{"id":1539439,"date":"2025-06-02T16:25:00","date_gmt":"2025-06-02T20:25:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1539439"},"modified":"2025-06-02T16:25:00","modified_gmt":"2025-06-02T20:25:00","slug":"steel-yourself-for-cracking","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/steel-yourself-for-cracking\/1539439\/","title":{"rendered":"Steel Yourself For Cracking"},"content":{"rendered":"

Steel Yourself For Cracking<\/span><\/p>\n

\n

By Benjamin Picton of Rabobank<\/em><\/p>\n

Steel yourself for cracking<\/h3>\n

Jamie Dimon made headlines over the weekend by saying that a crack in the bond market is \u201cgoing to happen<\/a>\u201d due to accumulated fiscal and monetary profligacy (which he repeated again this morning). While that\u2019s certainly an incendiary comment in itself, most of the newspapers seem to have weirdly glossed over Jamie\u2019s more blockbuster bromides at the same event, where he noted that the \u201ctectonic plates [of geopolitics] are shifting\u201d and \u201ctrade is [only] a part\u201d of that. <\/strong>The JP Morgan CEO was unequivocal that the USA would no longer be the issuer of the reserve currency in 40-years\u2019 time if it did not retain its position as the pre-eminent economic AND military<\/em> power, and that the biggest threat that the nation faces is \u201cthe enemy within<\/strong>\u201d. Yikes.<\/p>\n<\/p>\n

The man responsible for financing the US government doesn\u2019t seem too worried. Scott Bessent told a hearing of the House of Representatives that the United States \u201cwill never default\u201d on its debts.<\/strong> The fact that the question is even being asked seems place a few asterisks around that answer, with some of those perhaps relating to the USA inflating its way out, or engaging in financial repression to make the debt \u2018sustainable\u2019, or raising additional revenue through tariffs and\/or the provisions of the Section 899 \u2018Revenge Tax\u2019. <\/strong>The latter is designed to punish foreign capital flowing from countries that do not comply with US wishes on trade (EU digital services tax, I\u2019m looking at you<\/strong>).<\/p>\n

Is it time to question the sacred cow of globalized capital markets?<\/strong><\/p>\n

As if to highlight Jamie\u2019s point on the primacy of geopolitics, Ukraine managed to sneak a bunch of drones into cargo containers and then use them to take down fully one third of Russia\u2019s long-range nuclear bombers. Some analysts are calling this a Russian Pearl Harbour (which might gloss over how the USA responded after the attack on Pearl Harbour<\/strong>) but the event surely highlights the changed nature of modern warfare, and the extent to which \u2018small and cheap\u2019 can defeat \u2018big and expensive\u2019. We might have learned that lesson after rag-tag Houthis managed to confound the assembled forces of Western capitalism in the Red Sea, or after the war in Afghanistan took twenty years to replace Taliban with Taliban, but here it is highlighted for us once again.<\/strong><\/p>\n

On the subject of the Middle East, the USA has reportedly sent Tehran a proposed \u201cdetailed and acceptable\u201d nuclear deal with the strong suggestion that Iran should take it<\/strong>. According to reports, the deal would involve Iran foregoing all nuclear enrichment capabilities \u2013 which the Iranian leadership says it won\u2019t do<\/strong> \u2013 in favor of a regional enrichment consortium that will likely involve Saudi Arabia (Iran\u2019s major regional competitor). This comes at a time when the IAEA has just released a new report claiming that Iran has secretly enriched uranium to 60% purity, well beyond the levels required for civilian applications. If that stock were to be further enriched to 90% purity it would be enough for 9-10 nuclear weapons. That news will likely make it all the harder for President Trump to deter Israeli leadership from a pre-emptive strike on Iranian nuclear facilities.<\/p>\n

The USA had placed \u201cmaximum pressure\u201d sanctions on Iranian oil exports to give the nuclear deal negotiations a help-along, but the WSJ notes in an editorial today that a White House directive was delivered last week to pause all new sanctions activity. <\/strong>The WSJ suggests that this is handing off some of the leverage that the USA currently has, and also represents a free-kick to the USA\u2019s principal geopolitical competitor, China, who is by far the largest buyer of Iranian oil cargoes. <\/strong>The lighter touch on sanctions arrives at a time when OPEC+ has agreed to ramp up production by an additional 411,000 bbl\/day. So, although crude oil prices are rallying today and face plenty of geopolitical risks on the road ahead, in the absence of a major risk event coming to fruition any rallies are likely to be capped by the plentiful supply outlook.<\/strong><\/p>\n

Turning to Asia, Defense Secretary Pete Hegseth has ruffled some feathers in the Indo-Pacific by suggesting at the Shangri-La Dialogue in Singapore that China could be credibly seen as preparing to use military force to alter the balance of power in the region. Hegseth said that \u201cthe threat China poses is real, and it could be imminent\u201d in an apparent reference to US intel that Xi Jinping told the Peoples Liberation Army to be prepared to invade Taiwan by 2027<\/strong>. In a meeting with Australian Deputy Prime Minister and Defense Minister Richard Marles, Hegseth reportedly urged Australia to up its military spending to 3.5% of GDP. Marles (who is from the Right faction of the ruling Labor Party) seemed open to the idea. Prime Minister Anthony Albanese (a man of the Left), less so. China\u2019s Ministry of Foreign Affairs blasted Hegseth over his comments.<\/strong><\/p>\n

Kevin Hassett of the Council of Economic Advisors and Scott Bessent have been suggesting that Donald Trump might hold a call with Xi Jinping this week in an attempt to progress a trade deal. China has reportedly been withholding export licenses for critical rare earth materials, in contravention of the agreement to reduce tariffs for 90-days. After a reporter seemingly bruised the President\u2019s ego with a question about the TACO trade ( TACO = Trump Always Chickens Out) Trump announced a doubling of steel and aluminium tariffs to 50% from June 4th.<\/strong><\/p>\n

Could we be about to see Trump get tough on China again?<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nMon, 06\/02\/2025 – 12:25<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/steel-yourself-cracking<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Steel Yourself For Cracking By Benjamin Picton of Rabobank Steel yourself for cracking Jamie Dimon made headlines over the weekend by saying that a crack…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1539439","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-6stF","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1539439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1539439"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1539439\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1539439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1539439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1539439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}