Archive for June, 2017

North Korea is currently out of sight – but still an issue.

The window of opportunity for the US is circa 18 months (at which time North Korea will have a ballistic missile to hit the US).

Kim Yong Un is in full paranoia mode (using cars of subordinates, all identical) and not appearing in public, as on the US aircraft carrier there is the SEAL Team 6 that killed Osama Bin Laden (on the same carrier that was the base of the operation…).

China seems to have stopped the sales of gasoline fuel. This could be really crippling for North Korea …it could bring Kim of his knees…or making him attack before is too late. China National Petroleum declared that it stopped delivery as it fears North Korea could not pay. If this is true and maintained the North Korean reserves will last 3 months.

Probably is a temporary closure to send a message.

Funny enough, from the Malaysian police, I found out why Kim killed his brother.

The police released the fact the the brother met a renowned CIA contact the day before and going through is room (as he was under surveillance) they found an exchange via UBS stick and USD$120,000 in cash. A real spy story from the North Korean spy agency RGB, not just crazy Kim.

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The bond market has been stunned by the latest speeches of the various Reserve banks.

The European bank was pro rising rates. Canada surprised with a hintn of rate rise increase (and as per previous post Canada is really similar to Australia).

The Fed is in the rising path and the Bank of England had full on dissenters in his last meeting where it kept the rates stable.

On top of this an ex member of the RBA yesterday say that, if the economy is good, the RBA could increase 8 times between 2018 and 2019.

This is a major shift – all the accommodative policies that favour the share market and real estate are winding down.

A misstep could really crash the market – the Central Banks need to be really alert on what they are doing. I am not bearish, but we are in a minefield.

The Australian real estate market (and with it the Aussie banks) is in full on danger as the Australian bank takes their loans from overseas.

My personal idea is that they will not succeed to increase much the rates, but everything is changing.

Cyber Attack

Posted: June 28, 2017 in Uncategorized

In a few months we have two major cyber attacks.

Those cyberattacks are provoked by normal criminals, not even terrorists or state adversaries and still cripple the net.

And this tools are simply some basic tools stolen by some hackers from the NSA.

It makes you wonder what would happen in a real cyber war.

Courtesy to Snowden we know that the US has planted a killswitch in the water and energy supplies of friendly countries like Germany, Japan and Austria (in case they decide to be not that friendly). If you do that to friends…imagine what you plant on Russian and Chinese systems. And what they do plant on our systems could be even more worrisome as now, with the internet of things, also your car, television, fridge can be exposed.

It is literally a killswitch “lights-out” scenario and probably the first things you will notice in a full war scenario.

What you can do about it? Quite a few survival things essential to give the government the time to restore services in a week.

-Keep some long conservation food (and water!) – I was in Italy when Chernobyl happened…the supermarkets ran out of food in circa 2 hours.

-Have some camping gear (gas camping stove, barbecues, lights, candles etc)

-Keep some cash (the ATM and banks will be some of the first targets)

-Keep at least 50% of fuel in the car (well, if it is internet-connected, get a bicycle)

If it last more than a week, you better leave the main cities. There are war games scenarios that show that the crippling of the water systems for a week will bring back cholera and other nasty illnesses.

You never know when if happens, but unfortunately it will be always more frequently.

 

A different Syrian war

Posted: June 27, 2017 in Uncategorized

Now that the Syrian anti-IS war is almost finished, the real war start to appear.

All the war in reality started due to two competing oil/gas pipelines. The Qatar/Saudi/Syria to Europe and the Iran/Iraq/Syria/Lebanon one.

The first one was devised to render Europe independent from the Russian gas supplies. (if you do not believe you can check that the Russian gas supplies pass via….Ukraine…and Russia is trying to diversity via…Turkey).

So now all is fitting for the real showdown USA vs Iran …logically involving all players, including Qatar and Israel.

You can see all the picture now. 

The major point is a place in Syria called Al Tanf, the midpoint Iran/Lebanon. 

As they say, above all fears. 

Canada is often used as “Australia forecast”.

Canada is very similar to Australia – both legally and as landscape and even…weather.

All people live towards the border (coastline for AU) with US, population is scarce and concentrated in big cities. The weather is harsh – freezing winter’s (hottest summers in Australia).

Also investment wise, Canada is focussed on Canadian shares (banks) and commodities and super expensive real estate.

In the last few years the US hedge funds made a killing shorting previously high flying Canadian blue chips.

The reasons why are different, but since May the US hedge funds seem to have turned their attention to Australia.

The importance of overseas diversification is becoming of utmost importance.

 

I like the Middle East it is really like a good book avere you cannot guess the end.

The current situation actually started with the shale gas  in the US that allowed the US to be more independent and less caring of the Middle East.

President Trump is simply accellerating something that would have happened anyway.

Trump visit to Saudi Arabia somehow emboldened the Saudis to take matter into their hands.

So they started the Qatar siege and became more active against Iran and warned Turkey to stay out of the Gulf.

The key piece of this chess play is Prince Salmon, the new young prince (Macchiavellian indeed) and future king of Saudi Arabia. 

 He is considered the mastermind behind the Yemen war and the founder of the Vision 2030 plan for Saudi Arabia.

Vision 2030 in very short words is using the cash from oil to remodernize Saudi Arabia and pushing it towards an IT mastermind role.

So he is the one who pushed for the Aramco IPO (he wants it in US to be liked by Trump, other losing factions in London as they are scared of the potential legal issues in US (terror laws)).

In light of this he pushed heavy investment in high tech and a new friendship with Israel (very advanced in IT ).

On the other side is very aggressive and impredictable and a fierce enemy of Iran.

His Vision 2030 is very interesting,  but Iran could have another vision. Or maybe is just a ploy to raise the spectre of a Saudi/Iran war and oil prices, after having flushed out the oil speculators in the current sell off. He needs good money for the Aramco IPO.

As I say a great book with real consequences. 

China enters the MSCI

Posted: June 21, 2017 in Uncategorized

Finally Chinese shares have been admitted to the MSCI Indexes.

A good outcome, but more symbolic than anything else, at the moment.

At 0.73%% of the index initially it will bring in USD10bn in a USD6.8Trillion market (drop in the ocean) in 2018. Over the next 5 years USD210BN.

The inclusion will be done in two parts may and August 2018.

But the road is clear as, at the end, the inclusion will be 5% (and Chinese related shares will be 40% of the MSCI EM).

Chinese related stock are now 18.1% and will become 28.55% by August 2018.