Connect with us

Economics

Escobar: Eurasia Takes Shape, Part 1 – How The SCO Just Flipped The World Order

Escobar: Eurasia Takes Shape, Part 1 – How The SCO Just Flipped The World Order

Authored by Pepe Escobar via The Cradle,

As a rudderless…

Share this article:

Published

on

This article was originally published by Zero Hedge

Escobar: Eurasia Takes Shape, Part 1 – How The SCO Just Flipped The World Order

Authored by Pepe Escobar via The Cradle,

As a rudderless West watched on, the 20th anniversary meeting of the Shanghai Cooperation Organization was laser-focused on two key deliverables: shaping up Afghanistan and kicking off a full-spectrum Eurasian integration.

The two defining moments of the historic 20th anniversary Shanghai Cooperation Organization (SCO) summit in Dushanbe, Tajikistan had to come from the keynote speeches of – who else – the leaders of the Russia-China strategic partnership.

Xi Jinping: “Today we will launch procedures to admit Iran as a full member of the SCO.”

Vladimir Putin: “I would like to highlight the Memorandum of Understanding that was signed today between the SCO Secretariat and the Eurasian Economic Commission. It is clearly designed to further Russia’s idea of establishing a Greater Eurasia Partnership covering the SCO, the EAEU (Eurasian Economic Union), ASEAN (Association of Southeast Asian Nations) and China’s Belt and Road initiative (BRI).”

In short, over the weekend, Iran was enshrined in its rightful, prime Eurasian role, and all Eurasian integration paths converged toward a new global geopolitical – and geoeconomic – paradigm, with a sonic boom bound to echo for the rest of the century.

That was the killer one-two punch immediately following the Atlantic alliance’s ignominious imperial retreat from Afghanistan. Right as the Taliban took control of Kabul on August 15, the redoubtable Nikolai Patrushev, secretary of Russia’s Security Council, told his Iranian colleague Admiral Ali Shamkhani that “the Islamic Republic will become a full member of the SCO.”

Dushanbe revealed itself as the ultimate diplomatic crossover. President Xi firmly rejected any “condescending lecturing” and emphasized development paths and governance models compatible with national conditions. Just like Putin, he stressed the complementary focus of BRI and the EAEU, and in fact summarized a true multilateralist Manifesto for the Global South.

Right on point, President Kassym-Jomart Tokayev of Kazakhstan noted that the SCO should advance “the development of a regional macro-economy.” This is reflected in the SCO’s drive to start using local currencies for trade, bypassing the US dollar.

With Iran’s arrival, the SCO member-states now number nine, and they’re focused on fixing Afghanistan and consolidating Eurasia.

Watch that quadrilateral

Dushanbe was not just a bed of roses. Tajikistan’s Emomali Rahmon, a staunch, secular Muslim and former member of the Communist Party of the USSR – in power for no less than 29 years, reelected for the 5th time in 2020 with 90 percent of the vote – right off the bat denounced the “medieval sharia” of Taliban 2.0 and said they had already “abandoned their previous promise to form an inclusive  government.”

Rahmon, who has never been caught smiling on camera, was already in power when the Taliban conquered Kabul in 1996. He was bound to publicly support his Tajik cousins against the “expansion of extremist ideology” in Afghanistan – which in fact worries all SCO member-states when it comes to smashing dodgy jihadi outfits of the ISIS-K mold .

The meat of the matter in Dushanbe was in the bilaterals – and one quadrilateral.

Take the bilateral between Indian External Affairs Minister S. Jaishankar and Chinese FM Wang Yi. Jaishankar said that China should not view “its relations with India through the lens of a third country,” and took pains to stress that India “does not subscribe to any clash of civilizations theory.”

That was quite a tough sell considering that the first in-person Quad summit takes place this week in Washington, DC, hosted by that “third country” which is now knee deep in clash-of-civilizations mode against China.

Pakistani Prime Minister Imran Khan was on a bilateral roll, meeting the presidents of Iran, Belarus, Uzbekistan and Kazakhstan. The official Pakistani diplomatic position is that Afghanistan should not be abandoned, but engaged.

That position added nuance to what Russian Special Presidential Envoy for SCO Affairs Bakhtiyer Khakimov had explained about Kabul’s absence at the SCO table: “At this stage, all member states have an understanding that there are no reasons for an invitation until there is a legitimate, generally recognized government in Afghanistan.”

And that, arguably, leads us to the key SCO meeting: a quadrilateral with the Foreign Ministers of Russia, China, Pakistan and Iran.

Pakistani Foreign Minister Qureshi affirmed: “We are monitoring whether all the groups are included in the government or not.” The heart of the matter is that, from now on, Islamabad coordinates the SCO strategy on Afghanistan, and will broker Taliban negotiations with senior Tajik, Uzbek and Hazara leaders. This will eventually lead the way towards an inclusive government regionally recognized by SCO member-nations.

Iranian President Ebrahim Raisi was warmly received by all – especially after his forceful keynote speech, an Axis of Resistance classic. His bilateral with Belarus president Aleksandr Lukashenko revolved around a discussion on “sanctions confrontation.” According to Lukashenko: “If the sanctions did any harm to Belarus, Iran, other countries, it was only because we ourselves are to blame for this. We were not always negotiable, we did not always find the path we had to take under the pressure of sanctions.”

Considering Tehran is fully briefed on Islamabad’s SCO role in terms of Afghanistan, there will be no need to deploy the Fatemiyoun brigade – informally known as the Afghan Hezbollah – to defend the Hazaras. Fatemiyoun was formed in 2012 and was instrumental in Syria in the fight against Daesh, especially in Palmyra. But if ISIS-K does not go away, that’s a completely different story.

Particular important for SCO members Iran and India will be the future of Chabahar port. That remains India’s crypto-Silk Road gambit to connect it to Afghanistan and Central Asia. The geoeconomic success of Chabahar more than ever depends on a stable Afghanistan – and this is where Tehran’s interests fully converge with Russia-China’s SCO drive.

What the 2021 SCO Dushanbe Declaration spelled out about Afghanistan is quite revealing:

1. Afghanistan should be an independent, neutral, united, democratic and peaceful state, free of terrorism, war and drugs.

2. It is critical to have an inclusive government in Afghanistan, with representatives from all ethnic, religious and political groups of Afghan society.

3. SCO member states, emphasizing the significance of the many years of hospitality and effective assistance provided by regional and neighboring countries to Afghan refugees, consider it important for the international community to make active efforts to facilitate their dignified, safe and sustainable return to their homeland.

As much as it may sound like an impossible dream, this is the unified message of Russia, China, Iran, India, Pakistan and the Central Asian “stans.” One hopes that Pakistani PM Imran Khan is up to the task and ready for his SCO close-up.

That troubled Western peninsula

The New Silk Roads were officially launched eight years ago by Xi Jinping, first in Astana – now Nur-Sultan – and then in Jakarta.

This is how I reported it at the time.

The announcement came close to a SCO summit – then in Bishkek. The SCO, widely dismissed in Washington and Brussels as a mere talk shop, was already surpassing its original mandate of fighting the “three evil forces” – terrorism, separatism and extremism – and encompassing politics and geoeconomics.

In 2013, there was a Xi-Putin-Rouhani trilateral. Beijing expressed full support for Iran’s peaceful nuclear program (remember, this was two years before the signing of the Joint Comprehensive Plan of Action, also known as the JCPOA).

Despite many experts dismissing it at the time, there was indeed a common China-Russia-Iran front on Syria (Axis of Resistance in action). Xinjiang was being promoted as the key hub for the Eurasian Land Bridge. Pipelineistan was at the heart of the Chinese strategy – from Kazakhstan oil to Turkmenistan gas. Some people may even remember when Hillary Clinton, as Secretary of State, was waxing lyrical about an American-propelled New Silk Road.

Now compare it to Xi’s Multilateralism Manifesto in Dushanbe eight years later, reminiscing on how the SCO “has proved to be an excellent example of multilateralism in the 21stcentury,” and “has played an important role in enhancing the voice of developing countries.”

The strategic importance of this SCO summit taking place right after the Eastern Economic Forum (EEF) in Vladivostok cannot be overstated enough. The EEF focuses of course on the Russian Far East – and essentially advances interconnectivity between Russia and Asia. It is an absolutely key hub of Russia’s Greater Eurasian Partnership.

A cornucopia of deals is on the horizon – expanding from the Far East to the Arctic and the development of the Northern Sea Route, and involving everything from precious metals and green energy to digital sovereignty flowing through logistics corridors between Asia and Europe via Russia.

As Putin hinted in his keynote speech, this is what the Greater Eurasia Partnership is all about: the Eurasia Economic Union (EAEU), BRI, India’s initiative, ASEAN, and now the SCO, developing in a harmonized network, crucially operated by “sovereign decision-making centers.”

So if the BRI proposes a very Taoist “community of shared future for human kind,” the Russian project, conceptually, proposes a dialogue of civilizations (already evoked by the Khatami years in Iran) and sovereign economic-political projects. They are, indeed, complementary.

Glenn Diesen, Professor at the University of South-Eastern Norway and an editor at the Russia in Global Affairs journal, is among the very few top scholars who are analyzing this process in depth. His latest book remarkably tells the whole story in its title:  Europe as the Western Peninsula of Greater Eurasia: Geoeconomic Regions in a Multipolar World. It’s not clear whether Eurocrats in Brussels – slaves of Atlanticism and incapable of grasping the potential of Greater Eurasia – will end up exercising real strategic autonomy.

Diesen evokes in detail the parallels between the Russian and the Chinese strategies. He notes how China “is pursuing a three-pillared geoeconomic initiative by developing technological leadership via its China 2025 plan, new transportation corridors via its trillion-dollar Belt and Road Initiative, and establishing new financial instruments such as banks, payment systems and the internationalization of the yuan. Russia is similarly pursuing technological sovereignty, both in the digital sphere and beyond, as well as new transportation corridors such as the Northern Sea Route through the Arctic, and, primarily, new financial instruments.”

The whole Global South, stunned by the accelerated collapse of the western Empire and its unilateral “rules-based order,” now seems to be ready to embrace the new groove, fully displayed in Dushanbe: a multipolar Greater Eurasia of sovereign equals.

Tyler Durden
Wed, 09/22/2021 – 23:20


Author: Tyler Durden

Share this article:

Economics

“$3000 In Months, Not Years” – Gold’s Inflation-Protection Means “Violent” Run-Up Imminent

"$3000 In Months, Not Years" – Gold’s Inflation-Protection Means "Violent" Run-Up Imminent

While cryptocurrencies have been stealing the headlines…

Share this article:

“$3000 In Months, Not Years” – Gold’s Inflation-Protection Means “Violent” Run-Up Imminent

While cryptocurrencies have been stealing the headlines recently with record highs amid ‘inflation hedge’ narratives, commodities have put in a strong performance amid supply chain shocks and unprecedented demand interference (monetary/fiscal policy). As everything from copper to crude and aluminum to zinc has soared, one metal has lagged…

But, as Bloomberg reports, two of the biggest names in Canadian mining – the former chiefs of Goldcorp, David Garofalo and Rob McEwen – predict investors will catch on soon that global inflationary pressures are far less transitory and more intense than central bankers and hedonically-adjusted consumers price indexes suggest.

When that realization sets in, gold’s inflation-protection appeal probably will send prices to $3,000 an ounce, from about $1,800 now, according to Garofalo. Such a run-up would be a “down-payment” to McEwen’s $5,000 long term prediction.

“I’m talking about months,” he said.

“The reaction tends to be immediate and violent when it does happen. That’s why I’m quite confident that gold will achieve $3,000 an ounce in months not years.”

McEwen warns that the global monetary and debt expansion to cope with the pandemic, as well as secondary drivers associated with supply disruptions, will have people turning back to traditional methods of protecting wealth.

“It’s not just the dollar,” he said.

All currencies are buying less than what they were buying a year ago. So I look at that as an unprecedented development at least in our lives that is going to affect the value of fiat currencies around the world.”

We have seen this kind of delayed response before…

As Peter Schiff recently noted, the knock on gold and silver has always been that you forgo interest. Higher interest rates increase the opportunity cost of owning the metals. For example, if interest rates are 10% and you own gold, you’re giving up 10% interest on the money you have in the yellow metal. But when rates are negative, it doesn’t matter.

If they’re negative 2% or negative 10%, nobody wants a negative yield. So, as long as yields are negative, you want to get out of bonds. It doesn’t matter how negative. Once you’re losing, it’s a loss.”

Ultimately, a negative rate environment, no matter how negative, should be bullish for gold and silver.

The other tailwind for gold and silver is traders still expect the Federal Reserve to respond to inflation by tightening monetary policy – and thus raising interest rates.

Oil prices are rising as a result of inflation. Gold should also be rising as a result of inflation. It should not be falling because investors expect the Fed to fight inflation. Again, if the Fed could fight inflation, they’d be fighting it right now. The reason they’re not fighting it, the reason they’re pretending that it’s not a problem, and so there’s no need to fight it, is because they can’t. But they’re never going to admit that. That would be a complete disaster. So, they have to pretend that it’s transitory, that it’s not a real problem, but also pretend that if it ever becomes a real problem, well, they’re going to do something about it. But of course, they can’t do anything about it. So, they won’t.”

But while price has lagged, there are plenty that are using this ‘cheapness’ to back up the truck.

Gold demand in China was up in September, as the country approaches a peak gold-buying season. September is typically a strong month for wholesale gold demand in China as it leads up to an important holiday season. October is traditionally a big month for gold jewelry sales during the seven-day National Day Holiday in early in the month. Both gold withdrawals from the Shanghai Gold Exchange (SGE) in September and gold imports in August were up, a sign that the Chinese gold market continues to recover after it was hit hard by the coronavirus pandemic.

Rising local premiums also signal growing demand for gold in China. The local gold price premium rose for the third straight month in September, averaging US$7.5/oz. That was $1.70 higher month-on-month.

So, it appears the Chinese (and the Russians) get it and Peter Schiff thinks the markets will figure this out eventually.

In an inflationary environment – and we are in the most inflationary environment we’ve ever been in – the riskiest things you can own are bonds. And it doesn’t matter what bond you have. Treasuries are no safer than the riskiest junk bond when the threat is the loss of purchasing power to inflation. The real safe haven in this environment is gold. And as soon as investors understand the difference between gold and Treasuries, they will then start moving into gold as a safe haven, and they will not be deterred in their buying of gold when bonds go down because they will expect bonds to go down. When you’re looking to remove inflation risk from your portfolio, you sell bonds, including Treasuries, and you buy gold and silver.”

Its universality and 4,000 year-old history mean gold is better positioned than crypto-currencies as a hedge against an inflationary environment that “will have deep and meaningful impacts on our capital,” Garofalo concluded

Tyler Durden
Mon, 10/25/2021 – 05:45














Author: Tyler Durden

Share this article:

Continue Reading

Economics

ChargePoint Stock Could Get a Short-Term Jolt, But the Future Is Foggy

With investors showing more excitement lately for electric vehicle (EV) stocks, ChargePoint (NYSE:CHPT) stock is moving higher along with the sector.
Source:…

Share this article:

With investors showing more excitement lately for electric vehicle (EV) stocks, ChargePoint (NYSE:CHPT) stock is moving higher along with the sector.

Source: JL IMAGES / Shutterstock.com

After briefly falling below $20 per share in early October, CHPT stock has bounced back to above $21 per share.

Markets have shrugged off the many worries that tanked it in September. Speculative growth plays like EV stocks don’t appear at immediate threat of falling out of favor. With this, a further move higher may be in the cards for the popular EV charging play.

Besides a rebound in bullish sentiment for EV plays, other factors could give it a near-term boost as well. For instance, progress with the U.S. infrastructure bill. In order for it to get passed, a lot is getting taken out of it.

Yet based on the latest headlines, billions set aside to help America’s clean energy goals remain. In other words, billions in government largess for the build-out of America’s charging infrastructure. This of course bodes well for this company’s stateside expansion.

That said, while another near-term jolt could happen, caution remains key with this stock. There’s still plenty that could negatively affect its ability to grow in-line with the projections priced into it.

Add in the risk that growth stocks remain in danger of correcting, and treating this as a speculative trade, rather than as a long-term buy-and-hold, may be the best approach for now.

The Recent CHPT Stock Rally

The long-term bull case for ChargePoint remains up for debate (more below). Yet for now, the rebound it’s been on since earlier this month may have some more runway but perhaps not due to anything company-specific.

ChargePoint next announces earnings on Dec. 1. Barring news of another M&A (mergers and acquisitions) deal, like the pair of deals announced last summer, direct headlines about the company may be limited between now and then.

However, recharged bullishness for the EV sector by-itself could enable its rally to carry on. Especially as the market has shrugged off inflation, interest rate, and tapering worries, again, and shows little issue paying up for growth stocks.

Maybe not back to $35 per share, which it last hit during its short-lived rebound back in June. But possible developments, like passage of the EV bill, could enable it to make its way toward $30 per share.

Investors looking at this as a quick trade may find opportunity. Investors looking for a long-term play that could see an eventual triple-digit percentage increase in price, on the other hand? They might want to look elsewhere.

Why Another Drop Below $20 Could Happen

In the near-term, CHPT stock may stay on its current trajectory. But beyond the next month or so, there’s still the risk it makes another slide below $20 per share. As I discussed in my last article on the EV charging play, market-specific and/or company-specific factors could send the stock to much lower prices.

Regarding market-specific factors, Fed tapering and interest rate increases could put pressure on this growth stock, valued mainly on future results. As for company-specific factors, there are plenty.

Competition continues to heat up. Rivals include Blink Charging (NASDAQ:BLNK), EVgo (NASDAQ:EVGO), and Volta (NYSE:VLTA).

Not only that, there are issues that could impact its long-term performance. In terms of revenue growth, a preference for home-based chargers may lower demand for public charging stations.

When it comes to its ability to become profitable the company will need  to remedy an issue that’s played out recently. Hardware installation revenues may be moving up at a nice clip, but revenue growth for its higher-margin software subscription business is lagging behind.

Putting it simply, this may be the largest long-term risk for the company. If the SaaS-esque elements of its business (asset-light, recurring revenue) fail to take off, it’ll become harder and harder for shares to maintain a double-digit price-to-sales (P/S) ratio.

The Verdict on ChargePoint Stock

If the recent renewed excitement for EV plays carries on, the rebound for this charging play could carry on in the short term, but it’s going to be a few years before this company starts generating results with the pivot to EVs still in its early stages.

ChargePoint will eventually need to justify its current market capitalization ($6.83 billion). In the medium-term to long-term market volatility and/or disappointing results from the company, may send it tanking once again.

Until it next releases results/outlook in December, which I’ll admit could prove my concerns about it are overblown, tread carefully with CHPT stock.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.

More From InvestorPlace

The post ChargePoint Stock Could Get a Short-Term Jolt, But the Future Is Foggy appeared first on InvestorPlace.



Author: Thomas Niel

Share this article:

Continue Reading

Economics

Oil rises, gold flirts with 1800

Oil strengthens in Asia Oil prices rose on Friday as Jerome Powell signalled that supply chain disruptions and the “transitory” inflation will be us…

Share this article:

Oil strengthens in Asia

Oil prices rose on Friday as Jerome Powell signalled that supply chain disruptions and the “transitory” inflation will be us for quite some time yet. Brent crude rose 1.10% to USD 85.70, and WTI leapt by 1.95% to USD 84.15 a barrel, taking out resistance at USD 84.00 a barrel. With the Saudi Arabia Energy Minister signalling over the weekend that OPEC+ will remain cautious on production increases, both Brent crude and WTI have tracked higher in Asia from the get-go. News that the US Democrats are close to a final spending package, along with sharp jumps in natural gas and coal this morning, are also boosting oil’s positive outlook. Brent crude has risen by 0.60% through resistance at USD 86.00 to USD 86.20 a barrel. WTI has risen by 0.50% to USD 84.55 a barrel.

Although the relative strength indexes (RSIs) on both contracts have moved back into overbought territory, it is physical market demands, and not technical factors, that are driving price movements right now. Although a sharp correction lower on a bearish headline cannot be ruled out in either contract, and a sell-off is likely to be followed by an equally sharp rally as the buy-the-dippers, speculative and physical, pile in.

A daily close of Brent crude and WTI above USD 86.00 and USD 84.00 a barrel this evening would be a bullish technical indicator, signalling that the next move higher in oil prices is underway. In the bigger picture, only a fall through their respective trendline supports at USD 83.25 for Brent, or USD 80.00 a barrel for WTI, changes the bullish outlook.

Gold rollercoaster session

Gold had a rollercoaster session on Friday, rising as high as USD 1814.00 an ounce at one stage as the break of USD 1800.00 triggered stop-loss, momentum and model buying. The Powell taper comments put a floor under the US dollar and saw an intra-day retreat, but gold still finished 0.54% higher at USD 1792.50 an ounce. In Asia, gold has resumed its rally, climbing 0.30% to USD 1798.00 an ounce.

The price action on Friday, a vicious rally, followed by an equally vicious sell-off, highlights how non-sticky the fast-money players are in gold when it starts to see some intra-day volatility. The whipsaw price action suggests that any rally in gold will struggle to maintain a multi-day outlook while those types of flows dominate volumes. However, Mr Powell did say that “transitory” inflation pressures will be with for some time to come, and it is increasingly looking like some sort of inflation hedging is being built into gold prices. Gold’s challenge will be whether it can weather an FOMC tapering announcement next week, especially if, as expected, US yields and the US dollar start their move higher again. I frankly, have my doubt.

That said, gold is slowly but surely forming what appears to be the second shoulder of an inverse head and shoulders pattern through a series of higher daily lows. In the bigger picture, a rise through USD 1835.00 an ounce, would trigger the multi-month inverse head-and-shoulders technical pattern and swing gold’s outlook back to positive, targeting a move back above USD 2000.00 an ounce.

There is no doubt the shorter-term technical picture looks bullish though, especially as gold has now closed and remained above the 100 and 200-day moving averages at USD 1791.00 and USD 1793.85 an ounce. A daily close above this zone tonight should signal more gains. Behind them, gold has support at USD 1780.00 an ounce. Resistance appears initially at the overnight high around USD 1814.00 before gold faces a formidable zone of multi-month daily highs between USD 1832.00 and USD 1835.00 an ounce.




Author: Jeffrey Halley

Share this article:

Continue Reading

Trending