When the date for the prospective summit between the U.S. and North Korea was announced for June 12th, I pointed out that it coincided with the next FOMC meeting of the Federal Reserve. The Fed will raise interest rates at this meeting to 2%, which is where rates were at the time of Lehman Brothers collapse in 2008.
Initially, it appeared as though Donald Trump’s summit with Kim Yong Un had been cancelled. Days later it was ‘back on‘ again. The media have interpreted this as an about face turn from Trump, but given that this geopolitical event ties in directly with the Federal Reserve’s actions I am highly skeptical. This is not the first time that geopolitics has worked in parallel with central banks. The EU referendum vote in the UK took place amidst the Bank for International Settlements gathering in Basel. The U.S. election five months later occurred as Washington DC hosted the Sixth Joint BIS, World Bank, Bank of Canada Public Investors Conference.
It is also possible that the BIS were in session as the Italian general election took place earlier this year on Sunday the 4th of March. Every two months the BIS hold bi-monthly meetings, two of which the Yonhap news agency covered given that Bank of Korea governor Lee Ju-yeol was in attendance. A record of meetings that took place in January and May are documented, but nothing was reported on for March. Incidentally, January and May’s conferences took place at the beginning of either month. We are left to speculate as to whether Italy’s elections happened in accordance with the BIS’s movements. The bank themselves does not disclose the dates of bi-monthly meetings for ‘security reasons‘.
As monetary policy further tightens in America, a major international distraction in the shape of the U.S. – North Korea summit will once again take the emphasis away from what central banks are doing and keep the focus concentrated on the geopolitical arena.
Besides interest rate hikes, the Federal Reserve continue to run off treasury securities several times per month. At the beginning of May they ran off almost $20 billion, then another $10 billion a few weeks later. June will see further reductions in the build up to rates being increased. And any subsequent volatility in markets will be blamed not on the Fed but on the latest well timed shenanigans of the Trump administration.
As renewed confirmation of the summit was announced, Donald Trump followed through on intentions to place tariffs on steel and aluminium imports to the European Union, Canada and Mexico. The IMF predictably criticised the decision, spouting the line also taken by the BIS of how everybody loses in a trade war. French President Emmanuel Macron took this a step further by declaring the tariffs ‘unlawful‘ and in so doing warned Trump that, ‘Economic nationalism leads to war’.
When you factor in Trump’s decision to withdraw the U.S. from the Paris Climate Accord, the Trans Pacific Partnership and the Iranian nuclear agreement, it has prompted many outlets to consider such actions as putting the ‘rules based global order‘ in jeopardy. Political leaders champion this line regularly in their communications, portraying it as a mainstay for international stability.
As I have argued throughout these updates, the current narrative of a rise in nationalistic / populist / protectionist tendencies is ultimately not to the detriment of globalists. Groups such as Bilderberg and the Trilateral Commission were readily discussing these topics years before they penetrated through to mainstream politics. In short, out of conflict tends to come consolidation. Over time we will see ‘progressive‘ solutions to nationalism be elevated into positions of power. But not before a breakdown of the current ‘world order‘ is used to facilitate its rise.
The ‘rules based global order‘ spoken of today dates back to the mid 1940s and the creation of institutions like the International Monetary Fund and the United Nations. These measures were a step on the road to gaining a greater level of control over the world’s citizenry. The resurrection of twenty first century ‘populism‘ and desires for national sovereignty has brought about a new era of conflict into contemporary geopolitics. It is proven throughout history that to achieve greater levels of centralised power, conflict is a necessary tool for advancing the cause of globalism.
To give an example, it was last year that EU leaders began pushing the concept of structural reforms to the union. This was as the threat of a populist outbreak in Europe was growing in stature. With an Italian ‘populist‘ government now in place, calls for reform are growing more prominent. Europe now has to ‘change to survive‘, a notion endorsed by one most loyal to the globalist cause George Soros.
Global governance remains the goal of international organisations. And to succeed in this aim the ‘rules based global order‘ of today must be regenerated. This was openly admitted to by co-founder of the Trilateral Commission Zbigniew Brzezinski back in the 1970s. The gradual advance of outright globalism has been over a century in the making.
- “Everybody loses in a protracted trade war, we encourage countries to work constructively together to reduce trade barriers and resolve trade disagreements without resort to exceptional measures,” the IMF’s spokesman and director of communications Gerry Rice said in a statement on Friday.
- Christine Lagarde, managing director of the Washington-based lender, also criticised Mr Trump’s move in a tweet from the G7 Symposium in Whistler, Canada. “At the end of the day, if #trade is massively disrupted, if the level of trust among economic actors is severely damaged, those who will suffer most are the poorest people #G7,” she wrote.
- U.S. Commerce Secretary Wilbur Ross announced at a news briefing Thursday that tariffs of 25 percent on steel imports and 10 percent on aluminum imports will take effect from midnight.
- In a tweet following the news, the EC said: “The EU believes these unilateral U.S. tariffs are unjustified and at odds with World Trade Organization rules. This is protectionism, pure and simple.”
- Donald Trump’s summit with Kim Jong-un in Singapore on 12 June is back on, the US president says, a week after it was scrapped.
- Mr Trump made the announcement after talks with a senior North Korean envoy at the White House.
- Giuseppe Conte was sworn in as prime minister on Friday after a last-ditch coalition deal ended months of political deadlock and narrowly avoided snap elections in the eurozone’s third largest economy.
- Conte, an academic and political novice, will head a government of ministers from the anti-establishment Five Star Movement (M5S) and the far-right League party. The first populist coalition in a founding EU member has raised concerns in some European quarters.
- Britain’s consumers picked up the pace of their borrowing in April, according to data that could reassure the Bank of England that the economy is ready for another interest rate hike after a cold winter slump.
- Thursday’s data from the BoE showed consumer credit jumped by a bigger-than-expected 1.832 billion pounds, the strongest rise since November 2016, up from an increase of only 425 million pounds in March.
- A surging dollar and a capital flight from emerging markets may lead to another “major” financial crisis, investor George Soros said, warning the European Union that it’s facing an imminent existential threat.
- The “termination” of the nuclear deal with Iran and the “destruction” of the transatlantic alliance between the EU and the U.S. are “bound to have a negative effect on the European economy and cause other dislocations,” including a devaluing of emerging-market currencies, Soros said in a speech in Paris on Tuesday. “We may be heading for another major financial crisis.”
- Political chaos in Italy and the Brexit negotiations pose major risks for the European economy, the OECD has warned in its latest survey of the global economy.
- The Organisation for Economic Co-operation and Development used its economic outlook to warn that while the global economy was growing rapidly, there are nonetheless significant risks on the horizon.
- Falling business investment and the weakest household spending growth in more than three years marked a bad start to 2018 for Britain’s economy, as official data on Friday confirmed it almost stagnated.
- With Britain’s exit from the European Union due in less than a year and the shape of their future relationship still uncertain, business investment dropped 0.2 percent quarter-on-quarter, its worst performance since mid-2015, the ONS said.
- The Federal Reserve said the U.S. grew “moderately” from late April to early May in its latest evaluation of the economy, indicating the central bank remains firmly on track to raise interest rates next month.
- The central bank was widely expected to raise interest rates at its next meeting in June and its survey known as the Beige Book does nothing to dispel that notion.
- If the U.S. economy stays strong and inflation remains at or somewhat above the Fed’s 2 percent goal, he added, “that could mean that interest rates go above neutral for a period of time.”
- “I don’t view our policy path as just getting to neutral and saying, ‘okay we’re done’” he said.
- The Fed currently describes its monetary policy stance as accommodative and includes in its regular post-meeting statement a promise to keep rates lower than otherwise “for some time.” As rates rise, Williams said, that language is “no longer either accurate or… really that useful.”
- Asked if those words should be removed from the statement at the Fed’s next meeting, on June 12-13, Williams said it will be up to the policy-setting committee on the exact timing.
- Speaking while the BOE held its Markets Forum conference at Bloomberg’s European headquarters in London, he stressed the importance of households and businesses understanding the bank’s message.
- “Credibility comes from the strength and predictability of institutions. Do they say what they’re going to do?” said Ramsden. “In the bank’s case therefore, does it meet its remit? We’re judged by those outcomes and getting the message across to the public to deliver those outcomes — they should expect that over the three-year horizon there will be gently rising rates.”
- Mothercare has been given the green light to axe 50 underperforming stores in a move that will see 800 jobs put at risk.
- Mothercare said it had received the backing of creditors to press ahead with the company voluntary arrangement (CVA).
- This will allow the chain to close loss-making shops and secure rental discounts.
- Mothercare currently employs about 3,000 people across 137 outlets.