Art of War

Week ended December 15, 2023, interesting news items to look at this week were:

1.  Art of War: I have only been to Chengdu (成都), West China twice, the first time on a one day business trip, the other time as a tourist years later. The most memorable thing I recalled was the city just kept on oozing out  Chinese history and culture. The magical sights and sounds was not by some bureaucratic design but the fragrance so naturally infused with people from all walks of life, a  legacy that flowed from the times of the Three Kingdoms, the origin of Shu Han (蜀漢). One of the must see in Chengdu was the mausoleum of Zhuge Liang ( 諸葛亮), a brilliant General and Military Strategist. On the entrance of Liang’s mausoleum was a couplet that I found most profound. (Fig. 1).

The 30  characters on the couplet just summed up why the Anglo American Empire has eventually failed in every geopolitical initiative since 1991.

(i) Perpetual Wars: Even after the collapse of the Soviet Union, the Anglo American Empire did not achieve a restful state as the sole super-power because dollar hegemony has never been a naturally stable phenomenon. The reason, Euro dollars in the hands of other nations came about because of US’s twin deficits - fiscal and trade deficits that provide the world a continuous supply of dollars. This letting of blood saps the energy and vitality from the economy and enrich exporting nations. Periodically,therefore, the Anglo American Empire will need to destabilize and take down some external governments that dare to challenge the throne. In the words of General Wesley Clark “ The US has a good military that can take down governments and if the only tool you have is a hammer, then every problem have to look like a nail”. Please see Video Clip below (Video).

Table below are the direct military interventions and proxy wars which have been sponsored by US since 1991 (Fig. 2).

Up till the Ukraine war, the Anglo Americans had only tactical victories against weakened small states and insurgents. But even in the occupied state of Afghanistan or Iraq, the effective control of US in those two countries were limited to control of a corrupt puppet government within a 10 square Km Green Zone in Kabul or Baghdad. The Green Zones with its high concrete blast walls were in a sense a prison/fortress for the occupying force. (Fig. 3).

The Ukraine War then immediately show cased that NATO in its entirety simply do not have the resource for a conventional peers war with parallel if not superior combined arms warfare capability. For some reasons, the West thought retaining advisors familiar with the Art of War by Sun Tze, (Steve Bannon, General James Mattis, Dominic Cummings (Boris Johnson’s chief adviser) means they will have a good grasp of China’s bag of tricks. Little do the Anglo Americans realized “militancy” has always been looked upon as an inferior tool by the Chinese.

A soldier in defense for his country is willing to take a pay sacrifice. A US Corporal is paid $31,641 per annum but a starting pay for a mercenary in Blakwater is $90,000. DOD and the MIA shares a revolving door and that’s where the problem lies. A US Aircraft Carrier cost $12 billion but a Made in China  It cost only $2 billion. The West is nonetheless fooled by a deception that large military budget in dollar terms means strength. It is far from the truth. At the start of the Ukraine war, US could only produce 14,000 155mm artillery shells a month, stepping up to the current level of 330,000 per year. Russia is now producing 1.5 million per annum. It would not matter if Ukrainian boots in the battlefield were swapped with US boots, command and control in Ukraine has always been in the hands of US Generals. Russia has defeated NATO.

(ii) Throwing dollars at a problem is not the answer: After Huawei launched the Mate Pro 60, the US Commerce Department is desperate to come up with new containment measures against China. The Chips and Science Act could not provide the impetus to kick start new chip plants in the US. TSMC pulled out because for the meagre subsidy US Govt wants to squeeze dry all its proprietary technologies. Intel pulled out because they just lost the Chinese market. Intel also pulled out from Vietnam. US Govt sponsorship is one thing, but insufficient stable electricity in Vietnam is the Achilles heel. (Fig. 4)

This type of reactionary responses by US under threat is apparent to the world at large and now Vietnam is all out to embrace China. The Philippians is the last US lapdog in the South China Seas and when China got tough the US Navy backs off.   

2. The Gaza Powder Keg: It is day 71 for the war in Gaza but Day 662 for the war in Ukraine. The whole world wants an immediate ceasefire in Gaza because of the senseless killing of civilians, women, children, the aged and the infirm in Gaza. From Russian Intelligence, the cost to Israel in the Gaza war is US$300 million per day against an Israeli GDP of US$1,338 per day (2021 reported GDP) - some 22%. If we adjust IDF war expenditure against an economy that has been severe disrupted by soldiers in reserve being all called to action and a complete collapse of the lucrative tourism industry. The Gaza war expenditure to Israel matches a scale of WWII. US gave Israel until end of the year to do what they want to do in Gaza (Fig. 5).

In the meantime, the Houthi in Yemen is effectively blocking all cargo ships linked with Israel from entering through the Red Sea through missile attacks.(Fig. 6)

This week’s financial markets:

A. Stock Market: (Fig. 7): Dow closed at 37,305 for the week, a rise of 878 points (+2.4%), S&P 500 +2.5% and NASDAQ +3.35%.. 

The stock market gap up after post FOMC speech by Powell on pivot towards interest rate reduction in 2024.

B. Debt Market: (Fig. 8): USGG10YR ended the week at 3.915%, a drop of 31.4 basis points. 

The 10 Year Treasury was bid up by 2.88% on the back of Powell pivot speech. However on Friday, the Vice-Chair of FMOC John Williams came out with an unscheduled interview and said rate cuts is not part of current discussion. (Fig. 9).

This is reinforced by ECB Lagarde that rate cuts is not on the cards. (Fig. 10).  

Something spooked Powell and he is using talk to hold the market steady.

C. Commodities and Precious Metals: Trading results for the week: (Fig. 11) Silver (+3.57%), NASDAQ (+3.35%), S&P 500 (+2.50%), Uranium (+2.21%), JPY( +1.96%), Rubble (+1.89%), Eur (+1.25%), GBP (+1.05%), Gold (+0.94%), Oil (+0.87%), CNY (+0.65%) and Bitcoin (-4.04%),  

USD had decidedly weakened upon Powell’s pivot . The market volatility is on the rise as CTA (Commodity Trading Advisory Funds, an algo driven, highly leveraged and derivatives heavy Fund) been washed and rinse through a squeeze last week in the precious metals paper market by the US Exchange Stabilization Fund to protect a breakout in gold price. The financial markets are littered with land mines.

^{Isaiah 26:20-21} Come, my people, enter your chambers, And shut your doors behind you; Hide yourself, as it were, for a little moment, Until the indignation is past.

A Stone of Stumbling and a Rock of Offense

Week ended December 8, 2023, interesting news items to look at this week were:

1. A Stone of Stumbling and a Rock of Offense: The pause in the blood bath in Gaza ended a week ago and deaths and injuries continued. As a student of bible prophecy, I have no clear idea of when this humanitarian disaster will end but believe the flames of war will spread far and wide until people all over the world will be exhausted and disgusted by the senseless deaths. A charismatic leader will then emerge and by deception will usher in a false peace. Then when humanity got comfortable with his global leadership, his true colors of being a tyrant and dictator will be revealed. (Fig. 1)

No, I am not talking about a repeat of the actors and the Washington scene of September 13, 1993 because today, the power levers are all different and have become so much more complicated.

(i) Rabin vs Netanyahu: Politics in Israel is extremely complicated because even among the 7 million Jews living in Israel, there are major religious, social and political chasms that divide them within the borders of this small nation. First there is the Yishuv which are the Mizrahi Jews (from Middle East) that lived in the Land from the Ottoman and Pre-British Mandate days. By 1948, there were altogether 630,000 of Yishuv. Before nationhood of Israel in 1948, the Yishuv lived in peace with their Arab neighbors and these Yishuv Jews were characterized as very religious. Then a big wave of migration (aliyah) of European Jews set upon the Land as a result of the holocaust. This next batch of Jews comprising Ashkenazi Jews (Germanic Jews) and Sephardi Jews (Hispanic Jews), each with different cultural influences from Central Europe and Southern Latino Europe. A third wave of aliyah came after the collapse of the Soviet Union from 1989 and now comprise 25% of the 7.1 million Jewish population with a left wing inclination. Under the former Soviet Union, Jews were not specifically discriminated on ethnic grounds but there were anti-religious laws enforced against all religions including Judaism. A fourth wave of aliyah came after 2002, the “US Brooklyn” type with their Evangelical Christian origin and funded by the same. These different Jews with their diverse background and traumas coupled with a difference in faith make governance of Jews in Israel delicate and volatile. Israeli parliamentarian politics is,therefore, characterized by a coalition of minor political parties without a single majority ideology. Netanyahu is a Zionists and believe the Jews have a God given right to the Land at the exclusion of all others. Rabin in opposite was assassinated for acceptance of a two state solution. However, not all Jews are Zionists because the ultra-orthodox religious Jews are against Zionism. (Fig. 2).

Anyone serious in sponsoring peace between the Israelis and the Palestinians will need to understand how different Jews think and their core beliefs. In this respect, Jews are divided into 4 main groups by their faith:

(a) Haredim (9%) are the most religiously devout group in Israel, with 96% saying religion is very important in their lives, compared with 30% of all Israeli Jews. The word “Haredi” literally translates to “trembling” or “fearing God,” and most Haredim live their lives secluded from the rest of society.

(b) Datiim(13%) are nearly as religiously devout as the Haredim. About nine-in-ten of those surveyed from both groups say they are absolutely certain in their belief in God, and nearly all surveyed from either group say they do not travel by car, train or bus on the Sabbath, in accordance with Jewish law. However, Datiim – sometimes described as modern Orthodox Jews – are much more integrated in modern Jewish society. 

(c) Masortim (29%) are the most diverse of the four Jewish groups. They encompass a large middle ground between the two Orthodox groups and secular Jews. About half (51%) say religion is somewhat important in their lives, as opposed to very important (32%) or not too/not at all important (16%). While the three other Jewish groups often have strong opinions on one side or another on many issues relating to religion and public life, Masortim are generally much more divided. 

(d) Hilonim (49%), who tend to be secular in their outlook, are by far the largest Jewish group in Israel, making up roughly half of Israeli Jews. Only 18% are absolutely certain in their belief in God, and 40% do not believe in God at all. Hilonim strongly favor the separation of religion from public life in Israel. (Fig. 3)

The Zionists are not the majority but holds key cabinet and military posts by virtue of a coalition government with the charismatic Benjamin Netanyahu very skillful in manipulating public sentiment especially through fear and insecurity. Please see the different parlimentary power blocs in (Fig. 4)

(ii) Clinton vs Biden: With the disintegration of Soviet Union in 1991, Clinton represented the peak of US Global Supremacy in 1993 when he could chaperone Rabin and Arafat to shake hands in Washington. Biden on the other hand is grasping for straws against a fast declining and much weakened Anglo American hegemon. For close to 40 years since the default of Bretton Woods, the US has decidedly traded off its industrial real economy to preserve its dollar hegemony and military edge. The unintended consequence of spreading dollars far and wide led to the the dotcom mania, the subprime fiasco, 15 years of ZIRP followed by tax cut MAGA Trump and Covid means both the White House and Main Street have pledged their souls and bend the knee to Wall Street and Jewish financiers. The Friday just past, US cast a lone veto of UN Security Council “Humanitarian Ceasefire” Resolution. (Fig. 5).

The United States is now a vassal state chanting a hollow slogan of freedom and democracy and peoples of all colors is a front seat eyewitness. Sadly, both Israel and US is noticeably too fearful to admit that having lost their industrial base, they can no longer win any peers war with conventional weaponry. Additionally with Ukraine as a prime example, there remain few lapdogs willing to be the next cannon fodder.  

(iii) Hamas, Fatah, PLO, the Arab League and the Pan Islamic Movement: With a kaleidoscope of Sunnis, Shiites, Arabs, Persians, Turks and Kurds, the West used simply a divide and conquer plot and exploited the Middle East for close to 80 years. But whilst the West enjoyed an exuberant lifestyle on the back of cheap energy and resources, the developing ME economies have swapped their camels and AK47s with drones and precision missiles. After being too complacent, US and IDF finally relized through war games that an all out war with the Muslim community and at a worst case scenario means also total annihilation for Israel. Although Iran did not develop nuclear missiles, if IDF invoke the nuclear option, Pakistan’s nuclear missiles at the disposal of Iran or Saudi Arabia in retaliation. So for the time being, the opposing sides, including US is on a measured escalation. For the Muslims countries in the region, only armed militias are involved. State actors stood cautiously behind the scene in a restrained posture.

The blood feud in the Middle East between the different descendants of Abraham is as old as human history. There will be no peace until the Prince of Peace returns to the scene. By rejection of Jesus Christ as the Messiah, the Jews and the Muslims both failed to correctly interpret their heavenly mandate and will exhaust themselves to find peace. The answer has been there all along written within the 66 books of Holy Scriptures over 2000 years ago. “The meek shall inherit the earth. Put your sword in its place, for all who take the sword will perish by the sword. ” ^Exodus 19:5  Now therefore, if you will indeed obey My voice and keep My covenant, then you shall be a special treasure to Me above all people; for all the earth is Mine. ⁶  And you shall be to Me a kingdom of priests and a holy nation.' These are the words which you shall speak to the children of Israel." (Fig. 6)

 

2. Funding for Ukraine came to a screeching halt as US Senate voted against a bundled aid package with Ukraine and Israel funding are tied together. (Fig. 7).

An independent Senator sided with Republicans to block funding to Israel on moral grounds. Joe Biden is livid for should funding for Ukraine be splinter out, it would never again get through the Republicans. In the meantime, seven mortar rounds landed in the sprawling embassy compound in the Iraqi capital's Green Zone for the first time since the Gaza war. As the Israeli says, the vultures smell the blood once you show weakness. (Fig. 8)

 This week’s financial markets:

 A. Stock Market: (Fig. 9): Dow closed at 36,247 for the week, a rise of 2 points, S&P 500 +0.14% and NASDAQ +0.49%.. 

Mixed signals from Jobs Report and Consumer Spending, market is moving towards year end rest.

B. Debt Market: (Fig. 10): USGG10YR ended the week at 4.229%, a rise of 2 basis points. 

All is not quiet on the Western Front, deposits are leaving regional banks en mass and the Fed’s Bail Out Term Facilities are maxed out (Fig. 11).

Readers are reminded a previous study showed 186 US Banks are vulnerable to Silicon Valley Bank type of collapse. The Fed Bank Term Loan Facilities only gave a short term reprieve by granting loans to banks at 130% of underlying collateral value, expiring March 2024. (Fig. 12).

As White House continued to gazump cash away from the private sector in endless wars, liquidity is progressively drained from the financial markets. Fed’s Reverse Repo has gone down from a peak of $2.42 trillion to $0.82 trillion. (Fig. 13).

The overnight Reverse Repo operation is the foundation of Money Market Fund liquidity. My calculation is by end of January, another liquidity crisis will hit the US financial market and the Fed will be forced to print creating another round of USD depreciation. (Fig. 14)

C. Commodities and Precious Metals: Trading results for the week: (Fig. 15) Bitcoin (+14.80%), Uranium (+1.41%), JPY( +1.33%), NASDAQ (+0.49%), Rmb (-0.34%), Eur (-1.14%), GBP (-1.15%), Rubble (-1.66%), Gold (-3.0%), Oil (-6.64%) and Silver (-9.77%) .

Very interesting week for the currency and commodities market. Monday Asia opening (NY Sunday Night), gold and silver saw significant Chinese retail buying of physical gold and silver. Gold spiked up by 3.5% and Silver by 1.6%, Chinese dealers sought cover in the futures market outside of China. Western Big Bank Swap Dealers initially withdrew bids and let the price run then heavily shorted the market to trigger a price cascade and margin call. Paper selling continued throughout the week and Gold had an intra-week swing of $140 (6.8%). The paper Gold dump resulted in a temporary rise of USD and dealers took the opportunity to cover JPY shorts. The Anglo Americans are desperate to suppress a break away gold price from a global dedollarization drive. Such short term paper actions may impact leveraged funds but will have little impact on Central Banks and Sovereign Funds in their precious metals accumulation for national wealth preservation.

^Romans 9:6  But it is not that the word of God has taken no effect. For they are not all Israel who are of Israel, ⁷  nor are they all children because they are the seed of Abraham; but, "IN ISAAC YOUR SEED SHALL BE CALLED." ⁸  That is, those who are the children of the flesh, these are not the children of God; but the children of the promise are counted as the seed. ⁹  For this is the word of promise: "AT THIS TIME I WILL COME AND SARAH SHALL HAVE A SON." ¹⁰  And not only this, but when Rebecca also had conceived by one man, even by our father Isaac ¹¹  (for the children not yet being born, nor having done any good or evil, that the purpose of God according to election might stand, not of works but of Him who calls), ¹²  it was said to her, "THE OLDER SHALL SERVE THE YOUNGER." ¹³  As it is written, "JACOB I HAVE LOVED, BUT ESAU I HAVE HATED." ¹⁴  What shall we say then? Is there unrighteousness with God? Certainly not! ¹⁵  For He says to Moses, "I WILL HAVE MERCY ON WHOMEVER I WILL HAVE MERCY, AND I WILL HAVE COMPASSION ON WHOMEVER I WILL HAVE COMPASSION." ¹⁶  So then it is not of him who wills, nor of him who runs, but of God who shows mercy.  

A Wise Man Always Avoid Simple Answers to Complex Questions

Week ended December 1, 2023, interesting news items to look at this week were:

1. A Wise Man Always Avoid Simple Answers to Complex Questions: I often wonder have our global village evolved into such complexities that it can no longer be managed effectively and efficiently. Jaime Dimon, CEO of JP Morgan Chase recently warned we are now in“the most dangerous time the world has seen in decades,” (Fig. 1).

Dimon’s warning came last week but isn’t it a bit too late in the hour? Perhaps it came because the Americans truly felt stressed and helpless for the first time in decades. It was only a month earlier that Joe Biden said ”We’re the most powerful nation in the history of the world. We can take care of Israel and Ukraine and still maintain our overall international defense.” (Fig. 1 Red Framed Window). In 1967, Israel was able to defeat a coalition of Egypt, Syria, Jordan, Iraq and Lebanon in six days. It is 57 days since the Gaza war and a coalition of Israel and US could not defeat Hamas even with indiscriminate killing of 14,532 Palestinians and received world wide condemnation.

(i) An Abundance of Raw Data interpreted by Narrow Focused Machines: In my October 20 Blog, I quoted from Paul Craig Roberts that even a fox cannot get through the Israeli Gaza Border Security without IDF’s knowledge. The security arrangements at the Gaza border involved deep motion senses, surveillance camera and towers, 7m high steel walls, buffer zones with remote controlled machine guns and militarized kibbutz all around Gaza. Yesterday, NYT reported the IDF actually knew of Hamas’ planned attack over a year in advance by a plan code name as “Jericho Wall”. (Fig. 2).

If for the time being we drop the speculation that the Hamas attack was allowed for darker motives, then how do we explain what happened. The problem was not with Israel alone but just 8 days before the Oct 7 Hamas Jailbreak, US National Security Adviser Jake Sullivan rattled off a long list of positive developments in the Middle East, developments that were allowing the Biden administration to focus on other regions and other problems. ‘The Middle East Region Is Quieter Today Than It Has Been in Two Decades’ (Fig. 3).

Independent Military and Intelligence Analyst Scott Ritter postulates that the IDF bragged about its success with AI in dealing with Hamas in May 2021 that an AI Conference was held in February 2022 in Tel Aviv University and released an unclassified version of its achievements and an array of platforms that employed AI. (Fig. 4).

Last week I wrote the Western Old Dogs cannot learn new tricks, but just quite the opposite, Hamas must have learned their lessons quickly and it took just a little over one year to train the IDF AI like a Pavlov’s Dog to regard Hasmas’ advances as normal non-threatening incidents. I am not tech savvy enough to know how’s that’s done but reckon the trick may be similar to a regular “cry wolf” to desensitize the AI algorithms.

(ii) Education or Stealing Intellectual Properties: “Monkey See and Monkey Do” is a first step in education. If you parade your military exercise at your adversary’s front door day in and day out non-stop, sooner or later your adversary will know enough about you to come up with a plan to defeat you. Who is to blame? Russia was the first jailbreak, Niger the second, Hamas the third and soon enough the fourth, the fifth and it will spread like wild fire. The law of exponential decay is happening right now before our eyes (Fig. 5).

All the signs are there for the Dollar Hegemony Jailbreak in 2024.

2. FT Headline: Investors dump dollar in bet that US rates have peaked: ( Fig. 6)

Sadly Western MSM still think their Central Banks control all the levers when most of the world have been dumping dollars since 2022.

3. WAPO Headline: Netanyahu was protecting Hamas: (Fig. 7)

Zelensky had 18 months before being thrown under the bus by the Western Press, Netanyahu got only one month.

This week’s financial markets:

A. Stock Market: (Fig. 8): Dow closed at 34,947 for the week, a rise of 1298 points or +3.71%, S&P 500 +1.00% and NASDAQ +1.06%.. 

Powell took a dovish stand mid week and indicates no December rate rise.

B. Debt Market: (Fig. 9): USGG10YR ended the week at 4.209%, a drop of 26.3 basis points. Most asset class gone up except the USD and oil after Powell’s speech.

 

C. Commodities and Precious Metals: Trading results for the week: (Fig. 10) Silver (+4.72%), Gold (+3.53%), Bitcoin (+2.49%), JPY( +1.81%), SPX500 (+1.00 %), GBP (+0.75%), Uranium (+0.42%), NASDAQ (+0.30%), Rmb (+0.14%), Eur (-0.61%), Rubble (-1.19%), and Oil (-1.52%).

USD continued to show weakness as smart money moved into precious metals.

Ezekiel 4:1  "You also, son of man, take a clay tablet and lay it before you, and portray on it a city, Jerusalem. 2  Lay siege against it, build a siege wall against it, and heap up a mound against it; set camps against it also, and place battering rams against it all around. 3  Moreover take for yourself an iron plate, and set it as an iron wall between you and the city. Set your face against it, and it shall be besieged, and you shall lay siege against it. This will be a sign to the house of Israel. 4  "Lie also on your left side, and lay the iniquity of the house of Israel upon it. According to the number of the days that you lie on it, you shall bear their iniquity. 5  For I have laid on you the years of their iniquity, according to the number of the days, three hundred and ninety days; so you shall bear the iniquity of the house of Israel. 6  And when you have completed them, lie again on your right side; then you shall bear the iniquity of the house of Judah forty days. I have laid on you a day for each year.