Relations with China have taken another backward step after one of Australia’s biggest exporters, Treasury Wine Estates, was among several companies whose products were being stalled because of new customs rules targeting Australian companies and industries….
“Chinese officials have introduced new and different verification and certification processes and we’ve been working with the Chinese authorities and the officials, as well as with Australian authorities and officials, to ensure that we can meet these new and additional processes, which are not just applied to Treasury Wine Estates, it’s being applied to a number of other companies, across a number of different industries from Australia,” Treasury boss Michael Clarke said.
Australian Trade Minister Steven Ciobo said in Shanghai he had been informed of the situation by Treasury, the largest importer of foreign wine into China, in the past 24-36 hours.
“The questions being asked relate to certificates of origin. We will look at precisely what the situation is and if we can get to the bottom of it,” Mr Ciobo said.
….Amid a looming trade war between the US and China, and threatened punitive tariff packages worth hundreds of billions of dollars, American exporters have also reportedly encountered pre-emptive slow downs and extra scrutiny from Chinese customs in recent weeks.
China is attempting to use trade relationships to coerce trading partners into complying with their political demands, applying Lenin’s dictum “Probe with a bayonet. If you meet steel, stop. If you meet mush, then push.”
Australia faces a clear choice. Acquiesce and the trade issues will likely disappear…for a short time until China wants something else. Effectively we will become China’s southernmost province, responding to the will of the Central Committee in Beijing.
The alternative is a lot tougher: politely but firmly resist any pressure from Beijing and demand to be treated as an equal partner in international relations. The price is high but the rewards are far greater. Our freedom and independence.
Followers of international relations can take their pick of wars at present. There is a trade war brewing between Donald Trump and Xi Jinping, which could descend into a currency war with competing devaluations. We have a Russia waging a cyber war on the West, a Cold War in Eastern Europe and the Baltics, a proxy war in Yemen between Saudia Arabia and Iran, a frozen war in Georgia and Ukraine, and a hot war in Syria that threatens to escalate into a major confrontation between Russia and the West. On top of that we have Kim Jong-un trying to break into the big leagues by test-firing ICBMs over Japan. It’s a tough neighborhood.
The “peace dividend” that was supposed to follow the collapse of Communism is well and truly over. The next major ideological conflict is upon us. Democracy versus the Dictators. For the West to prevail it will have to engage in a coordinated muscular diplomacy over the next few decades. A good start would be Margaret Thatcher’s Statecraft: Strategies for a Changing World (2002):
Margaret Thatcher and Ronald Reagan in the oval office, 1988
“For my part, I favour an approach to statecraft that embraces principles, as long as it is not stifled by them; and I prefer such principles to be accompanied by steel along with good intentions.
…The habit of ubiquitous interventionism, combining pinprick strikes by precision weapons with pious invocations of high principle, would lead us into endless difficulties. Interventions must be limited in number and overwhelming in their impact.
….I should therefore prefer to restrict my guidelines to the following:
Don’t believe that military interventions, no matter how morally justified, can succeed without clear military goals.
Don’t fall into the trap of imagining that the West can remake societies.
Don’t take public opinion for granted — but don’t either underrate the degree to which good people will endure sacrifices for a worthwhile cause.
Don’t allow tyrants and aggressors to get away with it
And when you fight — fight to win.’
But the West also needs to clean up its own house and correct many of the abuses to which Capitalism has been subjected over the last few decades. Martin Wolf sums up the challenges in US-China rivalry will shape the 21st century:
‘The threat is the decadence of the west, very much including the US — the prevalence of rent extraction as a way of economic life, the indifference to the fate of much of its citizenry, the corrupting role of money in politics, the indifference to the truth, and the sacrifice of long-term investment to private and public consumption….’
Bold leadership is required. To fight the wars we have to but, more importantly, to resolve conflicts by other means wherever possible. That doesn’t mean avoiding conflict by retreating from red lines. It means establishing and vigorously enforcing new rules that benefit everyone. No one wins in a war. Whether it is a trade war, a cold war or a hot war. Everyone pays a price.
‘It must be thoroughly understood that war is a necessity, and that the more readily we accept it, the less will be the ardor of our opponents….’
At this time of year we are usually inundated with projections for the year ahead, from predictions of imminent collapse to expectations of a record year.
We live in a world of uncertainty, where both extremes are possible, but neither is likely.
We are clearly in stage 3 (the final stage) of a bull market. Risk premiums are close to record lows. The yield spread between lowest investment-grade (Baa) bonds and equivalent risk-free Treasuries has crossed to below 2.0 percent, levels last seen prior to the 2008 global financial crisis. The VIX is also close to its record low, suggesting high levels of investor confidence.
Money supply continues to grow at close to 5.0 percent, reflecting an accommodative stance from the Fed. MZM, or Zero Maturity Money, is basically M1 plus travelers checks and money market funds.
Inflationary forces remain subdued, with average hourly wage rates growing at below 2.5 percent per year. A rise above 3.0 percent, which would pressure the Fed to adopt a more restrictive monetary policy, does not appear imminent.
Tax relief and higher commodity prices are likely to exert upward pressure on inflation in the year ahead. But the Fed’s stated intention of shrinking its balance sheet, with a reduction of $100 billion in the first 12 months, is likely to have an opposite, contractionary effect.
A flattening yield curve has also been mooted as a potential threat, with a negative yield curve preceding every recession over the last 50 years.
A yield differential, between 10-year and either 2-year or 3-month Treasuries, below zero would warn of a recession. When long-term yields fall below short-term yields financial markets stop working efficiently and bank lending tends to contract. Banks, who generally borrow at short-term rates and lend at long-term rates, find their margins are squeezed and become strongly risk-averse. Contracting lending slows the economy and normally leads to recession.
But we are some way from there. If we take the last cycle as an example, the yield curve started flattening in 2005 (when yield differentials fell below 1 percent) but a recession only occurred in 2008. The market could continue to thrive for several years before the impact of a negative yield curve is felt. To exit now would seem premature.
Yesterday’s solid blue candle on the gold chart [XAUUSD] confirms my view of the precious metal as a form of “Trump insurance”. After Trump and North Korea exchanged threats suggesting nuclear retaliation, gold gained 1.32%, breaking resistance at $1275/ounce. Follow-through above $1300 would signal a primary advance, with a target of $1400*.
U.S. Secretary of State Rex Tillerson said on Friday there would not be many good options left on North Korea if the peaceful pressure campaign the United States has been pushing to curb Pyongyang’s nuclear and missile programs failed….
The United States, Japan and South Korea agreed on Friday to push for a quick U.N. Security Council resolution to apply new sanctions on North Korea. U.N. diplomats said the United States had given China a draft sanctions resolution.
But Washington faces an uphill struggle to convince Russia and China to give quick backing to new U.N. sanctions.
Experts say North Korea’s ICBM launch on Tuesday was a major step forward in its declared intent to create nuclear-tipped missiles capable of hitting the United States. Some U.S. experts say the missile appeared to have the range to hit Alaska, Hawaii and parts of the U.S. Pacific Northwest.
Washington has warned it is ready to use force if need be to stop North Korea’s weapons programs but the consequences of that could be catastrophic and it prefers global diplomatic action.
….As long as we know our history, we will know how to build our future. Americans know that a strong alliance of free, sovereign and independent nations is the best defense for our freedoms and for our interests. That is why my administration has demanded that all members of NATO finally meet their full and fair financial obligation.
As a result of this insistence, billions of dollars more have begun to pour into NATO. In fact, people are shocked. But billions and billions of dollars more are coming in from countries that, in my opinion, would not have been paying so quickly.To those who would criticize our tough stance, I would point out that the United States has demonstrated not merely with words but with its actions that we stand firmly behind Article 5, the mutual defense commitment. (Applause.)
Words are easy, but actions are what matters. And for its own protection — and you know this, everybody knows this, everybody has to know this — Europe must do more. Europe must demonstrate that it believes in its future by investing its money to secure that future.
That is why we applaud Poland for its decision to move forward this week on acquiring from the United States the battle-tested Patriot air and missile defense system — the best anywhere in the world. (Applause.) That is also why we salute the Polish people for being one of the NATO countries that has actually achieved the benchmark for investment in our common defense. Thank you. Thank you, Poland. I must tell you, the example you set is truly magnificent, and we applaud Poland. Thank you. (Applause.)
We have to remember that our defense is not just a commitment of money, it is a commitment of will. Because as the Polish experience reminds us, the defense of the West ultimately rests not only on means but also on the will of its people to prevail and be successful and get what you have to have. The fundamental question of our time is whether the West has the will to survive. Do we have the confidence in our values to defend them at any cost? Do we have enough respect for our citizens to protect our borders? Do we have the desire and the courage to preserve our civilization in the face of those who would subvert and destroy it? (Applause.)
We can have the largest economies and the most lethal weapons anywhere on Earth, but if we do not have strong families and strong values, then we will be weak and we will not survive. (Applause.) If anyone forgets the critical importance of these things, let them come to one country that never has. Let them come to Poland. (Applause.) And let them come here, to Warsaw, and learn the story of the Warsaw Uprising….
The UK has a hung parliament, with Theresa May’s Conservative Party losing seats and likely ending up 8 short of an overall majority. It looks as if young people voted in large numbers, mainly for Jeremy Corbyn’s Labour Party. The Conservatives remain the single largest party however, and together with the Conservative-leaning DUP on 10 seats, they will likely form the new government. The Prime Minister is holding a press conference at 10am – it is possible that she resigns at that time. This is an extremely poor result for her personally, having gambled that another General Election would significantly boost her majority. For an election designed to deliver a “Strong and Stable” government, we face the possibility of a new Conservative Party leadership battle (perhaps beginning later today) and even another General Election later this year.
This renewed uncertainty seems likely to be unhelpful to the UK’s Brexit negotiations, due to start on 19th June. The Conservatives did especially badly in “Remain” constituencies…… Finally, some good news for those fed up with election campaigns: the poor performance of the SNP in Scotland reduces the likelihood of a new Scottish independence referendum in the next few years.
Investors remain highly focused on global political issues. Emmanuel Macron’s victory in France has reduced some political risk in Europe, but investors are growing increasingly skeptical about President Trump’s ability to deliver on his pro-growth agenda. The growing scrutiny over White House ties to Russian operatives, escalating risks of global terrorism and rising uncertainty around North Korea are all negatives for investor confidence.
But these negatives have not offset positive global macroeconomic conditions. Global economic growth is hardly robust, but looks better than it has in several years, especially in Europe. Manufacturing activity is improving and global trade appears to be recovering. Corporate profits are also trending higher across most markets and industry sectors. Financials remain a weak spot in many areas of the world, but we expect global bond yields will rise as economic growth solidifies, which should help this sector. Finally, monetary policy remains growth- and equity-friendly. The Fed is in the midst of a rate-hiking campaign, but should continue raising rates slowly and predictably…..
Philip Parker – veteran fund manager decides to sell all shares in Altair’s Trusts to hand back cash and hands back mandates for SMA/IMA’s and also sells MDA family office mandates to cash from shares.
AUSTRALIAN EAST COAST PROPERTY MARKET BUBBLE AND THE IMPENDING CORRECTION
CHINA PROPERTY AND DEBT ISSUES LATER THIS YEAR
THE OVERVALUED AUSTRALIAN EQUITY MARKETS AND
OVERSIZED GEO-POLITICAL RISKS AND AN UNPREDICTABLE US POLITICAL ENVIRONMENT
The underlined above are some of the more obvious reasons to exit the riskier asset markets of shares and property – in my opinion.
As a result of the above and after 25 years as a fund manager and 30 years in this industry I am taking around 6 to 12 months off. The main reason is in my opinion that there are just too many risks at present, and I cannot justify charging our clients fees when there are so many early warning lead indicators of clear and present danger in property and equity markets now….
As a psychologist researching misinformation, I focus on reducing its influence. Essentially, my goal is to put myself out of a job.
Recent developments indicate that I haven’t been doing a very good job of it. Misinformation, fake news and “alternative facts” are more prominent than ever. The Oxford Dictionary named “post-truth” as the 2016 word of the year. Science and scientific evidence have been under assault.
Fortunately, science does have a means to protect itself, and it comes from a branch of psychological research known as inoculation theory. This borrows from the logic of vaccines: A little bit of something bad helps you resist a full-blown case. In my newly published research, I’ve tried exposing people to a weak form of misinformation in order to inoculate them against the real thing – with promising results.
Two ways misinformation damages
Misinformation is being generated and disseminated at prolific rates. A recent study comparing arguments against climate science versus policy arguments against action on climate found that science denial is on the relative increase. And recent research indicates these types of effort have an impact on people’s perceptions and science literacy.
A recent study led by psychology researcher Sander van der Linden found that misinformation about climate change has a significant impact on public perceptions about climate change.
The misinformation they used in their experiment was the most shared climate article in 2016. It’s a petition, known as the Global Warming Petition Project, featuring 31,000 people with a bachelor of science or higher, who signed a statement saying humans aren’t disrupting climate. This single article lowered readers’ perception of scientific consensus. The extent that people accept there’s a scientific consensus about climate change is what researchers refer to as a “gateway belief,” influencing attitudes about climate change such as support for climate action.
At the same time that van der Linden was conducting his experiment in the U.S., I was on the other side of the planet in Australia conducting my own research into the impact of misinformation. By coincidence, I used the same myth, taking verbatim text from the Global Warming Petition Project. After showing the misinformation, I asked people to estimate the scientific consensus on human-caused global warming, in order to measure any effect.
I found similar results, with misinformation reducing people’s perception of the scientific consensus. Moreover, the misinformation affected some more than others. The more politically conservative a person was, the greater the influence of the misinformation.
This gels with other research finding that people interpret messages, whether they be information or misinformation, according to their preexisting beliefs. When we see something we like, we’re more likely to think that it’s true and strengthen our beliefs accordingly. Conversely, when we encounter information that conflicts with our beliefs, we’re more likely to discredit the source.
However, there is more to this story. Beyond misinforming people, misinformation has a more insidious and dangerous influence. In the van der Linden study, when people were presented with both the facts and misinformation about climate change, there was no net change in belief. The two conflicting pieces of information canceled each other out.
Fact and “alternative fact” are like matter and antimatter. When they collide, there’s a burst of heat followed by nothing. This reveals the subtle way that misinformation does damage. It doesn’t just misinform. It stops people believing in facts. Or as Garry Kasporov eloquently puts it, misinformation “annihilates truth.”
Science’s answer to science denial
The assault on science is formidable and, as this research indicates, can be all too effective. Fittingly, science holds the answer to science denial.
Inoculation theory takes the concept of vaccination, where we are exposed to a weak form of a virus in order to build immunity to the real virus, and applies it to knowledge. Half a century of research has found that when we are exposed to a “weak form of misinformation,” this helps us build resistance so that we are not influenced by actual misinformation.
Inoculating text requires two elements. First, it includes an explicit warning about the danger of being misled by misinformation. Second, you need to provide counterarguments explaining the flaws in that misinformation.
In van der Linden’s inoculation, he pointed out that many of the signatories were fake (for instance, a Spice Girl was falsely listed as a signatory), that 31,000 represents a tiny fraction (less than 0.3 percent) of all U.S. science graduates since 1970 and that less than 1 percent of the signatories had expertise in climate science.
I found that explaining the misinformation technique completely neutralized the misinformation’s influence, without even mentioning the misinformation specifically. For instance, after I explained how fake experts have been utilized in past misinformation campaigns, participants weren’t swayed when confronted by the fake experts of the Petition Project. Moreover, the misinformation was neutralized across the political spectrum. Whether you’re conservative or liberal, no one wants to be deceived by misleading techniques.
Putting inoculation into practice
Inoculation is a powerful and versatile form of science communication that can be used in a number of ways. My approach has been to mesh together the findings of inoculation with the cognitive psychology of debunking, developing the Fact-Myth-Fallacy framework.
This strategy involves explaining the facts, followed by introducing a myth related to those facts. At this point, people are presented with two conflicting pieces of information. You reconcile the conflict by explaining the technique that the myth uses to distort the fact.
We used this approach on a large scale in a free online course about climate misinformation, Making Sense of Climate Science Denial. Each lecture adopted the Fact-Myth-Fallacy structure. We started by explaining a single climate fact, then introduced a related myth, followed by an explanation of the fallacy employed by the myth. This way, while explaining the key facts of climate change, we also inoculated students against 50 of the most common climate myths.
For example, we know we are causing global warming because we observe many patterns in climate change unique to greenhouse warming. In other words, human fingerprints are observed all over our climate. However, one myth argues that climate has changed naturally in the past before humans; therefore, what’s happening now must be natural also. This myth commits the fallacy of jumping to conclusions (or non sequitur), where the premise does not lead to the conclusion. It’s like finding a dead body with a knife poking out of its back and arguing that people have died of natural causes in the past, so this death must have been of natural causes also.