US Debt Ceiling.

On trade he will have a bit more success (steel, aluminium, semiconductors, shipbuilding, NAFTA, South Korea FTA, EU, China). There are several blocks, but they can be overturned with the “national interest clause”.  But the clause notion in this case would have to be expanded and give phenomenal overriding powers to President Trump in lat of matters. Hopefully it will be just a negotiating tactic and not the start of a real trade war.

In North Korea President Trump got himself into trouble. He cannot back down, nor Kim Yong Un who, in three years, will have real ICBM missiles that can hit the US. A non solution scenario.

In Syria, President Trump is toying with the idea of boots on the ground

In Iran President Trump hardline risks to make win an hardliner in the next Iranian election (19 May). A too strong position against Iran can create another North Korea situation.

In Russia is all back to Obama-Clinton plus the Russian probe. Attrition will continue in Ukraine, Syria and it is rising also in ex-Yugoslavia, Afghanistan and North Korea.

The next 100 days are the real test for President Trump.

French election results

Posted: April 24, 2017 in Uncategorized

Macron and Le Pen passed to the second round.

The market cheers as Macron will probably defeat Le Pen in the second round.

Macron successfully represented himself as an outsider and, in a usual pattern, got endorsed by everyone (including some unions!) as in reality he is the shadow representative of the elites.

Most probably he will win in the second round. The one potential risk is that Assange of wikileaks has really a bomb like news. And that all the endorsements from the elites wakes up the electorate that Macron is the elite candidate.

But even in this positive scenario (Macron win) there are two outcomes.

The right (nationalistic) side never been so strong and Macron is the last chance of the elites 

For the first time in France the old parties that dominated the political landscape are not even represented and this is a revolution in itself. Specially that in a socialist country as France there is no socialist party represented.

This is a revolution in itself.

Sit Rep North Korea 22 April

Posted: April 22, 2017 in Uncategorized

The next big day for North Korea is the 25th, another important day.

Meanwhile everybody is preparing for worst case scenario – world war 3. 

US the Vincent aircraft carrier group is still heading slowly towards South Korea. As General McMaster is really smart I think the deviation is just a trick. Anyway other 2 carrier groups are heading there and 2 destroyers are in position and there are big exercises going on in South Korea (17,000 Americans and over 300,000 South Koreans).

China has alerted at least 150,000 soldiers and their aircraft bombers are in maximum alert.

Russia has at least 3 ships and several trains have been spotted going towards the North Korean front line.

Naturally everyone is saying they are military exercises. And nobody wants North Korea to fall to the US, by the way.

Stock Markets issues

Posted: April 20, 2017 in Uncategorized

People are panicking, but a market correction of 5 to 8 per cent is natural and actually welcome.

The economy (US and Europe) is going quite good (at least media release estimates, if not the real economy), but in the face of that a series of issues are mounting.

-North Korea/ US – unless an accident happens this issue could linger for a while. Apart the postures, a real confrontation is unlikely as even a minor retaliation of North Korea could cost upwards of 5,000 deaths. And let’s not talk about major. Even if they do not have real delivery system they can explode a nuke close to the border…just 35kms from downtown Seoul,

-Syria. For all the posturing the US is really worried of a serious retaliation from Russia and Iran. As a consequences the flight missions over Syria have been seriously decreased. Also, end of May, an Iranian election will be held and some really hard core candidates are emerging against the current moderate.

-France election is too close to even poll.

And the economy

  • Obamacare could not be dismantled
  • the tax reform now seems to be slipping to 2018
  • The US debt is still there and there is the US Debt Ceiling debate coming
  • The US Fed is starting to think how to unwind its multi trillion balance sheet

So if everything goes well, from the top, we are seeing a 5-8% decline. But if something goes wrong for real we could see a 20%+ decline.

No Country for Old rally (bit like the movie)

French election part 1

Posted: April 19, 2017 in Uncategorized

After the hard lessons of Brexit and Trump…everyone is silent on the outcome of the French elections.

This Sunday is the first part (second part the 7th May and then the legislative in June).

Polls are so close that are all within margin of error (in order macron, Le Pen, Fillon, Melenchon).

Also to add to the issue is that voting in France is not compulsory.

Latest data show that 64% have decided to vote (against an historical 80%). This is good for Le Pen and Melenchon as extreme right/left electors are more faithful.

30% of the electors are still undecided -this is good for Macron/Fillon as an undecided elector is more likely to have less extreme views.

The undecided and abstention votes will decide the fate of Europe. Quite funny if not so tragic.

North Korea did not blow up

Posted: April 18, 2017 in Uncategorized

Hey! We are still here! North Korea did not blow up.

After the fizzle launch missile we have to watch for the 25th April (another NK special day and the day the first carrier group arrives in NK).

Apparently there are two other carrier group going towards NK for a serious firepower show. Plus there are the US subs. The US activated its anti missile shield (THAAD) – even if with protests of China and Russia.

On the US/Nork Korea side you can be sure

  • Nor Trump, nor Kim Jong Un will back down
  • General Mcmaster is a specialist in “left of field” strategies so the attack will probably be different from what you expect and not when you expect.

All peace chance are on China to put pressure on North Korea. They will put pressure.

I do not know if China can pull it off. Last year the uncle of Kim Yong Un was killed (by artillery!!) as he was too close to the Chinese. He recently killed his half brother as he was cultivated by the Chinese as  potential substitute.

The Chinese have moved (or are ready to move 150,000 soldiers) to the North Korea border as they do not want a united Korea under the South Korean government clse to the US.

The situation is more fluid that the market realizes.