There’s A Shakespearean Tone To Current Developments
By Michael Every of Rabobank
Burnham would come to high Done-inane
There’s a Shakespearean tone to current developments: tragically, not one of his comedies.
The US has introduced a temporary waiver (until August 21) for Iranian oil sales that undoes 40 years of sanctions. Iran can sell what it likes to who it likes, including the US, and receive US dollars. Two months isn’t enough time to sell much, but if the White House wants to show Iran it’s serious about offering new opportunities that’s been achieved. Equally, Iran says an agreement has been reached to release $12bn in frozen funds, but disputes Trump's claim it will buy food exclusively from the US with it.
More importantly, VP Vance said Iran has agreed to nuclear inspections from the IAEA, a huge concession. However, Iran responded that’s not the case and it didn’t negotiate nuclear matters so far in Switzerland.
On Hormuz, the Iranian view remains it will manage the strait and charge for passage within months: Trump’s is the polar opposite. That’s as transits seem to be running at around a quarter to a third of normal levels, at best. Indeed, the squeeze in bunker fuel is still evident in rising ocean carrier freight rates.
On Lebanon, a new deconfliction mechanism is floated that excludes Israel, as PM Netanyahu, Defence Minister Katz, and IDF head Zamir reiterated a pledge to “continue to act decisively” and hold their security zone there, including the 1km-long, 25-metre deep underground Hezbollah missile and drone base in Ali Taher ridge, evidence of how much Iran has ploughed into its proxy. Separately, the Israeli and Lebanese governments will meet in Washington to discuss normalization and elusive Hezbollah disarmament; and in the background, Syria has signaled that, after Trump's suggestion, it will only engage Hezbollah if Lebanon requests it.
The Saudi paper Asharq Al-Awsat reports Hamas held a top-secret meeting with French officials to discuss a possible return to '1967 borders', which they’ve floated before as a temporary truce, that could unlock Trump’s Board of Peace and ‘Gaza-Lago’ redevelopment plans.
Yet the Jerusalem Post reports new Mossad boss Gofman is taking the agency “by storm” and is ramping up plans to topple the Islamic regime. So, what’s it to be in the Middle East, beyond the current calm?
"Something wicked this way comes"
UK PM Starmer resigned, as former Mayor of Manchester Andy Burnham sealed his doom by coming to high Done-inane, swearing in as an MP in Westminster after not being one a week ago. The UK press is abuzz with discussions of who will be in his cabinet, like what’s-his-face and that-one-from-a-few-years-ago. There’s a natural market focus on who’ll be the Thane of Cawdor Chancellor: Burnham needs to reassure Gilts that fiscal rules will be adhered to and his leftwing backbenchers that he’s offering something new enough that his popularity won’t follow the same rapid downwards trajectory as that of Starmer, Sunak, Truss, Johnson, and May.
One immediate impact is that the July EU-UK summit has been postponed: nobody knows what Burnham’s view re: the EU will be, but he has previously backed rejoining.
“If you can look into the seeds of time; And say which grain will grow and which will not.”
In Asia, India launched three warships as a show of force to China in the Indian Ocean, as the US Department of War renamed its Indo-Pacific Command back to the Pacific Command, signalling a de-prioritisation of the area matching Europe re: NATO and the Middle East re: Iran and Israel. In East Asia, where the US is outsourcing its Taiwan-focused efforts to Japan and the Philippines, China says it warned off multiple Japanese ‘provocations’ during its recent aircraft carrier drills.
"Is this a dagger which I see before me?"
In related geoeconomics, China announced it’s targeting US rare earths firms in response to a Pentagon list of Chinese firms: this is largely a symbolic move, but it still underlines the tensions in this area. So does the Nikkei reporting that ‘China minerals control threatens EU rearmament, as bloc seeks new sources’: as we have long warned, even if you can afford a dagger, you can’t make it without rare earths, and Europe still hasn’t secured enough supply. More positively, the aluminium squeeze caused by the closure of Hormuz is being ameliorated by Chinese supply and dark transits from the Middle East.
“If it were done when ’tis done, then ’twere well; It were done quickly.”
In politics, besides Starmerama, another political scandal in Spain, and gridlock in choosing a new PM in Romania, the US Supreme Court looks set for three key rulings ahead:
Trump v. Slaughter reviews the long-standing precedent that restricts a president from firing heads of independent federal agencies (like the FTC) without "good cause". A ruling for Trump could alter the structure of the US government, allowing presidents to dismiss leaders of independent regulatory and financial institutions at will – including members of the Fed.
Trump vs. Barbara addresses the constitutionality of an executive order restricting birthright citizenship, denying automatic citizenship to children born on US soil if their parents are not US citizens or lawful permanent residents.
Watson v. Republican National Committee revolves around the constitutionality of state laws that allow mail-in ballots to be received and counted after Election Day, as long as they were officially cast or postmarked by that day. Naturally, this would shake up the mid-term, and all subsequent, US elections.
“Two truths are told; As happy prologues to the swelling act; Of th’imperial theme”
Meanwhile in markets, China introduced technical changes to bridge the gap between onshore CNY and offshore CNH in authorising six state-owned banks to conduct CNH transactions in the Shanghai Free Trade Zone as a ‘sand box’ as the PBoC expanded cross-border e-CNY agreements with 26 financial institutions. This isn’t China floating its currency; neither does this work around China’s ever-larger net trade surpluses, where earning CNH is very hard for most counterparties, limits the ability to internationalise CNH via the ‘USD’ method. Yet it speaks to a potential parallel CNH internationalisation where domestic liquidity backs that required offshore while retaining capital controls. With the US is moving ahead with plans for US dollar stablecoins, which have some similar aims, international payment systems, commodity supply chains, defence tech, and AI are going to become a stacked, contested space. Watch it; and what happens in the Middle East, Europe, and Asia. Over time, the FX market will grasp what it means.
“Out, damned spot! Out, I say!”
Markets are going for the easy option on all of the above news for now: Brent oil was at $78 at time of writing; bond yields were lower; and SpaceX looked like it was testing re-entry, having fallen around $600bn from its recent post-IPO peak.
"Methought I heard a voice cry, ‘Sleep no more! Macbeth does murder sleep’." That’s how I feel.
Badenoch blasts 'moaning' female Labour MPs over Burnham jobs 'quota'
Kemi Badenoch has told Labour women to earn a job in Andy Burnham's Cabinet instead of demanding they are handed jobs because of their gender.
The Tory leader lashed out today amid reports that female MPs are demanding the de-facto new prime minister introduce a 50:50 gender split 'quota' in his government.
Amid reports that former foreign secretary David Miliband is being lined up to return to the role, possibly with his brother Ed as Chancellor, one female minister also complained that Burnham could not have 'more Milibands than women' in the top posts.
But in a scathing article in the Times today Mrs Badenoch told them to 'stop moaning' and get chosen on merit instead of retreating into 'more of the failed identity politics that is holding back our country'.
'There are many, many reasons why you shouldn't have any Milibands in the cabinet,' she said.
'But complaining that the boys haven't given them the right jobs or that the boys are taking all the jobs, just shows that Labour's women still don't get it.'
The idea of quotas was also attacked by Baroness Jacqui Smith, Labour's Skills Minister.
Asked by Times Radio if Mr Burnham should reserve jobs for women, she said: 'No, I think what Andy Burnham should be doing is building the very best team around him to change this country.'
A letter written by the Women's Parliamentary Labour Party has called on Mr Burnham to ensure a 50:50 split between men and women in government jobs
Amid reports that former foreign secretary David Miliband (above, right, in 2010) is being lined up to return to the role, possibly with his brother Ed as Chancellor, one female minister complained that Burnham could not have 'more Milibands than women' in the top posts
But Mrs Badenoch told them to pipe down and get chosen on merit instead of retreating into 'more of the failed identity politics that is holding back our country'
A letter written by the Women's Parliamentary Labour Party and seen by the BBC has called on Mr Burnham to ensure a 50:50 split between men and women in government jobs after he succeeds Sir Keir Starmer.
'We are asking you to demonstrate this change from day one and address the toxicity and misogyny within our own party and government,' it said.
Labour has never had a female leader, while the Conservatives have had three, and Mrs Badenoch urged the government to follow its meritocratic example.
'If you run a meritocracy, then you do not have to worry about jobs for the boys,' she wrote.
'Every woman who is a Conservative MP, every woman who has ever won the leadership, has had to fight to get where she is.
'By contrast, Labour women are demanding guarantees from Burnham. But the truth is he doesn't have to give any guarantees.
'If none of Labour's women are prepared to get their hands dirty and challenge him for the leadership, their demands are toothless.'
'In fact, it's quite revealing that the women's parliamentary Labour Party has written to Burnham asking him to commit himself to at least 50 per cent female ministers.
'This has nothing to do with meritocracy. It is yet more of the failed identity politics that is holding back our country.'
