Ukranized the Entire Western Alliance

 

The week ended on January 11, 2025, interesting news items to look at this week are:

1. Ukranized the Entire Western Alliance: There is a Chinese Proverb “前門拒虎後門進狼”, literally it can be translated as “Whilst the tiger is resisted at the front door, the wolf has stealthily entered through the back”. The proverb is a metaphor for disasters coming one after another, and the situation is extremely dangerous. (Fig. 1)

Such is the predicament of Europe, Canada and the rest of the Western alliances. There are 29 countries standing as defensive shields or cannon fodder in front of the United States as the Anglo American Empire fights an unsuccessful war with the Global South and the axis of defiance against “The Rule Based International Order.” (Fig. 2)

These 29 countries have exhausted their resources (militarily, personnel, moral cover, economic and monetarily)  in defending American hegemony and now found themselves totally vulnerable to predatory American demands. For the Western Alliance countries, it is the Russian Bear at the front and the American Crocodile at the back.

(i) New York Post Meme - The Donroe Doctrine: (Fig. 3)

Today's cover of the New York Post features the title “The Donroe Doctrine”, a direct reference to the Monroe Doctrine, a policy established by the United States in the early 19th century. The Monroe Doctrine, proclaimed by President James Monroe in 1823, stated that any intervention by European powers in the Americas would be seen as a hostile act against the United States, establishing the idea that the Western Hemisphere would be an American sphere of influence. Especially in the 20th century, the Doctrine was used as a pretext for military interventions in the region. While recent Democratic governments have distanced themselves from the Monroe Doctrine, Trump explicitly defends it, reinforcing the idea of American hegemony in the Americas. Additionally, the Republican majority on the House of Representatives Foreign Affairs Committee shared the newspaper's cover with a tweet that read: “Our country was built by warriors and explorers. We conquered the West, won two world wars and were the first to plant our flag on the moon. President Trump has the biggest dreams for America, and it is un-American to be afraid of big dreams.” The tweet was later deleted but continues to circulate online.

(ii) The Fall of Justin Trudeau: (Fig. 4)

The first fallout of the Donroe Doctrine is Canadian Prime Minister Justin Trudeau who under pressure for not standing up to US President-elect Trump encroachment into Canada, resigned this week.

(iii) Denmark Capitualted: (Fig. 5)

In reaction to Trump’s threat of taking Greenland by force, Greenland’s prime minister Múte Egede called for Greenland independence from Denmark and for the “shackles of the colonial era” to be broken. Last year, on December 23, he explicitly rejected Trump’s interest: “Greenland is ours. We are not for sale and will never be for sale.” The Danish prime minister similarly dismissed the notion of Trump buying Greenland as absurd when he first raised it in 2019. Yet, Trump’s fascination with the Arctic island persists, reflecting broader geopolitical interests in the region.

But the big question is what prompts Trump’s America to show its fangs at this time. Commentators and analysts have put forward numerous reasons but the two most pertinent points are:

(a) Economics of Plunder and Low Hanging Fruits: US financial conditions is bordering on catastrophic and Trump is considering a declaration of National Economic Emergency. (Fig. 6).

The original US Grand Plan of fragmenting Russia and China for exploitation simply hasn’t work as the long drawn out war of attrition is hurting US a lot more than Russia or China. Of the $30 trillion of foreign portfolio investments in US, the Global South have resisted to further sink good money after bad whilst US allies continued to follow the Piper’s tune unabated. (Fig. 7).

As at end October 2024, the share of Foreigner’s Investment Portfolio Owed by US to US Allies are 4 times larger than the Global South (Fig. 8).

Since further borrowing by US is not an option for the US economy, even after paying the highest interest rates in the developed world, the allies’ sunk investments in US is a juicy low hanging fruit that the Trump administration simply cannot resists to devour.

(b) Imminent Military Defeat: In the world of Martial Arts, there is a Chinese saying, “天下武功,無堅不破,唯快不破” In English Translation it reads “In the world of martial arts, even the hardest defence can be pierced, only speed can't be pierced”. With the Russian’s Oreshnik Missile challenge and China’s recent show case of sixth-gen fighters and legacy hyper-sonic missiles, conventional warfare against these two adversaries is no longer a military option for the US. For the first time US is being forced onto a defensive posture. When mobilization and logistics is taken into consideration, Russia’s military industrial surge capacity vs NATO’s in the Ukraine conflict and China’s speed in arms built up, this Eurasian Bloc are not just equal but in honest reality have far surpassed the combined conventional military capability of G7. In a turbulent sea, survival means quickly ditching dead weight overboard after scavenging what one needs to live on and that is exactly what Trump is contemplating. Greenland and Canada are the perfect outpost for early missile tracking radar systems US would require before a hot kinetic war eventuate.

2. Major Shifts in Financial Markets for the three weeks December 31, 2024 to January 11, 2025.

(i) Key Financial Asset Category Performance: (Fig. 9)

Ruble (+11.50%), Copper (+6.66%), Oil (+5.84%), Silver (+5.33%), Gold (+2.51%), USD Index (+1.06%), Uranium (+0.77%), Bitcoin (+0.64%), Jpy (-0.26%), Rmb (-0.45%), AUD (-0.72%), S&P500 (-0.79%), Nasdaq (-1.06%), Euro (-1.11%), Dow (-1.25%) and GBP (-2.51%). Energy, Commodities and Precious Metals are sought as insiders are selling toppy US stocks en mass.

(ii) Fed Funds Rate and Duration Treasuries: Interest rate on Duration Treasuries continued to climb as Treasury Bonds are looking increasingly unattractive on a risk reward basis. This is despite the current FOMC minutes indicate a further 75 basis points cuts in Fed Funds rate is in the pipeline in 2025. (Fig. 10)

(iii) Short Term Interest Rate: Short Duration rates remained steady and the market is pricing the next Fed rate cut to be around June 2025. (Fig. 11)

Revelation 17:15  Then he said to me, "The waters which you saw, where the harlot sits, are peoples, multitudes, nations, and tongues. 16  And the ten horns which you saw on the beast, these will hate the harlot, make her desolate and naked, eat her flesh and burn her with fire. 17  For God has put it into their hearts to fulfill His purpose, to be of one mind, and to give their kingdom to the beast, until the words of God are fulfilled. 18  And the woman whom you saw is that great city which reigns over the kings of the earth." 

Friend or Foe

The week ended on January 4, 2025, interesting news items to look at this week are:

1. Friend or Foe:  2025 began with a continuation of irrational conflicts and chaos as a weakened  US struggled to exert its dominance on other nations, be they America’s allies or competitors. We take note as Henry Kissinger once said “ To be an enemy of America can be dangerous, but to be a friend is fatal.” (Fig. 1).

(i) Europe’s Energy War: On January 1, 2025 Ukraine ceased its gas transit agreement from Russia to Europe. Bloomberg energy analyst Stephen Stapczynski noted: "Cheap Russian natural gas has been a pillar of some European economies for half a century. That era is now over. Europe will face higher and more persistent gas prices." (Fig. 2).

Essentially Ukraine followed a cue from the Biden Administration in November 2024 to sanction Gazprombank by blocking the use of SWIFT for gas payment settlements. (Fig. 3).

Yes, Russia will loose some gas revenue but as Slovakia's prime minister Robert Fico,said “cutting off cheap Russian gas to Europe would create a "drastic impact" on EU nations but not hurt Russia.” Russia’s Gas sale to Europe is about $5 billion but I doubt Russia will suffer much damage because of price compensation and sales to the Global South. With Trump’s pledge to end the Ukraine conflict and thus leaving Europe as the final defender of Ukraine, why would Zelensky bite the hand that has been feeding her for 3 years. Since the start of the war, the EU and Member States have made available close to $135 billion in financial, military, humanitarian, and refugee assistance, nearly double the amount of $75 billion support from US. In the gas transit termination, Ukraine will loose $1 billion in transit fees, but all the benefits of the transit termination will accrue to the US in substantial overpriced LNG sales and a total domination of Europe’s energy supplies. (Fig. 4).

Quoting Kissinger again, “America has no permanent friends or enemies, only interests”. (Fig. 5).

From a global perspective of Natural Gas Balance, the sabotage and sanction of Russian Gas to Europe would not only hurt Europe but other US allies in Asia (Japan, South Korea, Taiwan and Singapore) who will need to compete for LNG from just 9 ex Russian LNG exporters. (Fig. 6).

Total Gas shortfall from Europe and US Allies in Asia is annually 645.8 bcm whilst US and Middle East’s surplus to export is limited to 246.05 bcm.  (Fig. 7).

Such risks has been on the radar of the Chinese who is well aware of the chameleon like DNA of the Anglo American Empire since 1917. (Fig. 8)

(ii) A Can of Worms in Syria: 3 weeks has past since the fall of the Assad regime to HTS, Russia still maintains her air and naval base is Syria. Two members of Nato, Turkiye and US are fighting a proxy war over the Kurds. (Fig. 9).

New Orleans had a terrorism attack by a US Veteran carrying an ISIS flag. (Fig. 10).

A wild fire is easy to start but difficult to control.

2. Major Shifts in Financial Markets for the two weeks December 23, 2025 to January 4, 2025.

(i) Key Financial Asset Category Performance: (Fig. 11)

Uranium (+5.00%), Oil (+4.64%), Bitcoin (+3.30%), USD Index (+1.05%), Gold (+0.58%), S&P500 (+0.40%), Dow (+0.40%), Silver (-0.31%),  Rmb (-0.33%), Nasdaq (-0.50%), Jpy (-8.2%), AUD (-0.65%), Copper (-0.76%), , Euro (-1.20%), GBP (-1.21%), Korean Won (-1.60%)  and Ruble (-6.26%). The sabotage of Gas supply to Europe had a major impact in Europe and US Allies in Asia. Uranium were and energy related assets were bid up and so were bitcoin and precious metals.

(ii) Bank liquidity shrunk to lowest level since October 2020. (Fig. 12).

With continued crowding out of funding by Fiscal Dominance, we expect a Repo crisis similar to September 2019 will occur soon enough and the Fed will be forced to start printing again. However this time round the Fed will unlikely be involved in buying Duration Treasuries over the top to force down bond rates as the last exercise had seen Fed Financial losses of $216 billion to January 2, 2025. The Fed negative equity is $165 billion as at January 1, 2025.  (Fig. 13).

(iii) Interest Rate Direction : There is little elbow road left for the Fed and the US Financial System to maneuver. We will continue to monitor key Treasury Rates and I expect side-way choppiness until another new major geopolitical or geoeconomic event breaks. (Fig. 14)

is recent Fed Funds Rate vs Duration Treasuries and (Fig. 15) is Fed Funds Rate vs USGG2YR.

II Corinthians 6:14  Do not be unequally yoked together with unbelievers. For what fellowship has righteousness with lawlessness? And what communion has light with darkness?