US And Israel Quietly Provide Military Support And Parts To Iran, Which In Turn Is Arming Syria

To summarize: in an act of complete disregard for the official diplomatic song and dance, both Israel and the US are now providing military support to Iran, which in turn is providing military support to Syria, which is also getting military support from Russia. And now, just to make things more interesting, the same labyrinth of "military support" is about to be unleashed in the Ukraine, whose western half is just as likely getting arms and military equipment (not to mention funding)from the West under the table, while Russia, whose main Black Sea port is in the Ukraine's Crimean peninsula, is arming the Eastern part of the Ukraine.

What can possibly go wrong?

Global Economy Collapses Despite 4th "Warmest" January On Record

The last 3 weeks have seen the macro fundamentals of the G-10 major economies collapse at the fastest pace in almost 4 years and almost the biggest slump since Lehman. Despite a plethora of data showing that 'weather' is not to blame, US strategists, 'economists', and asset-gatherers are sticking to the meme that this is all because of the cold on the east coast of the US (and that means wondrous pent-up demand to come). However, as the New York Times reports, for the earth, it was the 4th warmest January on record.

The 6 Types Of Twitter Conversation

Social media is increasingly home to civil society. As Pew Research notes, it is the place where knowledge sharing, public discussions, debates, and disputes are carried out. As the new public square, social media conversations are therefore as important to document as any other large public gathering. By analyzing many thousands of Twitter conversations, Pew identified six different conversational archetypes. The following infographic describes each type of conversation network and an explanation of how it is shaped by the topic being discussed and the people driving the conversation... the structure of these Twitter conversations says something meaningful about political discourse these days.

The Tyranny Of Models (Or Don't Fear The Reaper)

The tyranny of models is rampant in almost every aspect of our investment lives, from every central bank in the world to every giant asset manager in the world to the largest hedge funds in the world. There are very good reasons why we live in a model-driven world, and there are very good reasons why model-driven institutions tend to dominate their non-modeling competitors. The use of models is wonderfully comforting to the human animal because it’s what we do in our own minds and our own groups and tribes all the time. We can’t help ourselves from applying simplifying models in our lives because we are evolved and trained to do just that. But models are most useful in normal times, where the inherent informational trade-off between modeling power and modeling comprehensiveness isn’t a big concern and where historical patterns don’t break. Unfortunately we are living in decidedly abnormal times, a time where simplifications can blind us to structural change and where models create a risk that cannot be resolved by more or better modeling! It’s not a matter of using a different model or improving the model that we have. It’s the risk that ALL economic models pose when a bedrock assumption about politics or society shifts.

Why No Capex Recovery?

As happens at the end of every year, sellside analysts and economists, all predicted that this year would be different, and the long overdue capex spending would finally be unleashed. Apparently they had far greater visibility on this matter, than on the topic of snowfall in the winter, and its disastrous impact on a $17 trillion economy, whose Q1 GDP growth forecast has cratered from 3% at the start of the year, to barely half that number currently. One of the firms that preached that the CapEx recovery is imminent is none other than Goldman Sachs, the same firm that also year after year predicts a new golden age for the US, only to see its forecast crash and burn some 4-6 months later, couched in the tried (or is that now trite) and true scapegoatings: snow, unrest in Europe, inflation or deflation in Japan, the usual. However, this time may indeed be different, and the same Goldman has just released a piece wondering "Why no capex recovery?" (despite the firm's own forecasts to the contrary -just recall David Mericle's "Capex: The Fundamentals Remain Strong" which now in retrospect is completely wrong).

Citi Warns "Housing Sentiment Got Carried Away"

The divergence between the NAHB index and other housing indicators has continued to suggest that sentiment was “getting ahead of itself" and as Citi's Tom Fitzpatrick warns would suggest that the qualitative nature of the overall housing recovery is less robust than one would like.  Housing should pause/consolidate possibly even for most of this year as the weather argument that is trotted out by so many commentators does not seem to hold up to even a basic examination with the worst data coming from the West Coast. Simply put, Citi warns, we think housing sentiment got carried away as it did into 1994 and 1998 post the housing/savings and loan crisis of 1989-1991.

Russia To Add "Stealth" Subs To Mediterranean Force

Many have been surprised by the lack of public response by Russia to the ongoings in Ukraine. Aside from some comments by Siluanov, the response has been concerning in its absence from the iron fist. However, quietly and with little new coverage, RiaNovosti reports that the combat capability of Russia’s naval task force in the Mediterranean will increase significantly - for the first time in decades - following the first deliveries of Varshavyanka-class submarines (with advanced stealth technology dubbed "black holes in the ocean") to the Black Sea Fleet.

Reviving The 'Real World' Scenario That's Disappeared From Government Reports

"For 50 years or so the federal government has deliberately and to an increasing extent misstated probable future budget deficits. Democrats and Republicans are guilty. The White House is guilty. And so is Congress. Private firms that deliberately misrepresent their financial statements in this fashion would be guilty of a crime… The magnitude of the misrepresentation is breathtaking."

- Former St. Louis Federal Reserve Bank President William Poole.

EU Offers Conditional "Aid" For Ukraine's "Catastrophic, Pre-Default" Economic State

"There is no money in Ukraine's Treasury account," exclaimed 'Interim President' Oleksandr Turchynov to the Ukrainian parliament; adding that the Ukraine economy is in a "catastrophic state."

*THERE ARE PROBLEMS WITH BANKING SYSTEM AND HRYVNIA: TURCHYNOV
*PROBLEMS WITH PENSION FUND ARE "COLOSSAL": TURCHYNOV
*UKRAINE'S ECONOMY IS IN A 'PRE-DEFAULT' SITUATION: TURCHYNOV

Hardly surprising given the months of protest; but with Russia 'conditionally' postponing its EUR2bn 'loan', the Europeans are riding to the nation's aid with promises of EUR20bn (if Ukrainian authorities meet certain conditions). But, as the map below shows, a great deal of the nation's wealth lies in the eastern (pro-Russia) region.

Netflix Folds; Agrees To Pay Comcast To End Streaming Congestion

There go the margins... For months, Netflix and Comcast have been 'negotiating' over whether the video streaming service should pay for the apparently excessive load it places on Comcast's network, but now, as the WSJ reports, Netflix has agreed to pay to stop the network provider slowing its stream and impacting customers. According to Netflix data published in January, the average speeds of Netflix's prime-time streams to Comcast subscribers had dropped 27% since October. With Netflix accounting for almost 30% of web traffic at peak times, it is no surprise that Comcast's squeeze finally paid off. There are no details yet on the multi-year "mutually beneficial" deal but it is clear that broadband providers are gaining leverage over content providers.

The Constitution Failed

If you’re still wondering if the US Constitution of 1787 failed to protect liberty, then just look around you. That scrap of parchment is an obvious failure. The US government is the hugest government in the world and meddles in the lives of its citizens (and people worldwide) in every way imaginable. The government accepts no limits on its power whatsoever. The president rules by decree. This isn’t done under some new constitution. This is all done under the 1787 one.

Meanwhile In Non-Pro-Europe Ukraine

The bad feelings concerning Russia run deep in the Western parts of Ukraine (as they topple statues of Lenin in growing numbers) while in the East they see themselves much more as Russians. These feelings run very deep in the region and memories do not fade so easily as the mayor and police chief of Kerch vigorously defend the Ukrainian flag in the clip below - deep in the eastern Crimea region (that Russia has already suggested it is willing to go to war over). Russian President Vladimir Putin has now been placed in a very difficult position, as Martin Armstrong notes, the entire set of circumstances creates the image of events in Ukraine that have diminished the power of Russia, which is a matter of pride and the only stable resolution remains a split along the language faultline. The critical question then is - will Putin let it go?

G-20 Agrees To Grow Global Economy By $2 Trillion, Has No Idea How To Actually Achieve It

Apparently all it takes to kick the world out of a secular recession and back into growth mode, is for several dozen finance ministers and central bankers to sit down and sign on the dotted line, agreeing it has to be done. That is the take home message from the just concluded latest G-20 meeting in Syndey, where said leaders agreed that it is time to finally grow the world economy by 2% over the next 5 years. "We are putting a number to it for the first time -- putting a real number to what we are trying to achieve," Hockey told a news conference. "We want to add over $2 trillion more in economic activity and tens of millions of new jobs." There is only one problem: the G-20 has absolutely no idea how to actually achieve its goal of boosting global output by more than the world's eighth largest economy Russia produces in a year. Nor does it have any measures to prod and punish any laggards from this most grand of central planning schemes.

China Is Not 1914 Germany

Current events are frequently viewed through the prism of analogies. Words become shorthand for a particular type of situation. “Munich” equals the danger of appeasing bloodthirsty dictators, “Vietnam,” and now “Iraq/Afghanistan” means the folly of getting involved in (or, in the case of Iraq, starting) civil wars in countries whose societies the outsiders neither understand nor can effectively influence. In some cases, acting on these parallels turns out to be wise. The analogy that is currently in vogue in Asia is “1914.”

Here's What Happened The Last Time "Unemployment", "Taxes", & "Inequality" Were So Correlated

While social unrest has been a thing that occurs "over there", the increasing visualization of people taking to the streets in the face of desperate economic situations amid an elite class of politicians, dictators, and tyrants is becoming clearer by the day. As the following chart shows, across 500 billion words in over 5.2 million books, the words "unemployment, "taxes", and "inequality" tend to correlate highly with "war". The 18th century saw these terms the most correlated and as the following chronology suggests, that is not a time to reflect gladly upon...

Look In The Mirror, America!

Listening to the media gleefully hype the numerous construction flaws and rumors of corruption at the Sochi Olympics, we couldn't help thinking that Americans in general have no clue about Russia.  Here are some of the similarities and differences... "Russia is rising.  Maybe we can give her a high five on our way down.  Instead of criticizing others, look in the mirror America."

The Eastern Ukrainians Are Revolting

It is hardly surprising, given the drastically divided nation, that when Vitali Klitschko's pro-European political party ventured to Kerch - a city of the eastern edge of Ukraine in the Crimea region - things did not go entirely according to plan... This is the region that Russia has stated it is willing to go to war over and is deep in the pro-Russia territory... headlines galore are coming out of Ukraine but all that matters now is the Russian response... Especially after Tymoshenko's earlier comments:

TYMOSHENKO: UKRAINE MAY BRING CHANGES IN OTHER EX-SOVIET STATES; WILL HELP OTHER COUNTRIES UNDER `DICTATORS'

Though it seems pretty clear who they blame...