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NY Times latest on Iran…WASHINGTON — The United States has quietly moved significant military reinforcements into the Persian Gulf to deter the Iranian military from any possible attempt to shut the Strait of Hormuz and to increase the number of fighter jets capable of striking deep into Iran if the standoff over its nuclear program escalates.

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Already Plagued by Inflation, Iran Is Bracing for Worse(July 2, 2012)News Analysis: U.S. Bets New Oil Sanctions Will Change Iran’s Tune(July 1, 2012)Times Topic:Iran’s Nuclear Program (Nuclear Talks, 2012)Connect With Us on TwitterFollow @nytimesworld for international breaking news and headlines. Twitter List: Reporters and EditorsEnlarge This Image
Jumana El Heloueh/Reuters
The flight deck of the American aircraft carrier Abraham Lincoln in February in the Persian Gulf. Enlarge This Image
Ali Mohammadi/International Iran Photo Agency, via Associated PressIranian Navy patrol boats maneuvering during a drill in the Gulf of Oman last December.
The deployments are part of a long-planned effort to bolster the American military presence in the gulf region, in part to reassure Israel that in dealing with Iran, as one senior administration official put it last week, “When the president says there are other options on the table beyond negotiations, he means it.” But at a moment that the United States and its allies are beginning to enforce a much broader embargo on Iran’s oil exports, meant to force the country to take seriously the negotiations over sharply limiting its nuclear program, the buildup carries significant risks, including that Iran’s powerful Islamic Revolutionary Guards Corps could decide to lash out against the increased presence. The most visible elements of this buildup are Navy ships designed to vastly enhance the ability to patrol the Strait of Hormuz — and to reopen the narrow waterway should Iran attempt to mine it to prevent Saudi Arabia and other oil exporters from sending their tankers through the vital passage. The Navy has doubled the number of minesweepers assigned to the region, to eight vessels, in what military officers describe as a purely defensive move. “The message to Iran is, ‘Don’t even think about it,’ ” one senior Defense Department official said. “Don’t even think about closing the strait. We’ll clear the mines. Don’t even think about sending your fast boats out to harass our vessels or commercial shipping. We’ll put them on the bottom of the gulf.” Like others interviewed, the official spoke on the condition of anonymity because of the delicacy of the diplomatic and military situation. Since late spring, stealthy F-22 and older F-15C warplanes have moved into two separate bases in the Persian Gulf to bolster the combat jets already in the region and the carrier strike groups that are on constant tours of the area. Those additional attack aircraft give the United States military greater capability against coastal missile batteries that could threaten shipping, as well as the reach to strike other targets deeper inside Iran. And the Navy, after a crash development program, has moved a converted amphibious transport and docking ship, the Ponce, into the Persian Gulf to serve as the Pentagon’s first floating staging base for military operations or humanitarian assistance. The initial assignment for the Ponce, Pentagon officials say, is to serve as a logistics and operations hub for mine-clearing. But with a medical suite and helicopter deck, and bunks for combat troops, the Ponce eventually could be used as a base for Special Operations forces to conduct a range of missions, including reconnaissance and counterterrorism, all from international waters. For President Obama, the combination of negotiations, new sanctions aimed at Iran’s oil revenues and increased military pressure is the latest — and perhaps the most vital — test of what the White House calls a “two track” policy against Iran. In the midst of a presidential election campaign in which his opponent, Mitt Romney, has accused him of being “weak” in dealing with the Iranian nuclear issue, Mr. Obama seeks to project toughness without tipping into a crisis in the region. At the same time he must signal support for Israel, but not so much support that the Israelis see the buildup as an opportunity to strike the Iranian nuclear facilities, which Mr. Obama’s team believes could set off a war without significantly setting back the Iranian program. A key motivation for “Olympic Games,” the covert effort to undermine Iran’s enrichment capability with cyberattacks, has been to demonstrate to the Israelis that there are more effective ways to slow the program than to strike from the air. But this delicate signaling to both Iran and Israel is a complex dance. Senator John Kerry, the Massachusetts Democrat who is chairman of the Foreign Relations Committee, said that the administration must strike a fine balance between positioning enough forces to deter Iran, but not inadvertently indicate to Iran or Israel that an attack on Iran’s nuclear sites is imminent or inevitable “There are a lot of expectations to manage,” Mr. Kerry said in an interview. “People need to know you’re serious, but you must also leave room for peaceful resolution. It’s very important not to take steps that send the wrong messages here.” There is little evidence that the increased pressure is having the desired effect. Negotiations with Iran are at a stalemate, though a group of Iranian, American and European experts are expected to meet in Istanbul on Tuesday to review a recent American proposal and Iranian response. So far, though, Iran has strenuously resisted all efforts to force it to give up enrichment of uranium, starting with production of a type that is considered relatively close to bomb grade. Responding to the tightening of Western sanctions, Iran on Monday announced that it would consider proposed legislation to disrupt traffic in the Strait of Hormuz as well as missile tests, in a drill clearly intended as a warning to Israel and the United States. The Iranian legislation calls for Iran’s military to block any oil tanker en route to countries no longer buying Iranian crude because of the embargo. It was unclear whether the legislation would pass or precisely how Iran would enforce it. Senior Pentagon and military officials acknowledge that Iran has the capability to close the strait, at least temporarily, and the additional mine-clearing forces can be viewed as both concrete and spoken evidence of Washington’s commitment to make sure any closing is as brief as possible. The most significant Iranian threat to shipping came during its war of attrition with Iraq in the 1980s. Iran attacked tankers and other commercial traffic to disrupt Iraq’s oil revenues and threaten shipments from other Arab states viewed as supporting Baghdad. Iran also laid significant numbers of mines in an attempt to block transit, prompting mine-clearing operations and attacks on the Iranian Navy by American warships. Defense Department officials stressed that the recent reshaping of American forces in the Persian Gulf region should not be viewed as solely about the potential nuclear threat from Iran. “This is not only about Iranian nuclear ambitions, but about Iran’s regional hegemonic ambitions,” the senior Defense Department official said. “This is a complex array of American military power that is tangible proof to all of our allies and partners and friends that even as the U.S. pivots toward Asia, we remain vigilant across the Middle East.” While American ground troops have been withdrawn from Iraq, a force equivalent to an extra Army combat brigade has remained in Kuwait, officials said. It could have many roles to contain regional instability, but Iran is a primary concern. While it always is difficult to read Iran’s intentions, senior American Navy officers have noted that Iranian ships in the Persian Gulf have refrained recently from provocative behavior. “Things have been, relatively speaking, quiet,” said Adm. Jonathan W. Greenert, the chief of naval operations, assessing actions by Iranian Navy vessels over “the last couple of months.” But that was without the pressure of the new sanctions; already Iran is exporting far less oil every day than a year ago: about 1.5 million barrels a day versus 2.5 million before the gradual imposition of earlier sanctions. While Iranian vessels have avoided any confrontations with allied warships in recent weeks, Iran expects to equip its ships in the Strait of Hormuz soon with shorter-range missiles, a Revolutionary Guards commander said on Friday, according to the semiofficial Mehr news agency. With an eye on the threat of a belligerent Iran, the administration is also seeking to expand military ties with the six nations in the Gulf Cooperation Council: Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman. The United States and 19 other countries will hold a major mine countermeasure exercise in the Persian Gulf in September, said a senior military officer who noted that countries in the region were taking more steps in their own defense, including buying American-made air defense systems and other weaponry.

rba STATEMENT…Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at
3.50 per cent.

Growth in the world economy picked up in the early months of 2012, having
slowed in the second half of 2011. But more recent indicators continue to
suggest weakening in Europe and a slower pace of growth in China. Conditions in
other parts of Asia have recovered from the effects of last year’s natural
disasters, but the ongoing trend is unclear and could be dampened by the effects
of slower growth outside the region. The United States continues to grow at a
modest pace. Commodity prices have declined, which is helping to reduce
inflation and providing scope for some countries to ease macroeconomic policies.
Australia’s terms of trade have peaked, though they remain historically
high.

Financial markets have initially responded positively to signs of further
progress towards longer-term sustainability in European financial affairs, but
Europe will remain a potential source of adverse shocks for some time. While
capital markets remain open to corporations and well-rated banks, low appetite
for risk has seen long-term interest rates faced by highly rated sovereigns,
including Australia, decline to exceptionally low levels. Share markets have
remained volatile.

In Australia, recent data suggest that the economy continued to grow in the
first part of 2012, at a pace somewhat stronger than had been earlier indicated.
Labour market conditions also firmed a little, notwithstanding job shedding in
some industries; the rate of unemployment remains low.

There have been no changes to the Bank’s outlook for inflation. Over the
coming one to two years, and abstracting from the effects of the carbon price,
inflation is expected to be consistent with the target. Maintaining low
inflation over the longer term will, however, require growth in domestic costs
to slow as the effects of the earlier exchange rate appreciation wane.

Interest rates for borrowers have declined, to be a little below their
medium-term averages. Business credit has increased more strongly in recent
months, though credit growth remains modest overall. The housing market remains
subdued. The exchange rate has been volatile recently, but overall remains high.

As a result of the sequence of earlier decisions, there has been a material
easing in monetary policy over the past six months. At today’s meeting, the
Board judged that, with inflation expected to be consistent with the target and
growth close to trend, but with a more subdued international outlook than was
the case a few months ago, the stance of monetary policy remained appropriate.

Just read thru AYI conf call to get the feel for this qtr., will be watching to see how it will act after beating earnings tomorrow..for insight, per cc “As you well know, the economy in North America continues to be fragile as consumer confidence lags and job growth remains anemic. Having said this, we believe the many channels and markets we serve are for the most part on the road to recovery. Also in the quarter, we continue to encounter rising costs, particularly for lamps”

Dr. Funk..I am actually more concerned over whether BoE will add QE this week. In Oct 2011 we got a major rally over it. Last week it was a coin toss, but after EU meeting I think we lean towards no QE

Sub, I don’t know where Baron is? I need to get over to Algo’s and see. Happy Pre July 4 Sub and Everyone.

Tepid Recovery, with Domestic for fiscal cliff and our deficet. Outside risk from EU…funny she doesn’t mention China risk.

This could be our turning point, Iran is rattling the sword again about the Straits, BUT IRAN NEEDS CHINA, if China doesn’t buy Iran oil they are beyond in trouble and would have to deal…lets watch this as the Scientist meet to see if they can come up with a deal with Iran…BEIJING (Reuters) – The delivery of millions of barrels of Iranian crude to its
top buyer, China, is at risk of delay due to a dispute between refining giant
Sinopec and shipper National Iranian Tanker Co (NITC) over freight terms,
Beijing-based sources said on Tuesday.

China has turned to NITC for
delivery of the 500,000 barrels per day of crude it buys from Iran as a result
of European Union sanctions. The EU measures took effect on Sunday and prohibit
European insurers, who dominate the maritime sector, from offering cover on Iran
crude.

That left Sinopec unable to use Chinese shippers and forced it to
use NITC.

No vessels have been named to carry the 12 million barrels of
crude that China has nominated for loading in Iran in the first 20 days of July,
industry sources told Reuters.

“There is some problem between NITC and
(Sinopec’s trading arm) Unipec over the freight issue,” said an Iranian oil
official who requested anonymity as he was not authorized to speak to the
media.

“Unipec has proposed a number and it’s now under consideration by
NITC. I hope this can be solved very soon,” the official said.

Iranian
oil shipments have already tumbled 40 percent this year, according to the
International Energy Agency, as the Islamic Republic’s top customers – China,
India, Japan and South Korea – scale back or halt their purchases amid Western
sanctions aimed at halting Tehran’s nuclear program.

Unipec last month
requested that Iran deliver July-loading crude cargoes to Chinese ports and
provide price quotes on a cost-insurance-freight basis.

Before the EU
sanctions, China typically paid Iran for the crude only and paid for its own
freight and insurance. But in the absence of access to shipping insurance, it
now has to rely on NITC’s vessels.

“I hope and believe the Iranian side
will cooperate as it’s a small technical problem,” said a Chinese crude oil
trader.

“They should not be wasting time on this. Otherwise they will
face really big losses.”

Sinopec, through Unipec and state-trader Zhuhai
Zhenrong Corp, had scheduled to lift some 500,000 bpd of Iranian oil this month,
traders said.

However, Chinese traders said Sinopec’s import appetite
could be limited after record imports in May and lackluster domestic demand that
has forced it to cut production at its refineries.

LAST
SHIPMENTS?

The dispute over freight and insurance costs could disrupt the
delivery of the Iranian crude to China.

Its next deliveries consist of at
least four NITC supertankers carrying as much as 8 million barrels of Iranian
crude that are already on the water, shipping data shows. They were loaded last
month before the sanctions came into force.

Sinopec slashed its purchases
of Iran crude by more than half in the first quarter in a dispute with Tehran
over the cost of the crude and payment terms as it negotiated a 2012 supply
contract.

Iranian shipments to Sinopec started to rebound in April
following the end of the dispute, but the damage to Iran’s market share in China
had already been done.

The world’s second-largest oil consumer has cut
Iranian crude imports by 25 percent to about 390,000 bpd during the first five
months of this year, according to Chinese government data.

That was
enough to win a last-minute waiver from separate sanctions imposed by the United
States as part of the West’s campaign targeting Iran over its nuclear
program.

The waiver granted China a six-month reprieve from U.S.
financial sanctions that went into effect on June 28.

(Additional
reporting by Judy Hua in Beijing and Randy Fabi in Singapore; Editing by Robert
Birsel)

Copyright © 2012, Reuters

Share15

Eur/USD at 1.2620 and AUD/USD 1.0289

thanks TN..i read your posts all day long

Last night we  were talking about how auto sales lead econ data, biz insider today did a great piece with a multi decade chart on auto sales vs NFP http://www.businessinsider.com/motor-vehicle-sales-vs-non-farm-payrolls-june-preview-2012-7

my GIVN is up near 5% today, we waited all June for the PillCam news that the CEO indicated would come out….maybe something is Finally up.

Well, I am in the Iran will get their act together, Draghi won’t cut rates and Merv King will be voted down again….end of the eur/usd at 1.2606 and AUD/USD 1.0285…HAPPY 4th of July!!!!! ciao.

Good, we may get some good news finally with the Iran Talks..Major powers, Iran move to restart stalled nuclear talks
By ROY GUTMAN

By ROY GUTMAN
McClatchy Newspapers
ISTANBUL, Turkey — ISTANBUL – After more than 15 hours of expert-level talks, the United States and other major world powers agreed with Iran early Wednesday to move toward resumption of full negotiations to ensure that Iran’s nuclear fuel enrichment does not turn into a nuclear weapons program, a European participant at the talks said. The meeting, in Istanbul’s upscale Conrad hotel, began Tuesday amid doubts that talks would resume after they stalled last month. But as of early Wednesday, the participants reached agreement to implement the “Moscow plan,” a process that would start with a mid-level meeting between a senior European Union official, Helga Schmidt, and her Iranian counterpart, Ali Bagheri. The outcome of those talks would determine whether full-scale negotiations will follow, a European diplomat attending the talks told McClatchy Newspapers. The diplomat spoke anonymously because the discussions are ongoing. Shortly after 1 a.m., the Iranian delegation left the talks without commenting. But one member, as he departed the hotel, told a reporter, “We are smiling, and that says it all.” The Iran talks hold the key to war and peace in the Persian Gulf, and well beyond. Israel has threatened a military strike if Iran does not cease enriching uranium to 20 percent – a degree that, while far short of weapons grade, would allow it to produce nuclear weapons in a matter of a year or more. But with top Israeli military and intelligence figures and senior U.S. national security officials warning publicly that an Israeli airstrike would only delay the Iranian program for a few years at most, Prime Minister Benyamin Netanyahu agreed to give President Barack Obama a chance to seek a diplomatic solution first. Political talks were launched here in April and were moved to Baghdad in late mid-May, but stalled in the third round in Moscow in mid-June. On Sunday, the European Community and the United States introduced a new round of tough unilateral sanctions, which include a cutoff of European oil purchases and U.S. actions against the Iran central bank. In response, Iran has threatened to close the Strait of Hormuz, chokepoint for oil and gas shipments from the Persian Gulf to the rest of world. On Tuesday, Iran successfully tested mid-range missiles that are capable of striking Israel, and The New York Times reported that the United States had sent new minesweepers into the Gulf and deployed F22 Stealth and F15C warplanes to the Gulf. Iran denies any intention of developing nuclear weapons, and the country’s supreme leader, Ayatollah Khamenei, has issued a fatwa saying it was impermissible to divert nuclear material to bomb-making. Heading the first three rounds of political negotiations were Catherine Ashton, the EU’s top foreign affairs official, and Saeed Jalili, Iran’s top nuclear negotiator. Ashton represents the United States, Britain, China, France, Germany and Russia, while Jalili is empowered as personal representative of Iran’s supreme leader. The major powers, during the first hours of the talks, gave a detailed presentation of their major demands, the European diplomat told McClatchy Newspapers. These are: Halting the enrichment of nuclear fuel to the 20 percent level; shipping out any fuel for future reprocessing to that level; and halting enrichment activities at Fordow, near Qom, a facility that is buried deep under a mountain and likely could withstand an Israeli attack. Iran has insisted that economic sanctions be lifted as a condition for any agreement and that the international community recognize its right to enrich uranium for peaceful purposes. But at the Moscow talks, Iran brought up a broad series of other issues including cooperation on the crisis in Syria, a close ally to Tehran; Bahrain, where Iran supports the Shiite majority seeking a more democratic system; piracy in the Indian Ocean and narcotics. “The two parties were miles apart,” a senior European Union diplomat in Brussels told McClatchy Newspapers. “It was two days of talking at cross purposes.” Still, the official, speaking anonymously because of the sensitivity of the talks, said, “We do think there is a deal to be reached.” The European diplomat in Istanbul echoed that point. “We are very keen on a diplomatic outcome, and we hope the Iranians take that up,” he said. Read more here: http://www.miamiherald.com/2012/07/03/2880882/major-powers-iran-move-to-restart.html#storylink=cpy