Stratfor Worldview’s 2017 Third-Quarter Forecast

Based on the principle that transformative world events are not random, but are in fact predictable, Stratfor develops decade, annual and quarterly forecasts. These forecasts are built upon Stratfor’s geopolitical methodology, our framework for identifying and forecasting the fundamental trends shaping the international system. Below are the global trends highlighted in Stratfor’s forecast for the third-quarter of 2017. The complete forecast is available at Stratfor Worldview.
The US Exits Stage Left?
When world leaders gather in Germany for the approaching G-20 summit, they will no doubt make a slew of assertions – some alarmist, others justified – about a US retreat from the global stage. Talk of leaders like German Chancellor Angela Merkel, French President Emmanuel Macron and Chinese President Xi Jinping stepping in to fill the void and uphold global governance on major issues such as free trade, climate change, and security can be expected. But there is an underlying reality to that narrative that should be kept in mind.
Simply put, those hoping to fill the United States’ shoes in leading the world still have their own existential threats to contend with at home. Germany and France are buying valuable time with their electorates to try to repair the European Union and make an example of the United Kingdom’s departure, but the bloc’s members still have vastly different visions of what European integration should look like and how nationalism might fit in. China, meanwhile, is not a globalist power with a model of governance to offer the world; it is a fiercely nationalist power with global clout, caught between the compulsion to operate as a market economy and the imperative to centralize political power under the ruling Communist Party. None of these countries come close to matching the US military footprint or the country’s ability to shoulder the burden that comes with superpower status.

This post was published at FinancialSense on 06/26/2017.

The Hidden Motives Of The Chinese Silk Road

China’s Belt and Road Forum, hosted with great fanfare, signals the priority of this flagship connectivity initiative while also underlining its credentials as the new ‘shaper’ of global trends and norms. Exhorting all countries to participate, Chinese President Xi Jinping suggested that ‘what we hope to create is a big family of harmonious co-existence.’
But India, an emerging economy that shares a contested border with China, worries about containment and new pathways for aggression from Pakistan. Other nations wonder if hegemonistic designs are hidden behind the rationality of connectivity and trade. The policy initiative aims to enhance China’s centrality in the global economic unilateral approach in how the project is conceived and implemented so far belies the rhetoric of multilateralism emanating from Beijing.
Taking inspiration from the ancient Silk Road trading route, China’s One Belt One Road initiative, or OBOR, hopes to link more than 65 countries, encompassing up to 40 percent of global GDP. Xi’s signature foreign paradigm – linking China to Asia, Europe and Africa via an ambitious network of ports, roads, rail and other infrastructure projects. Beginning in China’s Fujian province, the projected Maritime Silk Route passes through the Malacca Strait to the Indian Ocean, moving along the Red Sea and the Mediterranean, ending in Venice.

This post was published at Zero Hedge on Jun 25, 2017.

Frontrunning: June 23

One year after Brexit: Forget euro zone breakup, sterling now deemed riskier (Reuters) Senate Holdouts Seek Upper Hand in Perilous Health Bill Talks (BBG) Senate Bill Poses Risks to Health-Care Companies (WSJ) Trump’s Tape Ruse Risks Fresh Legal Jeopardy in Russia Probe (BBG) Arab states demand Qatar closes Jazeera, cuts back ties to Iran (Reuters) Qatar Seen Rejecting List of Severe Demands to End Gulf Crisis (BBG) Turkey rejects call to shut military base in Qatar (Reuters) From Music to Maps, How Apple’s iPhone Changed Business (WSJ) How Killing Obamacare Might Save Obamacare, For a While (BBG) Baghdadi death near 100 percent certain: Interfax quotes Russian senator (Reuters) Japanese warship takes Asian guests on cruise in defiance of China (Reuters) FBI Director Nominee’s Client List Could Hinder Oversight of Investigations (WSJ) Buffett’s Home Capital Bet Backs Turbulent Canada Housing Market (BBG) China’s authorities tighten noose around online video content (Reuters) Deadly London apartment blaze began in Hotpoint fridge freezer, police say (Reuters)

This post was published at Zero Hedge on Jun 23, 2017.

What You Missed in Trump’s Tweet About China’s Failure

U. S. President Donald Trump’s tweet about China – posted yesterday afternoon (June 20) just after 2:30 p.m. – immediately had media outlets buzzing.
Some news sites suspected that it was actually a warning about how Trump is preparing for war with North Korea:
‘Trump Tweet Hints North Korea Tension Will Heat Up Again’ – Newsday ‘Trump Just Sent a Mystifying, Disturbing Tweet About North Korea’ – VOX ‘High Noon in North Korea: Is Trump Ready for War?’ – The Daily Beast ‘Did Trump Just Declare War on a Nuclear Weapons State Over Twitter?’ – New York Magazine Other (arguably less dramatic) media outlets posited that Trump, via Twitter, was actually nudging China to pick up its efforts in countering North Korea’s threats – as if to say, ‘Thanks for trying, China, but you failed. However, you still have an opportunity to redeem yourself by agreeing to more North Korea sanctions during today’s talks.’
The outlets in this latter camp quoted several experts, who explained their thoughts on Trump’s mid-afternoon tweet.

This post was published at Wall Street Examiner on June 21, 2017.

NORTH KOREA: Trump’s Recklessness Could Trigger All-Out Conflict on Korean Peninsula

21st Century Wire says…
Washington’s muscle flexing seems to have taken on a life of its own as the shadow of US neocolonialism falls over much of the world with increasing intensity. In Syria, the US is lashing out, lawlessly, at the bastion of resistance that has been denying its objectives for almost seven years. Now, the US secretary of State, Rex Tillerson has declared that China should ‘exert much greater economic and diplomatic pressure’ on North Korea to step away from its nuclear and missile programmes.
Footage of a reported, massive ‘live fire’ drill conducted by the North Koreans in April 2017 gives some indication of what the US might face if this ‘escalation’ is magnified beyond recall, by the usual suspects at Fox News and CNN…

This post was published at 21st Century Wire on JUNE 22, 2017.

Schaeuble Warns US Pullback Could “End Our Liberal World Order”

Less than a month after German Chancellor Angela Merkel warned that ‘Europe must take its fate into its own hands,’ Finance Minister Wolfgang Schaeuble implored US President Donald Trump to reconsider his ‘America First’ policy, claiming that a pullback by the US would risk the destruction of ‘our liberal world order’ by ceding influence to the Chinese and the Russians.
Trump’s hostility toward his European partners has strained relations between the US and its Continental allies. Since taking office, Trump has insulted fellow G-7 and NATO leaders, pulled out of the Paris Accord and attempted to ban travelers and refugees from six Muslim majority countries. Though Trump has treated at least one NATO leader with respect: Romanian President Klaus Iohannis, whom he honored with a Rose Garden press conference.

This post was published at Zero Hedge on Jun 22, 2017.

Robin Griffiths on 1987-Style US Market Crash and Why He Likes India

Markets Have Been Strong, But Narrow Focus Is Worrying
After Trump’s election, when US equities markets took off, world markets followed suit. While being in US equities has been a good play, it hasn’t done as well as world indices, Griffiths pointed out.
‘When I rank them all into my quintile system … right in the top quintile is the world index,’ he said. ‘Passively holding the global index is quite hard to beat.’
There are markets beating the global index, however: China, India, and emerging markets. Britain, American, and Japan are in the second quintile, he noted.
While investors in the US have done well, it’s likely they could have done better elsewhere.
Additionally, American equities are being held up by a few blue chip stocks. These are the FANG stocks: Facebook, Amazon, Netflix and Google, and other tech stocks. That’s where most of the action has been. Broader indices aren’t as strong.
‘I’m a little bit concerned that the focus is too narrow at the moment,’ Griffiths said. ‘It doesn’t alter the fact that the trend on the chart is definitely upward, though. … We have to go with the trend, yes, but it’s going up, so it’s going to get more expensive.’
1987-Style Crash Possible?
While he doesn’t recommend fighting the uptrend just because it’s expensive, Griffiths does recommend caution. He thinks we should be all right through the end of July.

This post was published at FinancialSense on 06/21/2017.

The West Can’t Smell What Eurasia is Cooking — Pepe Escobar

A tectonic geopolitical shift happened in Astana, Kazakhstan, only a few days ago, and yet barely a ripple registered in Atlanticist circles.
At the annual summit of the Shanghai Cooperation Organization (SCO), founded in 2001, both India and Pakistan were admitted as full members, alongside Russia, China and four Central Asian ‘stans’ (Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan).
So now the SCO not only qualifies as the largest political organization – by area and population – in the world; it also unites four nuclear powers. The G-7 is irrelevant, as the latest summit in Taormina made it clear. The real action now, apart from the G-20, also lays in this alternative G-8.
Permanently derided in the West for a decade and a half as a mere talk shop, the SCO, slowly but surely, keeps advancing a set up that Chinese President Xi Jinping qualifies, in a subdued manner, as ‘a new type of international relations featuring win-win cooperation.’
That’s the least one can say when you have China, India and Pakistan in the same group.

This post was published at Sputnik News

Iran, China Conduct Joint Naval Drills

Last summer, when the Syrian conflict was near its peak under the Obama administration, China unexpectedly warned it was ready to enter the proxy war when in a stunning announcement, Xinhua reported that Beijing was prepared to side with Syria and Russia, against the US-led alliance, and that Xi and Assad had agreed that the Chinese military will have closer ties with Syria and provide humanitarian aid to the civil war torn nation.
A high-ranking People’s Liberation Army officer also said that the training of Syrian personnel by Chinese instructors has also been discussed: the Director of the Office for International Military Cooperation of China’s Central Military Commission, Guan Youfei, arrived in Damascus on Tuesday for talks with Syrian Defense Minister Fahad Jassim al-Freij, Xinhua added. Guan said China had consistently played a positive role in pushing for a political resolution in Syria. “China and Syria’s militaries have a traditionally friendly relationship, and China’s military is willing to keep strengthening exchanges and cooperation with Syria’s military,” Xinhua quoted Guan.
Then last month, as the lingering Syrian proxy war dragged on, we reported that Moscow was hoping “for China’s help in solving the Syrian crisis and restoring the country.”
As Russia’s deputy foreign minister Igor Morgulov said on May 29, “our cooperation with China on Syria at various international venues is unprecedented. We blocked six attempts to pass anti-Syrian resolutions in the U. N. Security Council,” Morgulov said at “Russia and China: Taking on a New Quality of Bilateral Relations” international conference adding that “together we call for a peaceful and political-diplomatic solution to conflicts, without double standards, unilateral action or attempts at ousting regimes. Our approaches coincide, among other things, on the uncompromising fight against terrorism.”

This post was published at Zero Hedge on Jun 18, 2017.

Frontrunning: June 16

Russia may have killed ISIS leader Baghdadi (Reuters) About 4,000 more US troops to go to Afghanistan (AP) Insurers Look to Ramp Up Premiums in Health Law Exchanges (WSJ) U. N. envoy urges North Korea to explain why freed U. S. man is in coma (Reuters) Wal-Mart Offers a Refuge for Sellers Tired of Amazon (BBG) Trump to limit Cuba travel, restrict business deals with military: U. S. officials (Reuters) Private-Equity Firms Stand to Benefit From Court’s Curb on SEC (WSJ) The $31 Billion Hole in GE’s Balance Sheet That Keeps Growing (BBG) Facebook Boosts A. I. to Block Terrorist Propaganda (WSJ) Whole Foods CEO Calls Activist Investor ‘Greedy Bastards’ (BBG) Kroger Rattles Nerves in Grocery Section (WSJ) U. S. Exports to Mexico Fall as Uncertainty Over Nafta Lingers (WSJ) Funds pull back from Permian as U. S. shale oil firms go into overdrive (Reuters) The World’s Richest Nation Has Rarely Looked Weaker (BBG) 30 confirmed dead in London high-rise fire (AP) Big Oil Firms Are Exploring a New Frontier in Shale: Profits (WSJ) Facing criticism, British PM to visit London fire victims (Reuters) Pimco’s New Bond King Is Nothing Like Bill Gross (WSJ) U. S. accuses Chinese company of money-laundering for North Korea (Reuters) Overnight Media Digest
WSJ
– Nestl SA put its U. S. confectionery business up for sale, looking to shed its Butterfinger and Crunch candy bars as it grapples with how to cater to U. S. consumers’ increasing demand for healthy snacks. on.wsj.com/2rC2Cpy
– Pressure on U. S. grocers increased after a lower earnings forecast from Kroger Co sent shares in the nation’s biggest supermarket chain down 19 percent. on.wsj.com/2rCl7dt

This post was published at Zero Hedge on Jun 16, 2017.

China’s Red October

The 19th National Congress of the Communist Party of China, CCP, will be held in the fall of 2017. The exact date has not yet been announced, but late October is a reasonable estimate. This will be the most important CCP meeting since the death of Mao Zedong and the rise of Deng Xiaoping in the late 1970s.
Communist societies such as China have a dual or parallel government structure. On one side is a normal government with a president, vice premier, cabinet ministers and other subordinate posts. On the other side is the CCP leadership consisting of a General Secretary, Politburo Standing Committee, Politburo, and Central Committee.
The seven-member Politburo Standing Committee runs the CCP. The General Secretary is the single most powerful person in the leadership. The conventional government is controlled by the CCP, which holds the real power.
In recent decades, the General Secretary serves two five-year terms, and is then succeeded by another member of the Standing Committee. At the end of the first five-year term, the Standing Committee elevates one or two candidates who are most likely to succeed the General Secretary at the end of his second term.
The process is carried out in secrecy and decisions are arrived at by consensus. The process is designed to insure smooth transitions and to avoid the cult of the individual that surrounded Mao Zedong.

This post was published at Wall Street Examiner on June 14, 2017.

In Major Win For Beijing Panama Establishes Ties With China, Cuts Relations With Taiwan

While Megyn Kelly’s interview with Russian President (and all around global bad guy if one were to believe the daily barrage of leftist headlines) Vladimir Putin did not raise the ire of advertisers, it appears her interview with right-wing provocateur Alex Jones has lurched from social media firestorm to real-world dollars and cents for NBC News.
The sit-down has been promoted as a discussion about ‘controversies and conspiracies.’
In a video promoting the interview, Jones talks about the 9/11 attacks as an ‘inside job.’ In the clip, Kelly also brings up Sandy Hook, saying: ‘When you say parents faked their children’s deaths, people get very angry.’ Jones replies: ‘But they don’t get angry about half-a-million dead Iraqis from the sanctions.’
Next Sunday, I sit down with conservative radio host @RealAlexJones to discuss controversies and conspiracies #SundayNight June 18 on NBC pic.twitter.com/7bVz6Fobf5
— Megyn Kelly (@megynkelly) June 11, 2017

This post was published at Zero Hedge on Jun 13, 2017.

US Urges Beijing To Impose First Round Of Sanctions Against Chinese Firms Trading With North Korea

The Trump administration has asked Beijing to impose what would be the first round of sanctions against nearly 10 Chinese companies and individuals that trade with North Korea, part of a strategy to starve, and ultimately shut down, Kim’s nuclear program, the WSJ reports.
Recall that while U. S. sanctions on North Korea target virtually the nation’s entire economy; U. N. sanctions are less stringent and still allow for significant nonmilitary trade, especially between the isolated nation and its biggest trading partner, China. While there is no firm deadline, senior US officials cited as sources by WSJ indicated that the Treasury Department could impose unilateral sanctions on some of these entities before the end of the summer if Beijing doesn’t act.
The Journal did not name the entities being targeted, however clues to their identities can be found in a report released Monday by a Washington-based nonpartisan research group, C4ADS, that identifies several Chinese entities of concern in the hopes of exposing illicit trading networks. Those include a Chinese businessman and his sister said to be connected to a ship intercepted by Egypt last year while smuggling 30,000 North Korean rocket-propelled grenades. US officials told WSJ that the report reflects part of its strategy towards North Korea.

This post was published at Zero Hedge on Jun 12, 2017.

Facebook’s Little Ethics Problem

Facebook has been aiding abusers of human-rights — such as China, Turkey, Russia and Pakistan — to curb the freedom of expression of their people. “On the same day that we filed the report, the ‘Stop Palestinians’ page that incited against Palestinians was removed by Facebook… for ‘containing credible threat of violence’ which ‘violated our community standards.’ On the other hand, the ‘Stop Israelis’ page that incited against Israelis, was not removed. We received a response from Facebook stating that the page was ‘not in violation of Facebook’s rules.’” – Nitsana Darshan-Leitner, head of The Israel Law Center. According to Darshan-Leitner, Facebook’s insistence that it cannot control all the content on its pages is disingenuous, if not an outright lie. After all, its algorithms are perfectly accurate when it comes to detecting users’ shopping habits. There is a problem at Facebook. On May 8, the social media platform blocked and then shut down the pages of two popular moderate Muslim groups — on the grounds that their content was “in violation of community standards” — without explanation.
Had these pages belonged to the radicals who incite followers to violence, however, the move would have been welcome, and would have corresponded to Facebook’s Online Civil Courage Initiative, founded in Berlin in January 2016, to “challeng[e] hate speech and extremism online,” in the effort to prevent the use of social media as a platform for recruiting terrorists.

This post was published at Zero Hedge on Jun 7, 2017.

In Major Blow To Washington, South Korea Suspends Deployment Of US Antimissile System

In a stunning blow for US diplomacy in the Pacific rim region, Yonhap reported that South Korea’s newly elected president, Moon Jae-in said he has suspended the deployment of American THAAD anti-missile defense system, a major concession to China and a significant break with the United States on policy toward North Korea.
‘We are not saying the two launchers and other equipment that has already been deployed should be withdrawn. But those that have yet to be deployed will have to wait,’ a senior presidential office official said, according to the news agency. The remarks come as the presidential office is examining an allegation South Korea’s defense ministry may have kept the delivery of four further Thaad launchers secret in an attempt to protect the project from an environmental impact evaluation, Yonhap said.
As noted previously, the THAAD missile defense system has been controversial in South Korea where thousands have protested the deployment, while also drawing sharp criticism from China, which views the system’s radar as a threat to the regional balance of power. In response to the initial deployment, Beijing had taken retaliatory economic measures against Seoul, including curtailing the flow of Chinese tourists and punishing South Korean companies in China. The defense system officially went into operation late last month on an abandoned golf course in Seongju, 135 miles southeast of Seoul, when two of six launchers were installed. United States military officials have said that the system is already ‘operational and has the ability to intercept North Korean missiles.’
During his presidential campaign, Moon who won the South Korean presidency last month and has adopted a conciliatory pose in the ongoing North Korean conflict, complained that the United States and the previous South Korean administration rushed to deploy Thaad before the election.

This post was published at Zero Hedge on Jun 7, 2017.