Wednesday Night 1945 with Peter Berezin

Peter’s latest report highlights:
This week’s FOMC statement, together with the accompanying press conference, signaled a clear change in tone from the Fed.
Despite the fact that underlying growth remains well above trend, a rate cut in July is now more likely than not. An additional “insurance cut” is also probable in September.
Right now, rising inflation is not much of a risk. However, the Fed’s dovish turn almost guarantees that the U.S. economy will overheat.
This reinforces our view that Fed policy will unfold in a two-stage process: A period of excessively easy monetary policy stretching past the next presidential election, followed by a burst of inflation that ultimately forces the Fed to hike rates
The dollar is likely to weaken over the coming months. Cyclical equity sectors will start outperforming defensives, while international stocks will outperform their U.S. peers.
We went long gold on April 17th. The trade is up 9.2% since then. Stick with it.

Shall we ask him about Facebook’s Libra? Is this merely a new version of Canadian tire money, or should we be grateful for the scrutiny of such authorities as the European central bankers and regulators?

With the upcoming G20 meeting on June 28-29 the world media’s attention will turn to who is meeting with whom on the sidelines.

The ongoing trade war between the US and China continues to capture  headlines. In May the US increased existing tariffs of 10% on US$200bn worth of Chinese merchandise imports to duty rates of 25%, and China responded by raising its import tariffs on around US$60bn of US goods.
The stakes were raised again a few days later with a US proposal to apply additional tariffs across Chinese merchandise imports not yet covered by punitive tariffs, worth around US$300bn per year. Against this backdrop, The Economist Intelligence Unit has come to the view that the most likely outcome of a planned meeting between US president Donald Trump and Xi Jinping, his Chinese counterpart, on the sidelines of the G20 meeting will be of a truce in tariffs escalation, probably until at least 2020. This prediction appears to be confirmed by the report carried in the South China Morning Post that China, US agree to resume trade talks in phone call ahead of Xi-Trump G20 meeting
China said Monday it will not allow discussion on Hong Kong at the G20 this week even as US President Donald Trump plans to raise the city’s mass protests during his meeting with President Xi Jinping. Will Trump try anyway? And what about his promise to Justin Trudeau to press Chinese President Xi Jinping on Canada’s behalf over Beijing’s detention of two Canadians in apparent retaliation for Canadian authorities serving an American arrest warrant on Huawei CFO Meng Wanzhou. It will be more difficult now in view of the news that her lawyers  have made a submission to Canada’s minister of justice that calls on him to withdraw extradition proceedings against the Huawei CFO and lays out the legal basis for him to do so in the name of “human decency” and other “Canadian values”.

The past week’s international news has been dominated by U.S.-Iran relations, building from the attacks on oil tankers in the Gulf of Oman and culminating in Trump’s last-minute decision on Friday  not to retaliate militarily to the shooting down of a  U.S. drone. Instead,  he has imposed new sanctions on Iran, stepping up a policy of pressuring the nation’s leaders and the crippled Iranian economy. Editorialists and opinion writers have had a field day (actually, several). Please see Iran 2019 and note in particular Is Iran Close to Collapse? Three Things You Need To Know about the U.S.-Iran Showdown. with thanks to Alireza Najafi-Yazdi.

Talk of Middle East peace is in the air again, as politicians are set to gather in Bahrain to launch the latest in a long line of initiatives to resolve the Israeli-Palestinian conflict. Thousands of words and millions of dollars will likely be expended at the U.S.-led conference on June 25-26 aimed at boosting the Palestinian economy, as the first phase of President Donald Trump’s long-delayed peace plan gets under way. Bearing witness to the difficulty of the task are the scars left by wars past across the landscape of Israel, the Palestinian Territories and the Golan Heights. UPDATE: Phase one of US Middle East peace plan greeted with scepticism No Israelis or Palestinians present for launch of plan that shreds decades of diplomacy.
Meanwhile, Bruce Riedel, senior fellow and director of the Brookings Intelligence Project points to concerns that Jordan’s King Abdullah is facing new risks—from his own friends

These events have tended to overwhelm coverage of Boris Johnson‘s alarming gallop towards the post of Prime Minister. Max Hastings, former editor of the Daily Telegraph writes a scathing piece: I was Boris Johnson’s boss: he is utterly unfit to be prime minister while another Guardian story details close ties between Johnson and Steve Bannon , and Mark Carney has challenged his claims that Britain could avoid significant disruption to trade from new tariffs if it left the EU without a deal.

The appalling plight of detainees in detention centers has (finally) become a dominant thread of  domestic U.S. news. Already The Unimaginable Reality of American Concentration Camps was a topic of concern. But then a team of lawyers went public with the results of interviews with more than fifty children conducted in order to monitor government compliance with the Flores Agreement (see Why a Government Lawyer Argued Against Giving Immigrant Kids Toothbrushes) which mandates that children must be held in safe and sanitary conditions and moved out of Border Patrol custody without unnecessary delays. The conditions the lawyers found were shocking: flu and lice outbreaks were going untreated, and children were filthy, sleeping on cold floors, and taking care of each other because of the lack of attention from guards. Some of them had been in the facility for weeks. On Monday it was reported that the U.S. government had removed most children from the Border Patrol station in Clint, Texas. On Tuesday, however, administration officials said that more than 100 children had been returned to the facility after concerns about overcrowding had been alleviated, the New York Times reports. It is now widely reported that The Trump administration is turning away donations collected for the children. Families have been attempting to drop off toothbrushes, soap, diapers, and other essential hygiene products only to be turned away by officials.
As could be expected, President Trump and Vice President Mike Pence both blamed Democrats for not allocating additional funding for the Department of Homeland Security, and the acting commissioner of U.S. Customs and Border Protection, John Sanders, has resigned amid outrage over his agency’s treatment of detained migrant children.
And we stand by unable to intervene.

On 17 June, The House of Commons passed a motion to declare a national climate emergency in Canada
Whether on purpose or not, this immediately followed the G20 Ministerial Meeting on Energy Transitions and Global Environment for Sustainable Growth which focused in particular on  hydrogen as  the G20 energy innovation commitment … the International Energy Agency released the Future of Hydrogen, a report on the current status of hydrogen development as well as guidance on its future efforts.
The motion was greeted by commentary ranging from scoffing to skeptical to serious suggestions for solutions. Few failed to do a quick compare & contrast with the subsequent announcement that the vote in favour of the non-binding motion took place hours before the government announced it was approving the $7.4 billion Trans Mountain pipeline expansion project.
Reality check: Declaring a climate emergency sends a message but does little else ““A resolution of the House is a declaration of opinion or purpose; it does not require that any action be taken, nor is it binding,” read the procedural rules.”
Dan Gardner, author of Risk: The Science and Politics of Fear and a principal at Tactix, an Ottawa consultancy asks:  Nuclear power is the key to fighting climate change. So why don’t we embrace it?
A few weeks ago, the IEA released a report revealing just how critical nuclear power is to the fight against climate change.
If the electricity generated by nuclear power between 1971 and 2018 had instead come from the burning of fossil fuels, humanity would have emitted an additional 63 gigatonnes of carbon dioxide. To put that in perspective, all the burning of fossil fuels in the world in 2018 emitted 33.5 gigatonnes.
‘It’s the future’: How going small may fuel nuclear power’s comeback
Canadian government sees big potential from small modular reactors
Renewable energy, such as wind and solar, has increased over the same time, but only enough to make up for the loss of nuclear, which also produces zero emissions — rather than replacing carbon-emitting sources like oil and natural gas. As a result, the IEA says that over the past 20 years, the share of low carbon electricity has remained flat — at 36 per cent.
Canada’s nuclear waste to be buried in deep underground repository
From day one, there has been a current of opposition to nuclear power, and like an electrical surge, criticism has spiked at times – during cost overruns in the province, and in the aftermath of disasters abroad.
Nuclear Energy Pros and Cons

How do we feel about the announcement that the CAQ overhauls Green Fund, promises to move on electrification

Thanks to Jeremy Kinsman for the upbeat May You Live in Canadian Times with the message that we should “face up proudly to our Canadian vocation to be globalist do-gooders. It’s partly a curse, but one we have earned and need to earn every day. It comes with the obligation to be willing to commit to the defence of democracy, inclusivity, and multilateral cooperation.” We need to make sure that Canadians embrace this attitude rather than the bleak tones of Ford, Kenney and Scheer (to name only the most obvious).

Cleo Paskal‘s latest piece is a fascinating account of how China’s debt diplomacy is being challenged by new players and in particular, how The LDS Church has offered to help Tonga with its sovereign debt to China.

Long reads

Council on Foreign Relations: Setting the Scene—and the Expectations—for the G20 Summit in Japan
This weekend, Japanese Prime Minister Shinzo Abe welcomes world leaders to Osaka for the annual summit of the Group of Twenty (G20). This club of major economies has been at the forefront of global governance since November 2008, when U.S. President George W. Bush convened an emergency committee to help rescue a world plummeting into the financial and economic abyss. The G20’s ambit has since broadened to encompass an ever-expanding range of global issues.
The Osaka summit continues that trend. Japan set an ambitious agenda for its presidency of the G-20, which rotates every year. Major themes include removing structural impediments to growth, reforming the global trading system, adapting the world economy to the data revolution, combating climate change and plastics pollution, adjusting employment policy to reflect aging societies, empowering women in the workforce, advancing sustainable development and achieving universal health coverage. This sprawling program reflects the G-20’s perceived centrality as a global steering group, as well as the constant temptation of successive host nations to add signature initiatives to the G-20’s preexisting priorities.

The Highlights and Implications of the G20 Energy and Environment Ministerial Meetings in Japan
(CSIS) The G20 Ministerial Meeting on Energy Transitions and Global Environment for Sustainable Growth of the Group of Twenty (G20) took place on June 15-16 in Karuizawa, Japan.
The ministers stressed the importance of international cooperation and private finance in strengthening research, development, and deployment of innovative technologies and approaches for a clean energy transition and issued the G20 Karuizawa Innovation Action Plan on Energy Transitions and Global Environment for Sustainable Growth.
Against the backdrop of attacks on oil tankers near the Strait of Hormuz only a few days before the G20 Karuizawa meetings, the ministers also stressed the importance of reliable energy infrastructure as well as supply diversification as means to enhance global energy security (Update on Recent Progress in Reform of Inefficient Fossil-fuel Subsidies that Encourage Wasteful Consumption”, prepared by OECD / the IEA)
How I learned to stop worrying and love (well, accept that it might help save the planet) nuclear power
To stop the global climate crisis, we need emissions-free energy more than ever – and for all its risks, atomic power seems like a necessary evil
Confronting carbon: how does Canada meet its climate targets?
CBC News asked Navius Research, a climate-modelling company, to project how close Canada could get to its goal if certain policies were ramped up. (View the methodology.)
We selected three often-discussed approaches: increasing the carbon tax, mandating sales of electric vehicles and greening the electrical grid.
What is nuclear energy and is it a viable resource?
(National Geographic) Nuclear energy’s future as an electricity source may depend on scientists’ ability to make it cheaper and safer.

Events
The Democrats’ Debates Wednesday & Thursday 26 and 27 June
How to watch the first 2020 Democratic presidential debate
Suggest setting the PVR. Watching the 10 candidates live could be either stressful or boring. Useful advice from 2016 Republicans
Interviews with nearly 20 Democratic elected officials, party chiefs, labor leaders and operatives the past week revealed an air of foreboding verging on alarm that the debates will degenerate into a two-night, bare-knuckle brawl. With the divisive 2016 Democratic primary fresh in their minds and the current presidential candidates starting to take swipes at one another, the fear is that voters will be left with the impression of a bickering, small-minded opposition party. Democratic bigwigs fear debates will devolve into horror show
S.O.S. – Sewer Overflow Surveillance Project
Presentation by Daniel Green of the Société pour vaincre la pollution (SVP) on the contamination of Montreal Island streams and Saint Lawrence River by sewer overflows.
Date and time: Thursday, June 27 – 7 pm
Place: Westmount Park United Church, 4695 Boulevard de Maisonneuve W, Westmount
The Société pour vaincre la pollution’s Sewer Overflow Surveillance (S.O.S.) project aims to better understand the impacts of sewer overflows* on the remaining streams and on the shoreline of the Saint Lawrence River on the Island of Montreal.
SVP invites the public to a presentation on sediment contamination of Montreal’s streams and shoreline of Saint Lawrence. During this presentation, you will learn about the nature of the contaminants we found in our sampling. We will present detailed mapping of sediment contamination data upstream and downstream of sewer discharge points in streams and in the Saint Lawrence.
Ron Domachevsky advises that the entire Thomas More Institute academic year is up on the TMI website at www.thomasmore.qc.ca
A quick scan reveals an enticing program for any interests.
You can register for the fall, winter or spring sessions. Please note that you must create an account in order to register for courses.
The TMI offices will be closed July 1st and July 22nd-August 2nd for the construction holidays. Please leave us a message at 514-935-9585 or send an email to info@thomasmore.qc.ca if you have any questions about registrations.