Archive for the ‘Uncategorized’ Category

China Rising

Posted: October 19, 2017 in Uncategorized

The Congress has kicked off and President Xi consolidates the power (the most after Mao!) and present his vision.

-China will grow with the mandate of Party first and its unique form of Chinese socialism

-China will point to be the foremost power by 2050 (in to phase 2020-2035 and then 2035-2050)

-China will point at quality over quantity (he did not hint at GDP targets)

Other points:

Monetary and Fiscal integration, reigning in speculation, more open economy for foreigner and freer Yuan, housing not for speculation.

In essence President Xi privileges the Party over reforms.

One of the best politicians in the world, but still fail to address some Chinese issues which could endanger his vision.

Rising wages, automation (which is positive due to the shrinking workforce cause by the 1 child policy) and specially the soaring debt  (IMF indicates that it will be 300% of GDP by 2022).

But the biggest threat to Xi vision will come from external events such as the President Trump administration, North Korea, a faster economic deceleration due to the debt level.

Anyway, much better than the Western politicians (not a high bar, but still a bar).

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The first clear message from the Chinese Congress is…houses are for living and not for speculation.

mmmmhhh maybe we should tell PM Turnbull?

Kurdish dream crushed

Posted: October 18, 2017 in Uncategorized

The Kurds , as the Islamic State is defeated, declared a referendum and independence.

As usual, they got used and now discarded as both Turkey and Iraq (which is an Iranian pawn) does not want it (in and around Kirkuk there is a lot of oil).

Already the Kurdish fighter are in full flight against the might of Iran which gave them an ultimatum.

Both the US and Russia have the hands tight as they are allies of the party involved (but only the Kurds are easily dismissed).

The only help they could have would be Israel – but even for Israel a direct confrontation so far from its border would be unsustainable (but probably they will help black-op style).

I am quite sad that one of the main forces that defeated IS (together with Iranian/Russian forces) again has been used and then discarded. Unfortunately it happens often.

Geopolitics 1 0 1

 

A battle on two fronts – Iran

Posted: October 16, 2017 in Uncategorized

President Trump- still proceeding with its dismantle anything Obama, charged against Iran.

Geopolitically it is a supremely unthoughtful thing to do – even if he toned down its own version.

  1. You do not open a second front when you already confronting North Korea – specially as North Korea and Iran have been proven to collaborate on weapon system.
  2. Iran had quite serious internal problems between the various factions – the push will probably embolden and unite the military side that President Trump wanted to hit.
  3. The agreement has been supported by various side and specially the European allies of the US – so this introduce another split between US and Europe.
  4. Iran has an incredible war machine – specially in asymmetric warfare. So much so that, in running battles with Israel, it is the only side that sometimes wins and sometime lose against the almighty Israeli army (usually the other side just gets beaten)
  5. There is already an alliance Turkey, Iraq and Iran that encompasses the entire North Middle east.
  6. Iran can easily hit the US asymmetrically in Iraq and Syria at least. Or reinforce the Houthi in Yemen. And these are just easy targets.

Opening such a second front is really dangerous.

Saudi Arabia -ARAMCO sale

Posted: October 14, 2017 in Uncategorized

Saudi Arabia has changed is mind and decided to sell its crown jewel Armco (the owner of all Saudi oil) via private sales and not IPO. Or at least IPO make it to the market in minor flavour in 2019.

There quite large geopolitical repercussions if the move.

The private buyer will probably be China. This has implication both as strategic positioning (already with the Russian arms deal the Saudis were distancing from the US) and also for the USD. The USD has been the currency reserve of the world specially after the win of the 2WW and the pact to price oil in USD in 1971. And China is already testing a gold backed Yuan oil transaction system.

On the other side is an admission that even the Saudis cannot control the oil prices with fracking and EV vehicles on the rise.

North Korea

Posted: October 13, 2017 in Uncategorized

North Korea is more and more tilting towards war.

North Korea advised that they will restart usuing the Kaesong shared industrial facility (but without agreement from the South).

Several reports from Russia hints to a probable real ICBM (12,000km radius) missile test.

The war of words (now insults) is going on.

On the US the tempo of “friendly” military exercise is growing (4 this month!). Also some new weapon systems have been put in place (aircraft carrier and sub at least).

One dark theory is that there is a strange race going on. Republicans are really starting to get tired of President Trump, but they need to keep him until the tax reform is passed.

For President Trump a way to stop being impeached or deemed unfit for command would be to start a war before that as those proceedings are almost impossible to achieve in war time.

Unfortunately it makes sense. A doom race.

There is a lot of talk of Terminator killing machines, but they are still things of the near future.

In finance alghorithm trading is diffused everywhere (close to 90% of trades are alghorithmic and machine trading is a big component of it).

And in finance, in the last 3 months, the human traders are beating the machines.

The resistance has started.

Jokes apart, this low volatility period is a killer for machines. The raw data and macro situation tells the machines that the situation is bad and we are going to recession…and the market goes up.

The machine cannot understand the manipulation and other influences as it goes by logic. The market is sometime logic, but more often driven by greed and fear.

Once you know the machines you know when to run and hide and when to fight and defeat them or simply ride their path of destruction.

As they say in the movie, the resistance has started. Not easy and few human managers will survive.