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In line of fire

Source: livemint

Foreign investment into the US could be threatened by Donald Trump’s new “revenge” taxes, analysts have warned.

A provision within the president’s One Big Beautiful Bill Act will allow the US to apply higher taxes on foreign individuals, businesses and investors connected to jurisdictions that impose “unfair foreign taxes” on US individuals and companies.

Companies listed on the London Stock Exchange could choose to avoid the measure by redomiciling in New York.

Section 899, as it is called, classes digital service taxes and “diverted profits taxes” as unfair, along with any taxes that target US entities. It would allow US authorities to impose an additional tax starting at 5% and increasing by five percentage points annually, up to 20%.

Max Yoeli, a senior research fellow in the US and the Americas programme at Chatham House, says section 899 “threatens to further alienate foreign investors”.

It could chill investment into the US by calling into question its “fundamental openness”, he added in a comment piece.

The Italian bank UniCredit agrees that section 899 could further damage foreign investor sentiment towards US dollar-denominated assets. It could backfire on the US, it says, given the large amount of domestic assets held by foreigners.

“The list of countries that would fall into this category is long and encompasses most European countries, including Italy and Germany,” UniCredit told clients, saying that foreign investors had more than doubled their holdings of US assets over the past decade.

“Not only would this additional tax serve to finance corporate tax reductions, but it would also likely be used as a negotiating tool for the US in trade deals, especially as Republicans seem willing to withdraw from the global minimum tax framework.”

A chart showing the value of US assets held by foreign investors, in trillions of US dollars. Photograph: UniCredit

UniCredit also fears the dollar’s safe haven status could be undermined if there are fresh tax disputes between the US and other countries.

The One Big Beautiful Bill Act was passed by the US House of Representatives last month. The Senate is yet to approve the bill, with the White House setting a deadline of 4 July.

George Saravelos, the global head of FX research at Deutsche Bank, warned last month that section 899 could allow the US administration to transform its trade war into a capital war by “explicitly using taxation on foreign holdings of US assets as leverage to further US economic goals”.

UK companies could certainly fall foul of section 899, as Britain operates a digital services tax aimed at tech multinationals, and a diverted profits tax designed to clamp down on tax avoidance by multinationals.

Goldman Sachs has calculated that UK corporates are “particularly exposed” to section 899, as roughly 30% of the revenues of companies listed on the FTSE 100 are generated in the US.

However, as companies that are majority-owned by US shareholders are exempt, City bosses may consider moving their stock market listing to New York, to dodge section 899.

“This ownership dynamic not only mitigates tax risk but also reinforces the strategic case for relisting in the US, where investor bases are deeper and more aligned with US revenue exposure,” the Goldman Sachs analysts said.

According to Goldman, the large UK companies with the most significant exposure to the US, and who are not majority-owned by US investors, are the media group Pearson, the business services group Experian, the pest control business Rentokil and the pharmaceuticals manufacturer Hikma.

Ashtead Group, Compass and Melrose also generate a large proportion of their sales stateside, but as they have majority US ownership they should be exempt from section 899.

French companies could also be at risk, as Paris operates a digital services tax on the revenues that large tech companies generate in France.

Source: Theguardian

Source: Bloomberg

Everything is suddenly exploding higher - also with gold and oil dropping - especially on the following WSJ breaking report which suggests (dubiously, we should add...) that the Iranians are 'open' to returning to the negotiating table with Trump officials, even as ballistic missiles rain down on Israel, and as much of the Islamic Republic - particularly oil depots - burn...

"In the midst of a ferocious Israeli air campaign, Tehran has told Arab officials they would be open to return to the negotiating table as long as the U.S. doesn’t join the attack, the officials said. They also passed messages to Israel saying it is in the interest of both sides to keep the violence contained," per WSJ on Monday.

Oil prices tumbling on the breaking report...

Gold has been falling since before the missile war started late on Thursday...

After another day on the receiving end of an Israeli war of aggression that began Friday, Iran delivered a major counterpunch overnight, further demonstrating that Israel's highly-touted Iron Dome defense system is vulnerable to Iran's hypersonic missiles. Upon completing a deadly barrage aimed at targets in Tel Aviv, Haifa and elsewhere, Iran claimed it had employed a "new method" that put Israel's multi-layered defense system in disarray to the point its various systems targeted each other.

As fire and rescue teams scrambled to respond to the damage, Times of Israel reported at least eight people had been killed and more than 90 injured in the early-Monday attack, bringing Israel's running death toll to at least 24 with hundreds wounded. “The arrogant dictator of Tehran has become a scared murderer who fires at Israel’s civilian home front in order to deter the IDF from continuing to carry out attacks that are destroying his capabilities,” said Defense Minister Israel Katz, only to then promise that "residents of Tehran will pay the price, and soon."

Iran claimed it struck targets that included a power plant in Haifa that "was seen engulfed in flames," an oil refinery complex in Bazan, a facility of the military technology company Rafael Advanced Defense Systems facility, as well as Ben Gurion Airport. The Cradle reports that other targets included Nevatim Air Base, an army camp in Galilee, and hits on power grid facilities that caused "widespread blackouts." Projectiles also hit a residential high-rise building and at least another residential area. An Iranian defense official said the attack included missiles with 1.5-ton warheads, but noted Iran has even heavier warheads in its inventory.

Citing a statement from the Islamic Revolution Guards Corps, state media outlet PressTV reported that "the operation specifically targeted the Zionist regime’s command and control systems using advanced tactics and enhanced intelligence-tech capabilities."

“As a result,” the IRGC said, “the enemy’s multilayered defense systems were thrown into disarray, to the point where their own air defense units began firing on each other.” One video making the rounds on social media appears to show an IDF missile interceptor blowing itself up, though the careful observer must contemplate the possibility that an unforced IDF error captured on video may have been opportunistically exploited to make an exaggerated claim:

Dampening Israeli hopes that Iran may run out of missiles soon, Israeli National Security Advisor Tzachi Hanegbi told Army Radio that Iran has "thousands of ballistic missiles" in its inventory, which the Times of Israel called "a higher figure than previously estimated."

Iran has similarly made repeated claims that it hasn't used its full resources yet. “We are still exercising restraint and have not deployed all our capabilities to avoid global chaos," IRGC chief Major General Mohsen Rezaei told Iranian state media. "However, we may reach a point where we use new weapons." While reiterating Iran's claim that it doesn't seek to acquire a nuclear weapon -- a claim re-certified as valid by the US intelligence community as recently as March of this year -- he hinted that Iran's stance on nuclear weapon development could change, saying "the future cannot be predicted with precision."

A question is starting to loom large: How long can this Israeli society -- which has for years gone almost entirely unscathed as its military unleashes utter devastation on lesser forces and civilian populations -- withstand prolonged destruction from a well-equipped foe like Iran?

Source: Zero Hedge

source :kitco

Above: GBP/AUD at daily intervals.

Source: Poundsterlinglive