In Venezuela, Maduro is holding on to power and refusing to release official election tallies. Protests are broadening beyond the traditional opposition strongholds into traditional Chavez-supporting poorer neighbourhoods. The US and regional neighbours Brazil, Colombia and Mexico appear to be taking a calibrated approach, making an effort to avoid the mistakes of the Guaido years of pressure, threats and sanctions, calling instead for Maduro to step down and allow for a peaceful transition. Unfortunately nearly 1,000 people have been put in prison, and the streets of Caracas are still noisy with pot-banging protests, known as cacerolazos.
The biggest risk for markets, as flagged in our most recent Navigator Watchlist, continues to be the potential for Middle East turmoil to escalate into a full-blown conflict. Last week’s assassinations of high-profile Hizbollah and Hamas senior leaders in Beirut and Tehran infuriated Iran, which has promised severe retaliation. Frantic diplomacy to prevent escalation is taking place, but will it be successful this time? I have been cautioning since October that the risk of major regional conflagration is significant, but I’m now the most worried than I’ve been so far. Tehran’s response in April was comparatively measured, but the precision nature of the assassinations and their locations sent a strong message--and exposed Iranian weakness.
Yes, all sides continue to state their desire to avoid all-out war. But Washington’s patience with Netanyahu is clearly wearing thin, judging by the leaks that are emerging. Biden has reportedly told Netanyahu to “stop bullshitting” him, promising to protect Israel from this round of Iranian retaliation, but refusing to be dragged into a regional war. Additional US military assets are moving into position in the region now, including Carrier Strike Group 3. This group includes the USS Abraham Lincoln aircraft carrier, which is equipped with F-35Cs. Calls to evacuate Beirut have been announced, and Israelis are preparing for an attack as early as Monday, but expected sometime this week.
The most likely scenario for Iran’s retaliation is an attack similar to April 13th, but broader in the scope of the target, and potentially involving Hizbollah forces in Lebanon, according to military sources.
It is certainly true that systemic risk transmission via the oil price channel is much lower now than in the past, thanks to US shale gas supplies and reduced global dependence on the Middle East (although oil has been up 5% on the back of the recent geopolitical tensions). Nevertheless, a full-scale war involving Israel and Iran would be devastating, bearing the risk of further disrupting supply chains and dragging in other neighbours—and obviously worsening the existing dire state of the humanitarian catastrophe. We think it could also impact the Fed’s calculus for a September rate cut.
A full-blown conflict in the Middle East would be an unwelcome distraction for the White House, as the Democratic National Convention meets August 15th and with VP Kamala Harris due to announce her running mate this week, going on the campaign trail together immediately. With under 100 days to go until US elections, every day counts.
Harris Leads Trump +2 points according to a CBS/You Gov Poll Choice For President (Likely Voters)
In just two weeks, Democratic Presidential nominee Kamala Harris has surpassed Joe Biden, tied Trump in both the national vote and the Electoral College, and broken fundraising records, bringing in $310 mm vs Donald Trump’s $138 mm. Harris also has $377 mm in cash on hand, while Trump has $327 mm. Money is a huge driver in US politics, but it isn’t everything—Steve Forbes and Ross Perot both had massive war chests and went on to lose.
What the fundraising speaks to is the level of enthusiasm that Harris’s candidacy is generating, especially with grass-roots and “small dollar” donors. Will it be enough to carry her to victory? Harris and Trump are in a statistical tie, and Trump retains a plausible path to victory in the Electoral College. Harris’s Electoral College pathways are very much in play, hence the close attention to the choice of her running mate.
Pennsylvania Governor Josh Shapiro is the current favourite VP pick, given his strong popularity and the large number of EC votes his home state could deliver, with Kentucky Governor Andy Beshear in roughly second place, and Pete Buttigieg as a wild card in my view. Democratic Party operatives are signalling that any loss of support by the party’s hard left over Shapiro’s stance on Gaza would be more than compensated for by the Pennsylvania electoral college votes expected to result from having him on the ticket.
The VP choice is really not so much about the most compelling bio, despite the cocktail-party chatter. Besides, all the front-runners have solid bios anyway, from Tim Walz (everyone’s favourite Midwestern dad + Veteran + Minnesota Governor) to Mark Kelly (Astronaut and Naval officer, Arizona Senator), Governor Andy Beshear of Kentucky, silver-tongued “Mayor Pete” Buttigieg, Transport Secretary, and Illinois Governor J.B. Pritzker. It’s a strong front bench, and I’d argue that just seeing more of these potential VP picks has boosted interest in the race for Democrats and “politically homeless” Independents and undecided voters.
Predict It: Who will Win the Democratic vice presidential nomination?
July 2024, A Month When a Decade Seemed to Happen…
The 'Prisoners' Dilemma//Prisoner Swap with Russia Underscores Intricate Multi-Country Diplomacy
The successful swap of 16 American, German and Russian dissidents in exchange for 8 Russians (who were behind bars in 5 different countries) was a feat of diplomacy involving intensive, highly-complex negotiations including Germany and Slovenia as well as the Kremlin, and contributions from actors as diverse as Hillary Clinton and Tucker Carlson.
Via : La Stampa
The painstaking nature of the negotiations underscores the importance of alliances and trust in international relations; German Chancellor Scholz let it be known that his government was very much opposed to releasing Vadim Krasikov, jailed for assassinating a Chechen dissident in a public park in Berlin in broad daylight in 2019, but reportedly did so out of loyalty to Joe Biden, saying, “For you, I will do this” . The return of Krasikov, sometimes referred to as “Putin’s assassin” (see the below clip of him being welcomed by Putin) was the main target for Russia, which has in recent years made hostage-taking unofficial state policy.
Putin Welcomes Convicted Hitman and Others in Largest Prisoner Exchange Since Cold War
Here are the final two paragraphs of the story, describing jailed Wall Street Journal reporter Evan Gershkovic’s impressively brave response to Putin’s request that he draft a plea for clemency:
“The Russian Federation had a few final items of protocol to tick through with the man who had become its most famous prisoner. One, he would be allowed to leave with the papers he’d penned in detention, the letters he’d scrawled out and the makings of a book he’d labored over. But first, they had another piece of writing they required from him, an official request for presidential clemency. The text, moreover, should be addressed to Vladimir Vladimirovich Putin.
The pro forma printout included a long blank space the prisoner could fill out if desired, or simply, as expected, leave blank. In the formal high Russian he had honed over 16 months imprisonment, the Journal’s Russia correspondent filled the page. The last line submitted a proposal of his own: After his release, would Putin be willing to sit down for an interview?”
What do you think about the state of the world?
All the best,
Tina
Our Views in the Press
Israel's End Game: Implications of Strikes in Tehran and Beirut - Tina Fordham on Bloomberg Surveillance
