Archive - Apr 2011

While the majority of the world was in a sleepy mood courtesy of closed core capital markets, events in Syria were anything but. From Reuters: "Syrian security forces killed almost 90 protesters on Friday, rights activists said, the bloodiest day in a month of escalating pro-democracy demonstrations against the rule of President Bashar al-Assad." Yet while many are quick to dismiss "yet another MENA revolution", Emad Mostaque, MENA strategist at UK's Religare Capital Markets begs to differ. "The market implications of a breakdown in Syria would be profound, but likely not be felt immediately as it doesn’t tick the boxes for proximity (such as Bahrain) or oil production (such as Libya). Iran’s influence would be curtailed, as would support for Hezbollah and Hamas." But the mittelspiel does not end there, and will likely have even greater consequences on Israel: "A third intifada between Israel and Palestine is already likely following a series of rather unpleasant attacks from both sides and a Syrian breakdown would heighten the chances of an Israeli attack on Lebanon, particularly given the success thus far of their new Iron Dome anti-ballistic system (even stops mortars)... A conflict like this would raise the chances of a follow up attack on Iranian nuclear facilities, particularly if Hezbollah’s retaliatory rocket capabilities were neutered." So it appears that the old bogeyman from the summer of 2010, Iran's nuclear power - the source of so much Stuxnet (of unknown origin( consternation, is about to come back front and center all over again. And when one factors in the ubiquitous presence of CIA operatives (flipflops on the ground) in the region (always disclosed well after the fact) one wonders just how staged this latest "revolution" truly is.

Although Kraft and Starbucks each has found new partners after their bitter breakup, surging prices of coffee (34-year high) and sugar (30-year high in Feb.) could bring margin and cost pressures in the food and coffee sector.

Earth Day edition ...

Government already PASSED a jobs bill, and Obama IS representing his constituency ... so stop whining!

Stepping back from this, you really can’t help but notice how stupid the whole “stock wealth effect” ideology is. Setting aside the fact that MOST of the gains stocks have produced since 2009 are due to US Dollar devaluation, it strikes me as odd that someone would think they were richer because their stock portfolio was up… while the cost of just about everything has ALSO gone up tremendously. For instance, since March 2009, stocks have doubled. However, oil has nearly TRIPLED in price.

Your friends will be hysterical when they see you wearing...

Since posting on Zero Hedge over the next 24 hours will be more sporadic than usual, please use this space for any news, discussions and general observations about life, the universe and everything.

Would you like cheese with that burger? Ok, sir, that'll be $5.00...

If there was one thing TEPCO was consistent in during the entire Fukushima crisis (and will be for a long time), was its ability to simply "disappear" data that was not palatable for general consumption. Well, it only took MIT 6 months to "TEPCO" its Billion Price Project. Launched early in 2011, the MIT BBP was the only place where one could get an objective look at how inflation was trending in the US and across other countries in the world (and as one can imagine, it was "trending" laughably higher than the CPI). Well, as of this morning it appears that each individual country's data has been "disappeared", and conveniently replaced with the "blended average" also known as the "World Inflation Index." For all those who previously had at least one recourse to see just what liberties the BLS was taking with its imaginary CPI data, well, that recourse is now gone.

Zero Hedge is not a political blog. We take every opportunity to expose the hypocrisy and corruption on both sides of the aisle. Granted over the past 2 years we have seen quite a bit more of it from one side, but that has been primarily due to that one side being in control, and as always happens to whoever is in charge, screwing things up. For the most part, we try to be at least modestly picky about how we express ourselves now that politics and finance have become more intertwined than ever in history. The same can not be said about the following clip from Drinkingwithbob who appears to have said "basta" to diplomacy, and delivers one of the more memorable rants against what everyone knows to be true but few are willing to say out loud. If nothing else, it is... cathartic.

Hosed by Ben and Timmah, Bammy and Congress ...

From Goldman's David Kostin: "Positive revenue surprises averaged 2% and helped drive the strong earnings season to-date with 28% of S&P 500 stocks now having reported 1Q results. Earnings surprises have averaged 11% and analysts have lifted their EPS estimates for all four quarters. Energy company revisions are the key reason. Bottom-up full-year 2011 EPS estimate now stands at almost $99, above our $96 topdown forecast. Earnings season continues next week with 178 firms representing 34% of S&P 500 market cap set to report 1Q results."

The most exciting episode of the neverending (and always distracting from far more important matters) political soap opera is without doubt the ongoing debate over the debt ceiling (which may legally be breached as soon as the week of May 1). For what it's worth, this is a complete sideshow as i) the ceiling will be raised, ii) both parties will blame each other for this outcome while shaking hands behind the scenes in expectation of more "gifts" from Wall Street and iii) the world will realize just how broke America is now that its debt ceiling, which we believe will be raised by just over $2 trillion to last the country until after the next presidential election, will for the first time ever be greater than its GDP, an event that has never before occurred. And so the distraction will shift to another even more meaningless debate. In the meantime, few ask themselves the key question: why is there government debt? In that regard, many have made the point against government debt, but few have done so as successfully and as succinctly as Bill Buckler does in his latest issue of the Privateer. In the below segment, Buckler does the definitive and most commonsensical reduction of the "government debt" issue and why what America is doing is nothing short of allowing itself to be hijacked on the road to a dictatorship.

Taking over the private sector also occurred in the US monetary system with the US Federal Reserve allowing Wall Street to dish their junk debts onto its balance sheet in a kind of “cash for trash” program where Wall Street sells crap no one wanted for 100 cents on the Dollar to the Fed… and then the Fed doesn’t try to get its money back… EVER. Doing this had a profound psychological impact on the financial world. By swapping US Dollars for trash assets, the Fed sent a clear signal to all of us that cash was in fact becoming trash.

The most concise summary of the key positive and negative events over the past week.