Qatar Navy to Bolster Fleet With 7 New Warships

One of the biggest buyers of US military equipment in the world, Qatar, has decided go in a different direction for its next purchase of combat warships. Spoiler: Russia didn’t get the contract either.

The second-richest country in the world by GDP per capita ($129,700) agreed to a deal with Italy "to acquire seven warships" for $5.9 billion, the Qatari Foreign Ministry announced Wednesday.

The news was delivered during a joint news conference held by Qatari and Italian diplomats in Doha.

The emissaries gathered to discuss the diplomatic row, unresolved since June, between Qatar and four other Arab nations: Saudi Arabia, Bahrain, United Arab Emirates and Egypt. Qatar has been accused of funding terrorism and being too cozy with Iran, a charge Doha has denied outright.

Riyadh and the other three nations include in their list of 13 demands that Doha end support of the Muslim Brotherhood (banned by Russia as a terrorist organization), Al-Qaeda, the Nusra Front/Fateh al-Sham and Hezbollah; shut down Al Jazeera; and adopt a firmer stance against Tehran.

Doha says the demands violate Qatari national sovereignty.

Kuwait has emerged as the mediator between Qatar and the other Arab states. On Wednesday, though, Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said the bloc “showed no intention to resolve the crisis peacefully,” during a meeting between the parties on Sunday, Italy’s The Local reported.

In a conflicting Tuesday report, Qatari Minister of State for Defense Khalid bin Mohammad Attiyah said the dispute “should be resolved only through dialogue,” and military options had been eliminated “for many reasons,” Sputnik Egypt reported.

Italian Foreign Minister Angelino Alfano urged a relaxation of tensions and encouraged a new way forward that demonstrates “respect for international law,” The Local added.

The Council on Foreign Relations’ Max Abrahms tweeted on July 19, "Saudi Arabia had to manufacture misdeeds by Qatar because Saudi Arabia participated in many of Qatar’s actual misdeeds."

Credit to Sputnik

Remember This Milestone: The Dow Jones Industrial Average Hits 22,000 For The First Time In U.S. History

The Dow hit the 22,000 mark for the first time ever on Wednesday, and investors all over the world greatly celebrated.  And without a doubt this is an exceedingly important moment, because I think that this is a milestone that we will be remembering for a very long time.  So far this year the Dow is up over 11 percent, and it has now tripled in value since hitting a low in March 2009.  It has been quite a ride, and if you would have told me a couple of years ago that the Dow would be hitting 22,000 in August 2017 I probably would have laughed at you.  The central bankers have been able to keep this ridiculous stock market bubble going for longer than most experts dreamed possible, and for that they should be congratulated.  But of course the long-term outlook for our financial markets has not changed one bit.

Every other stock market bubble of this magnitude in our history has ended with a crash, and this current bubble is going to suffer the same fate.

But many in the mainstream media are still encouraging people to jump into the market at this late hour.  For example, the following comes from a USA Today article that was published on Wednesday…

“It’s still not too late to get in,” says Jeff Kleintop, chief global investment strategist at Charles Schwab, based in San Francisco. “The gains are firmly rooted in business fundamentals, not false hopes.”

I honestly don’t know how anyone could say such a thing with a straight face.  We have essentially been in a “no growth economy” for the past decade, and signs of a new economic slowdown are all around us.

But even though price/earnings ratios and price/sales ratios are at some of the highest levels in history, some analysts insist that the stock market still has more room to go up…

On the flip side, investors with time to ride out any short-term market storm should not rule out getting in the market now. Economies around the globe are improving and are boosting the profitability of corporations in the U.S. and abroad, says Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners in Charlotte, N.C.

Zaccarelli won’t even rule out Dow 25,000 by the end of 2018.

Personally, I believe that it is far more likely that we would see Dow 15,000 by the end of 2018, but over the past couple of years the bulls have been right over and over again.

But the only reason why the bulls have been right is because of unprecedented intervention by global central banks.

Today, the Swiss National Bank owns more than a billion dollars worth of stock in each of the following companies: Apple, Alphabet, Microsoft, Amazon, Exxon Mobil, Johnson & Johnson and Facebook.

So where does a central bank like the Swiss National Bank get the money to purchase all of these equities?

It’s easy – they just print the money out of thin air.  As Robert Wenzel has noted, they simply “print the francs, exchange them for dollars and make the purchases”.

If I could create as much money as I wanted out of thin air and use it to buy stocks I could relentlessly drive up stock prices too.

Our financial markets have become a giant charade, and central bank intervention is the biggest reason why FAANG stocks have vastly outperformed the rest of the market.  The following comes from David Stockman…

Needless to say, the drastic market narrowing of the last 30 months has been accompanied by soaring price/earnings (PE) multiples among the handful of big winners. In the case of the so-called FAANGs + M (Facebook, Apple, Amazon, Netflix, Google and Microsoft), the group’s weighted average PE multiple has increased by some 50%.

The degree to which the casino’s speculative mania has been concentrated in the FAANGs + M can also be seen by contrasting them with the other 494 stocks in the S&P 500. The market cap of the index as a whole rose from $17.7 trillion in January 2015 to some $21.2 trillion at present, meaning that the FAANGs + M account for about 40% of the entire gain.

Stated differently, the market cap of the other 494 stocks rose from $16.0 trillion to $18.1 trillion during that 30-month period. That is, 13% versus the 82% gain of the six super-momentum stocks.

If global central banks continue to buy millions of shares with money created out of thin air, they may be able to keep this absurd bubble going for a while longer.

But if the Fed and other central banks start pulling back, we could see a market tantrum of epic proportions.  In fact, almost every single time throughout history when the Federal Reserve has attempted a balance sheet reduction it has resulted in a recession…

The Fed has embarked on six such reduction efforts in the past — in 1921-1922, 1928-1930, 1937, 1941, 1948-1950 and 2000.

Of those episodes, five ended in recession, according to research from Michael Darda, chief economist and market strategist at MKM Partners. The balance sheet trend mirrors what has happened much of the time when the Fed has tried to raise rates over a prolonged period of time, with 10 of the last 13 tightening cycles ending in recession.

“Moreover, outside of the 1920s and 1930s, there is no precedent for double-digit annual declines in the balance sheet/base that will likely begin to occur late next year,” Darda said in a note.

President Trump is going to get a lot of credit if the stock market keeps going up and he is going to get a lot of blame if it starts going down.

But the truth is that he actually has very little to do with what is really going on.

This stock market bubble was created by the central banks, and they also have the power to kill it if they desire to do so.

And once this bubble bursts, we may be looking at a crisis that makes 2008 look like a Sunday picnic.

Goldman Sachs and others are already warning that this stock market rally is on borrowed time.  Let’s hope that it can continue at least for a little while longer, but in the end there is no possible way that this story is going to end well.

Credit to Economic Collapse

US Military Wants an Enemy

China Threatens India "Leave Chinese Land Or Face War"

While the world's eyes are focused on Syria, Russia, Ukraine, and North Korea; there is another - much more tense - fight between two nuclear powers that is getting far too little attention. The world's two most populous nations, China and India, have been engaged in a border dispute for decades but in recent months it has flared once again with a Chinese Ministry of Defense official now warning explicitly that Indian troops must leave the contested Doklam area if they do not want war.

The latest standoff started more than a month ago after Chinese troops started building a road on a remote plateau, which is disputed by China and Bhutan.  Indian troops countered by moving to the flashpoint zone to halt the work, with China accusing them of violating its territorial sovereignty and calling for their immediate withdrawal.

"The crossing of the mutually recognised national borders on the part of India... is a serious violation of China's territory and runs against the international law," Chinese defence ministry spokesman Wu Qian told a press conference quoted by AFP, adding that "the determination and the willingness and the resolve of China to defend its sovereignty is indomitable, and it will safeguard its sovereignty and security interests at whatever cost."

He also said that "border troops have taken emergency response measures in the area and will further step up deployment and trainings in response to the situation," without giving any details about the deployment.

And now, as RT reports, during a heated TV debate between a retired Indian Army major general and now defense commentator, Ashok Mehta, and the director of the Chinese Defense Ministry’s Center for International Security Cooperation, Senior Colonel Zhou Bo; tempers frayed.

Speaking first, Mehta fired off a lengthy yet passionate tirade, accusing the Chinese of fanning anti-Indian sentiments in an overly aggressive way.

“Chinese media, think tanks, Xinhua, Global Times, PLA Daily have written the most aggressive and most belligerent stories about threatening India, taking India to war, opening a two-front conflict, teaching India a lesson,” the former general complained.

“I mean, that kind of language is not being used in India!” Mehta added.

Asked by the news anchor if he could provide any proof and name specific Chinese articles featuring warmongering rhetoric, the Indian expert failed to cite any, but instead recalled his professional background.

Zhao interrupted...

“General, you have been talking too much! This is not the right way of having this conversation,”

“Let me just use a few seconds – you [Indian troops] are on Chinese territory, so if you do not want a war, you’ve got to go away from Chinese territory,” the senior colonel remarked.

In a statement on Wednesday, Beijing said Indian troops were still present on Chinese territory, and that China had acted cautiously, demanding that Delhi pull out its forces.

"But the Indian side not only has not taken any actual steps to correct its mistake, it has concocted all sorts of reasons that don't have a leg to stand on, to make up excuses for the Indian military's illegal crossing of the border,” the Chinese Foreign Ministry said, as cited by Reuters.

As we noted previously, this isn’t the first time that these two nations have been at each other’s throats over their borders. In 1962 their armies clashed, leading to defeat of the Indian army, and thousands of casualties on both sides. Based on the rhetoric coming out of Beijing’s state sponsored media, it appears that China is willing to replicate that conflict.

Credit to Zero Hedge

'It's a terrible thing' - Ron Paul on newly-signed US anti-Russian sanctions

It's Not The Stock Market Bubble You Need To Worry About It's The Everything Bubble

The U.S. Just Declared Full-Scale Trade War On Russia

Several hours after President Trump officially signed the new Russian sanctions into law - despite his reservations and his statement that while he favors "tough measures to punish and deter aggressive and destabilizing behavior by Iran, North Korea, and Russia, this legislation is significantly flawed" - Russia responded when moments ago Russian Prime Minister Dmitry Medvedev said on his FaceBook page that any hopes of improving Russian relations with the new US administration are dead, that the Trump administration demonstrated complete impotence by transferring executive power to Congress "in the most humiliating manner",and most notably, that the US just declared a full-scale trade war on Russia. 

From Medvedev's facebook page:

The signing of new sanctions against Russia into law by the US president leads to several consequences. First, any hope of improving our relations with the new US administration is over. Second, the US just declared a full-scale trade war on Russia. Third, the Trump administration demonstrated it is utterly powerless, and in the most humiliating manner transferred executive powers to Congress. This shifts the alignment of forces in US political circles. 

What does this mean for the U.S.? The American establishment completely outplayed Trump. The president is not happy with the new sanctions, but he could not avoid signing the new law. The purpose of the new sanctions was to put Trump in his place. Their ultimate goal is to remove Trump from power. An incompetent player must be eliminated. At the same time, the interests of American businesses were almost ignored. Politics rose above the pragmatic approach. Anti-Russian hysteria has turned into a key part of not only foreign (as has been the case many times), but also domestic US policy (this is recent). 

The sanctions codified into law will now last for decades, unless some miracle occurs. Moreover, it will be tougher than the Jackson-Vanik law, because it is comprehensive and can not be postponed by special orders of the president without the consent of the Congress. Therefore, the future relationship between the Russian Federation and the United States will be extremely tense, regardless of the composition of the Congress or the personality of the president. Relations between the two countries will now be clarified in international bodies and courts of justice leading to further intensification of international tensions, and a refusal to resolve major international problems. 

What does this mean for Russia? We will continue to work on the development of the economy and social sphere, we will deal with import substitution, solve the most important state tasks, counting primarily on ourselves. We have learned to do this in recent years. Within almost closed financial markets, foreign creditors and investors will be afraid to invest in Russia due to worries of sanctions against third parties and countries. In some ways, it will benefit us, although sanctions - in general - are meaningless. We will manage.

Separately, Russia's foreign minister Sergey Lavrov said that Russia retains the right to impose new counter-measures, adding the US sanctions are short-sighted, and risk harming global stability. He concludes that and attempts to pressure Russia will not make it change course.

Echoing Lavrov, earlier on Wednesday the permanent representative to the UN, Vassily Nebenzia said Moscow "won’t bend" and has no plans to change its policies following Donald Trump’s signing of new anti-Russian sanctions. 

“Those who invented this bill, if they were thinking that they might change our policy they were wrong, as history many times proved. They should have known better that we do not bend and do not break,” Nebenzia told journalists in New York.

"Some of the US officials were saying that this is a bill that might encourage Russia to cooperate... This is a strange form of encouragement. But it is not our habit to be resentful children," continued the diplomat, who promised that Moscow would "not relent on finding means and ways" to cooperate in the international arena over issues such as Syria.

The Kremlin also chose not to escalate the situation further. “This changes nothing. There is nothing new here,” Vladimir Putin’s press secretary, Dmitry Peskov, told the media in Moscow. “Counter-measures have already been taken.”

And now we await a similar announcement from the European Union.

Credit to Zero Hedge