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Dollar Is 'Best of a Bad Bunch' in Surprise Turn for Wall Street
From the Reserve Bank of Australia to the European Central Bank,
officials are acknowledging a rising tide of risks, and shifting their
monetary-policy outlooks as a result.
The upshot is that even with the Federal Reserve signaling that it’s
done hiking interest rates for the foreseeable future,
foreign-exchange traders increasingly see the U.S. currency holding
its own as the world’s doves gain the upper hand. Since the Fed’s
pivot last week, the dollar has gained about 0.5 percent, outpacing
all of its Group-of-10 peers.
The U.S. is the “best of a pretty bad bunch,” James Athey, a senior
investment manager at Aberdeen Standard Investments in London, said in
a Bloomberg TV interview. While noting that the American economy
remains on an upward trajectory, for the euro zone “that story does
not apply in the slightest. The underlying health of the economy from
a structural and now a cyclical perspective is far, far, far weaker.”
Wall Street has long expected a dollar slump this year, fueled by
converging monetary policies as U.S. economic outperformance wanes
relative to the rest of the world. Yet increasingly 2019 is shaping up
to be a race downward among currencies stamped with an abundance of
Along with recent upside on dollar crosses, traders are already paying
more for options contracts that benefit from the greenback gaining
against its major peers over the next several months relative to
hedges guarding against a drop. Meanwhile, the gap between U.S. and
German 10-year yields has widened about 9 basis points since the start
of the year, even as Treasury rates touched an almost one-year low in
“That’s the paradox, that the dollar is gaining even though U.S.
yields remain low,” said Win Thin, Brown Brothers Harriman’s global
head of currency strategy. If the market begins to price back in a Fed
rate hike later this year and 10-year Treasury yields move higher,
“that would be the next leg for a dollar rally.”
The speech of a president whose power is draining @FinancialTimes @EdwardGLuce
Law & Politics
Once a year, Donald Trump gives an uncharacteristically bipartisan
speech to Congress. It is customarily sandwiched — often within hours
— by venomous expressions of partisanship. Mr Trump’s 2019 State of
the Union was no exception.
Earlier in the day, the president described Chuck Schumer, the Senate
Democratic leader, as a “nasty son of a bitch”, and Joe Biden, the
former vice-president, as “dumb”.
A few hours later he called on Americans to “rekindle the bonds of
love and loyalty and memory that link us together”.
The puzzle is why he bothers to go through the motions. Perhaps even
Mr Trump — the noisiest iconoclast ever to occupy the White House —
feels bound by the weight of tradition.
The difference is that his third attempt at conjuring national unity
deceived no one. His first address to Congress, which took place
shortly after his infamous “American carnage” inaugural address in
2017, won rapturous reviews.
Otherwise implacable critics said he had finally taken on a
presidential mantle. Such praise was quick to curdle. Two years later,
no one believes Mr Trump is about to pivot to the political centre.
In spite of obligatory references to American greatness, moon
landings, Normandy beach invasions, and Cold War valour, Mr Trump’s
only real goal was the highly divisive — and familiar — one of
building a wall with Mexico. He offered no plan on how to do it.
It was the speech of a president whose power is rapidly draining. It
came barely a week after Mr Trump caved into Democratic pressure to
reopen the US government following a record 35-day shutdown without
having secured a dime of funding for the wall.
It came just eight days before the US government is set to close
again unless Mr Trump agrees to whatever budget deal a bipartisan
committee sends to his desk. It will not include any funding for the
At which point, Mr Trump will sign because he cannot afford to be
blamed for another shutdown. He is then likely to declare a national
emergency — one that his most loyal enforcers, most importantly Mitch
McConnell, the Senate majority leader, have declared in advance to be
In spite of this, Mr Trump insisted on Tuesday night that “I’ll get it
[the wall] built”. He has backed himself into a corner from which
there is no escape. Without a wall, Mr Trump’s base will drift away.
Yet he can only fund one by manufacturing a crisis he would be almost
certain to lose.
The other significant message in Mr Trump’s speech was an attack on
socialism. Cold War presidents would routinely warn against the Soviet
version. It is hard to recollect a US president worrying about
socialism at home.
Yet Mr Trump’s bromide was borne of a shrewd political calculus. Many
of the unapplauding Democrats in front of him today happily flaunt a
word that was until recently taboo in US politics.
The brewing Democratic presidential primaries are turning into a
social democratic beauty contest. Mr Trump knows he could profit from
that. “Today we renew our resolve that America will never be a
socialist country,” he said to thunderous applause from half the
As for the traditional laundry list of presidential to-do items, most
Americans will struggle to name a single one 48 hours from now. The
speech was remarkably light on specifics, even by Mr Trump’s
There was a content-free reference to infrastructure — no mention of
cost, mechanism or rationale.
He talked a little about lowering prescription drug prices and funding
a cure for childhood cancer.
These were the most tired passages in the speech. It was clear Mr
Trump neither expected, nor particularly wanted, to make bipartisan
hay with the Democrats. The feeling was clearly mutual. The 2020
election is already under way.
Two things are clear. The first is that Mr Trump will bill the
election as a battle between him and a socialist. “We were born free
and we will stay free,” he said on Tuesday.
The second is that it will take place against the backdrop of a missing wall.
Russia's Hostile Measures in Europe via @RANDCorporation
Law & Politics
Different regions of Europe pose different problems in terms of
Russian threats and approaches
The Baltic states of Estonia, Latvia, and Lithuania are often cited as
being among the members of the EU and NATO that are most vulnerable to
Russian influence. Possible motivations for Russian activities in the
region include undermining and addressing the potential threat from
the EU and NATO. There are distinctions between Russian foreign policy
interests in the Baltics and those in the other former Soviet states,
however. For example, Russian analysts and some U.S. analysts of
Russia note lower Russian interests and objectives for influence in
the Baltics. Therefore, although Russia's intentions to use hostile
measures in the Baltics remain real, the measures available and
willingness to commit significant resources appear to be greater for
other former Soviet republics, including Ukraine, Belarus, and the
Central Asian states.
Southeastern Europe is a significant target of Russian influence,
especially countries where a majority of the population speaks a
Slavic language. Russian interest in Southeastern Europe is likely to
arise in part from concern about growing NATO military capabilities,
including ballistic missile defense capabilities in Romania; the goal
of undermining EU and NATO enlargement in the Western Balkans and
Moldova; a view that Russia should have influence over the region;
and, perhaps most fundamentally, a desire to maintain Russian economic
ties in the region.
Turning to the rest of Europe, major U.S. allies in Western Europe
present the largest strategic prize to Russia outside of the United
States. Western Europe is home to Europe's largest economies,
most-powerful militaries, and key U.S. military bases. Still, this
region seems comparatively less vulnerable to Russian influence,
although Russia might attempt to use a variety of hostile measures
Crypto Universe May Be in for New Round of Pain, Fundstrat Says @business
As if cryptocurrencies haven’t been through enough already, they may
be poised for yet another leg down.
Digital currencies are on track to retest their fourth-quarter lows in
a weak technical position, Fundstrat Global Advisors strategist Robert
Sluymer said in a note Wednesday. A proprietary gauge of market
breadth in the space shows smaller coins are most at risk, he added.
“The price structure for most cryptocurrencies remains weak and
appears vulnerable to a pending breakdown to lower lows,” Sluymer
wrote. Fundstrat’s advance/decline indicator, which measures market
breath for 250 small-cap cryptocurrencies, “is at risk of breaking to
Digital currencies have had a tough time over the past year with
Bitcoin, the most well-known of the lot, down more than 80 percent
from its December 2017 high. In a recent report, JPMorgan Chase & Co.
estimated the cost to create one Bitcoin was $4,060 globally in the
fourth quarter, higher than the $3,369 level it was trading in Asia on
While Sluymer’s own firm has stopped giving price targets for Bitcoin
over specific time frames, the key level to watch for the digital
currency is $3,100, he said.
“A break below the fourth-quarter lows at $3,100 would imply a decline
to $2,270, while a move above $4,200 is needed to signal Bitcoin is
beginning to improve,” he said.
The Hidden Environmental Toll of Mining the World's Sand via @YaleE360
By far the largest mining endeavor globally is digging up sand, mainly
for the concrete that goes into buildings. But this little-noticed and
largely unregulated activity has serious costs — damaging rivers,
wreaking havoc on coastal ecosystems, and even wiping away entire
Nothing sounds so dull — even for most environmentalists — as sand
mining. But in India, reports of sand mafias cashing in on the
country’s construction boom have lately been making headlines.
Last month, the issue went viral — a 17-year-old girl named Kavya in a
fishing village in the state of Kerala posted a video on a mobile
phone app about how excavators and dredgers had invaded her coastal
community. “The land beneath our feet is sinking away,” she said. It
became a sensation across the country. Bollywood actors backed her,
and now the country’s National Green Tribunal, a government body aimed
at settling environmental disputes, is to consider the case.
Sand mining is the world’s largest mining endeavor, responsible for 85
percent of all mineral extraction. It is also the least regulated, and
quite possibly the most corrupt and environmentally destructive. So
could this be a turning point?
In recent years, as I have traveled the world looking at environmental
issues, sand mining has kept appearing out of the corner of my eye.
Always there, but rarely the main story. While in Kerala in August,
researching the environmental factors behind recent floods, I found
that sand is dredged from local rivers 40 times faster than the rivers
can replace it. Riverbeds have been lowered by around 6 feet as a
A month later, in Ethiopia’s Rift Valley, while visiting the
Abijatta-Shalla National Park, I watched as trucks drove into the park
and loaded up with sand destined for building sites in Addis Ababa,
100 miles away. It was illegal, but park officials shrugged their
Sand and gravel are mined on a huge scale around the world. But few
global data are collected on this activity. The United Nations
Environment Program (UNEP) estimated that the total exceeds 40 billion
tons a year. But its estimate had to be based on a proxy: cement
manufacture. Every ton of cement requires six to seven tons of sand
and gravel to make concrete.
Concrete is the predominant use for sand. But sand also makes up 90
percent of asphalt on roads. It also is used for land reclamation in
places like Singapore. And it is widely used in industries such as
glass manufacturing and fracking, where it forms part of the gritty
mixture injected underground to fracture shale deposits and release
natural gas or oil.
On February 18, twenty-eight European Union foreign ministers will meet in Brussels to answer the same question they have faced every year since 2002: 'What should we do about Zimbabwe?' @mailandguardian
After the recent weeks of state-directed violence and repression in
Zimbabwe, this year’s decision will be another stern test for the
credibility of the EU’s response. In truth, seventeen years of
restrictive measures on Zimbabwe have provided a tough lesson in the
limits of the EU’s influence and global reach.
Put simply, the EU is nursing a failed Zimbabwe policy in the absence
of better alternatives. It must now decide how much confidence it has
in its restrictive measures policy and whether it is time to
re-explore more imaginative options to pursue in parallel.
At its meeting later this month, the EU must decide whether to
maintain or revise this curious and untidy status quo position.
Formally speaking, the EU needs to make three separate but
interconnected choices. First, how do you solve a problem like the
Mugabes, now out of power, but for so long the focal point for abusive
state power in Zimbabwe? Second, how should the EU treat those who are
currently under suspended measures, especially those who are still,
like Chiwenga, in very senior positions and are presumably
instrumental in the current round of repression and violence? And
third, a decision must be made about whether the current crisis is
sufficiently grave to justify further actions, over and above
re-activating suspended measures, possibly to include new listings for
other senior government and security figures, perhaps even re-listing
the current President of Zimbabwe, Emmerson Mnangagwa.
Zambia Finance Chief Targets IMF Financial Package by Year-End @business
Zambia’s Finance Minister Margaret Mwanakatwe said she’s in talks with
the International Monetary Fund about securing a financial package and
has taken the necessary steps to ensure the southern African nation
qualifies for support.
“I would want to see a program with the IMF, I think it would be good
for us,” Mwanakatwe said in an interview in Cape Town on Tuesday. “I
would love to see something in place by the end of the year. That is
why we put in place various measures to ensure that we have a way
forward that is sustainable debt-wise.”
Zambia’s efforts since 2016 to secure a $1.3 billion loan from the
Washington-based lender have been stalled by concerns over its
While the yield on the government’s $1 billion of notes maturing in
2024 has dropped 275 basis points this year to 13.02 percent, its
spread over U.S. Treasuries remains the highest in emerging markets
among countries that aren’t in default.
IMF officials visited Zambia in November and are due to return in
March for three weeks, where the package will be on the agenda,
according to Mwanakatwe. She ruled out any possibility of Zambia
defaulting on its foreign debt.
“At that meeting we hope we can come to a meeting of minds as to what
exactly they would require from us in order to engage for a program,”
The minister expects Zambia’s economy to grow at least 4 percent this
year. Industries being targeted for growth include mining, energy and
Gross domestic product is being re-based for the first time since
2010, and could show the economy is significantly larger than the data
currently reflects. The review of the data is about 30 percent
The government intends abolishing value-added tax from April 1 and
replacing it with a sales tax, which will be easier to collect. “We
will be advocating for a lower rate of sales tax than the current VAT
rate of 16 percent,” Mwanakatwe said.
“We have gone through the draft of the law. We want to start engaging
with the public in February, with a view to getting comments so that
that we can get a final document that I can take to cabinet and to
Uganda shuts main independent news website @AFP @YahooNews
Uganda's communications regulator on Wednesday ordered the country's
main independent newspaper the Daily Monitor to shut down its website.
In a letter to the newspaper's managing director, the head of the
Uganda Communications Commission (UCC), Godfrey Mutabazi, said the
Daily Monitor had failed to register under data communications
regulations introduced in 2018.
It accused the newspaper's parent company, Monitor Publications
Limited, of providing an online news service illegally.
The Daily Monitor website had on Monday reported on a legal case
launched last month by a "witch doctor" who alleged that almost 30
years ago, Kadaga had used the traditional healer's services to boost
her political career, but had never paid him the agreed fee.
According to Bbossa, Kadaga's office filed a complaint alleging that
the Daily Monitor had published "fake news" about her with the matter
being investigated under a colonial-era defamation statute.
Rwanda signs $400 million deal to produce methane gas from "Killer Lake" @ReutersAfrica
Rwanda said on Tuesday it had signed a $400 million deal to produce
bottled gas from Lake Kivu, which emits such dense clouds of methane
it is known as one of Africa’s “Killer Lakes”.
The project by Gasmeth Energy, owned by U.S. and Nigerian businessmen
and Rwandans, would suck gas from the lake’s deep floor and bottle it
for use as fuel. This should, in turn, help prevent toxic gas bubbling
to the surface.
The seven-year deal, signed on Friday, was announced on Tuesday.
Rwanda already has two companies that extract gas from Lake Kivu to
power electricity plants.
Clare Akamanzi, chief executive of the Rwanda Development Board, told
Reuters bottled methane would help cut local reliance on wood and
charcoal, the fuels most households and tea factories use in the East
African nation of 12 million people.
“We expect to have affordable gas which is environmentally friendly,”
she said. “We expect that people can use gas instead of charcoal, the
same with industries like tea factories instead of using firewood,
they use gas. It’s part of our green agenda.”
The deep waters of Lake Kivu, which lies in the volcanic region on
Rwanda’s border with the Democratic Republic of Congo, emit such dense
clouds of methane that scientists fear they might erupt, killing those
living along its shore.
Eruptions from much smaller methane-emitting lakes in Cameroon, one
causing a toxic cloud and another sparking an explosion, killed a
total of nearly 1,800 people. The shores of Lake Kivu are much more
Gasmeth Energy said it would finance, build and maintain a gas
extraction, processing and compression plant to sell methane
domestically and abroad.
The bottled gas should be on sale within two years, Akamanzi said,
adding that prices had yet to be determined.