Malcolm Webb reports from Uganda on flight of South Sudanese refugees into neighbouring countries
|South Sudan’s army says it has regained control of the rebel-held town of Bentiu, handing the government control of Unity State’s oilfields where production had been halted.The army had earlier announced it was mobilising thousands of additional troops as it battled to recapture two rebel-held cities, including Bentiu, although regional mediators were still hopeful a ceasefire could be reached.
“It happened this afternoon at 2.30pm,” Philip Aguer, army spokesman, told Reuters news agency on Friday.
“When you control Bentiu, you control all the oil fields in Unity state.”
Forces in Bentiu loyal to former Vice President Riek Machar had been holding off the army of President Salva Kiir for several days, leaving it ransacked and emptied of its civilian population.
Machar confirmed rebel forces had lost control of the northern oil hub, but pledged his fighters would continue their battle against the government.
“We withdrew from Bentiu, but it was to avoid fighting in the streets and save civilian lives. We fight on, we will continue the battle,” Machar told AFP by satellite telephone from an undisclosed location in the country.
He said the rebel side would remain engaged in peace talks that are taking place in Addis Ababa in neighbouring Ethiopia.
“Yes, we are committed,” he said, without giving any indication if he was willing to agree to an immediate and unconditional ceasefire.
Speaking in Addis Ababa, a rebel military spokesman described the loss of Bentiu as a “temporary setback”.
“Our forces made a tactical withdrawal to avoid civilian casualties,” Lul Ruai Koang said.
“The government does not have the capacity to defeat us militarily,” he added, accusing the South Sudanese government of “bringing in mercenaries” from neighbouring Uganda and the Darfur region of Sudan.
He also said rebels still controlled Unity State’s oil infrastructure outside Bentiu.
Fierce battles have also continued around Bor, another rebel-held town in central South Sudan that has already changed hands three times since the conflict began nearly a month ago.
In the capital Juba, the government’s allies from several regions say they are in the process of calling up thousands of former soldiers to shore up the South Sudan army.
“We have to mobilise all SPLA soldiers, all former soldiers who were in the Sudanese army,” Clement Wani Konga, governor of Central Equatoria State, said, adding 3,000 extra troops had been found in his region alone and a further 12,000 were expected to soon be armed and ready.
Nevertheless, in Addis Ababa, where the peace negotiations are being held under the aegis of the East African regional bloc IGAD, the chief mediator told AFP news agency he was still optimistic.
“If you ask me on the possibilities of signing, I am very optimistic … because we have now come a long way in establishing understanding between the parties,” Seyoum Mesfin said.
He said he expected a ceasefire in “the shortest possible time”.
Against this backdrop, the UN says it believes that “very substantially in excess” of 1,000 people have been killed in the South Sudan civil war.
It also says that nearly a quarter of a million people have fled their homes, many of them fleeing a wave of ethnic violence between Kiir’s majority Dinka tribe and Machar’s Nuer.
For its part, the US, which was instrumental in helping South Sudan win independence from Sudan in 2011, has said it fears implosion of the young country and is urging the two warring factions to immediately agree to a truce.
Overnight China reported disappointing export data, missing expectations of +5%. The gvoernment explained this on the basis that they were losing their competitive edge since the Yuan has strengthened to 20 year highs but perhaps most telling is that fact that, as the FT reports, China became the world’s biggest trader in goods for the first time last year – overtaking the US for all of 2013. We suspect the powers that be are starting to get nervous as this comes soon after China’s surge to become the world’s largest oil importer marking a notable shift in the world’s most powerful nations – as trade with the rest of Asia and increasing flows with the Middle East represent a shift in power away from the US.
There is one exception.. of course – net imports with Japan continues its 3 year trend lower as tensions between the two nations sour further.
Via The FT,
The total value of China’s imports and exports in 2013 was $4.16tn, a 7.6 per cent increase from a year earlier on a renminbi-adjusted basis, according to figures released by the Chinese government on Friday.
The US will release its full-year figures in February but its total imports and exports of goods amounted to $3.57tn in the 11 months from January to November 2013, making it a virtual certainty that China is now the world’s biggest goods trading nation.
Some historians argue China was the world’s largest trading nation during the Qing dynasty – which lasted from 1644-1912 – despite the ambivalence of Chinese emperors toward foreign trade.
“This is a landmark milestone for our nation’s foreign trade development,” said Zheng Yuesheng, chief statistician of the customs administration.
Mr Zheng said he expected a stronger showing in 2014, thanks to an improving world economy, the impact of structural reforms in China and a lowered outlook for commodity prices, which would help offset rising costs of labour and financing for Chinese manufacturers.
One can only note that nothing lasts forver…
However, as always with China, there is a caveat…
The Chinese government itself has expressed some concern about Chinese trade data in late 2012 and early 2013. Statistics officials have acknowledged that during that period export numbers in particular were distorted by a huge amount of fake invoicing by companies and individuals evading China’s strict capital controls to move cash in and particularly out of the country.
That will probably lower growth figures for the first months of this year.
“We should be prepared for a period of low headline year-on-year export growth due largely to the faked exports data between December 2012 and April 2013,” said Lu Ting, China economist at Bank of America Merrill Lynch.
Last week, in Part I of “That Was The Weak That Worked,” we reviewed the equity markets in an attempt to see how equity investors managed to scamper through 2013 with the friskiness of puppies when all about them lay doubt and potential disaster.
We found the answer in quantitative easing — of course.
This week we will take a look at how the bond market managed to navigate the same 12-month period and see what can be learned about 2013 in order to forecast for 2014.
Let’s begin by considering the subject of logical fallacies — an endeavor rendered more obsolete with each passing day.
(Deus Diapente): The study of logical fallacies is useful in learning how to think instead of what to think. In learning how to deconstruct an argument, you learn how to efficiently construct your own thoughts, ideas, and arguments. You learn how to find fallacies in your own line of reasoning before they’re even presented, which is a valuable methodology for learning how to think. Which is a lot more honest, liberating, and possibly more objective than simply regurgitating what society, teachers, parents, preachers, friends, or politicians tell us…
“Learning how to think instead of what to think”?
The very idea is enough to send many into an Austen-like swoon, and yet within this relatively simple construct lies a principle that, if it were applied to today’s markets, would have every rational investor rushing headlong into the hills.
Allow me to demonstrate using everyone’s favourite logical structure: the syllogism.
A syllogism is classified as a point-by-point outline of a deductive or inductive argument. Syllogisms normally contain two premises followed by a conclusion:
Premise 1:Miley Cyrus is the most talented musician of her generation.
?Premise 2:The most talented musician of every generation achieves legendary status.?
Conclusion:Miley Cyrus is a legend.
The conclusion, from a purely logical standpoint, holds water. The problem comes when either of the first two premises is not accepted by the person to which they are proposed.
At that point, the argument starts to fall apart.
The common term for this kind of flawed argument is a “non sequitur,” which literally means “it does not follow.”
So let’s apply the syllogistic approach to the concept of quantitative easing and see how we go:
Premise 1:Central banks have been printing money like lunatics.?
Premise 2:Their printing of money hasn’t had any ill effects.?
Conclusion:Printing money doesn’t have any ill effects.
Right then. There’s our syllogism. Do you want to go first, or shall I?
Quantitative Easing IV (or “QE IV” — so-called because it was injected directly into the veins of the monetary system) was unveiled on December 11, 2012, when Ben Bernanke announced, as Operation Twist expired, that in addition to the ongoing QE3 program (which committed the Federal Reserve to buying $40 bn in MBS every month) he would sanction the additional buying of $45 bn in long-term Treasury securities. Every month. Forever. Until further notice.
The rest, as they say (whoever “they” are), is history.
The effect on the Fed’s balance sheet is plain to see:
That’s a very steady, predictable line; and markets, as we have discussed, LOVE steady and predictable. The consistency of this curve underpinned the strength in equity markets this year, as I demonstrated last week. But in Bondville? Well, that’s another story…
2014 is going to be a bumpy ride for bond markets, folks. Count on it.
Government debt is at levels that only governments themselves would pay, at exactly the time when they are trying to lean more heavily on the private sector to take up the slack — good luck with that.
Interest rates, bond markets, and the housing market are inextricably intertwined. They always have been and always will be. Period.
You cannot monkey around with one piece of that eternal triangle and expect the others not to be affected at some point, and just because nothing bad has happened definitely does NOT mean it won’t.
2013 may well have been The Weak That Worked, but the odds on that continuing for another 12 months are very short indeed.
And so, as we wrap up this week, let’s revisit the idea of logical fallacies and throw a couple more that the guardians of the global economy are relying on into the ring for good measure:
The Taper Syllogism
Premise 1: The Fed tapered its monthly asset purchases.
Premise 2: The taper had no major negative effect on markets.
Conclusion: Tapering has no negative effect on markets.
The Housing Bubble Syllogism
Premise 1: The government has all the data on the housing market.
Premise 2: The government sees no bubble in the data.
Conclusion: There is no housing bubble.
The Interest Rate Syllogism
Premise 1: The Fed sets interest rates.
Premise 2: The Fed has promised low rates of zero to 0.25 percent “… at least as long as the unemployment rate remains above 6.5 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”
Conclusion: Interest rates will stay at zero to 0.25% and zero to 0.25 percent will be appropriate “… at least as long as the unemployment rate remains above 6.5 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”
The Inflation Syllogism
Premise 1: The world’s central banks have printed ~$4.7 trillion.
Premise 2: There is no noticeable problem with (official) inflation numbers.
Conclusion: Printing money doesn’t cause inflation.
Full Grant Williams letter below…
The US is already at odds with China over its air defence zone over the East China Sea [Getty]
|The United States has described as “provocative and potentially dangerous” new Chinese restrictions of foreign fishing vessels in disputed waters in the South China Sea.
From January 1, China has required foreign fishing vessels to obtain approval to enter waters it says are under its jurisdiction. It rejects territorial claims by the Philippines, Taiwan, Malaysia, Brunei and Vietnam.
Jen Psaki, a spokeswoman for the US State Department, said on Thursday that China gave no justification under international law for the new restictions.
“Our long-standing position has been that all concerned parties should avoid any unilateral action that raises tensions, and undermines the prospects for a diplomatic or other peaceful resolution of differences,” she said.
“The passing of these restrictions on other countries’ fishing activities in disputed portions of the South China Sea is a provocative and potentially dangerous act.”
The US is already at odds with China declaring in November an air defence zone over an area of the East China Sea claimed by Japan and South Korea.
The US flew B-52 strategic bombers into the new zone in defiance, raising tensions further in the Pacific.
The new Chinese rules do not outline penalties, but the requirements are similar to a 2004 national law that says boats entering Chinese territory without permission can have their catch and fishing equipment seized and face fines of up to $82,600.
Hua Chunying, a Chinese foreign ministry spokeswoman, said regulating the use of marine resources was a normal practice.
China’s ties with the Philippines have been especially frosty over the South China Sea.
Raul Hernandez, a spokesman for the Philippine foreign ministry, said Manila had asked its embassy in Beijing to get more information on the rules.