Archive - Oct 2013

Hopefully Great Britain doesn't get the idea of finally reclaiming its rebellious colonies lost over two hundred years ago, because the US certainly is making it easy. As part of the numerous non-essential services shut down in the current government funding crisis, Foreign Policy reports that the Air Force's Air Combat Command (ACC) - home to the service's fighter jets, B-1 bombers and most of its drones and spyplanes -- has grounded squadrons that are not set to deploy abroad after January. "...Only fighters based at Mountain Home flying this fall are the F-15SGs of the Singaporean air force that are permanently stationed there. Interestingly, German and Canadian air force jets are also flying out of the Idaho base on training deployments of their own.

For a "sick" nation, it seems laughter may just be the best medicine... especially as they say "a day without laughter is a furlough day wasted."

Nancy Pelosi tried hard this evening (in the post WH meeting presser) to position the Democrats in order to disavow the inevitable but now Bloomberg is reporting that:

*HOUSE REPUBLICAN PLAN WOULD LINK SHUTDOWN, DEBT-LIMIT FIGHTS

House Republican leaders plan to bring up a measure to raise the U.S. debt-limit as soon as next week as part of a new attempt to force President Barack Obama to negotiate on the budget by merging the disputes over ending the government shutdown and raising the debt ceiling into one fiscal fight. This is not what most sell-side strategists expected as a base-case; in fact it is close to a worst-case for many - especially given Obama's apparent unwillingness to negotiate.

Earlier, on CNBC, Obama said he is "prepared to negotiate." As it turns out, he may have been confused about the meaning of the bolded word because less than four hours later, the White House issued a statement in which "The President made clear to the Leaders that he is not going to negotiate over the need for Congress to act to reopen the government."

"Like most members of the Congress that passed it and, undoubtedly, the president of the United States who signed it, I have not read the entirety of the ill-named Patient Protection and Affordable Care Act.  Yet there is one aspect concerning that legislation of which I am certain: I will not comply."

Faith, hope, and central bank charity... that's all there is left in the new normal.

Any hopes that tonight's meeting between the president and members of Congress, which lasted about an hour, would yield results just went up in smoke:

BOEHNER SAID OBAMA REITERATED HE WILL NOT NEGOTIATE
BOEHNER SAYS TIME FOR SENATE TO APPOINT NEGOTIATORS

Reid chimes in:

• REID SAYS BOEHNER HAS TO ACCEPT `YES FOR AN ANSWER'

Which means the government shutdown will proceed into its third day, with little hope for a political resolution on the horizon.

"We debated buying a bank, which we came close to doing. It remains an option for us," Carne Ross, a board member of the Occupy Money Cooperative (an offshoot of the Occupy Wall Street movement) says. "We eventually came to this [the debit card], as the easiest way to get a financial product out there."

Source: Not The Onion.

Mere days after the US and Iran showed very tentative signs of some diplomatic progress being possible (and hours after Netanyahu's "Rouhani's a wolf in sheep's clothing" comments), The Telegraph reports that Mojtaba Ahmadi, who served as commander of the Cyber War Headquarters for Iran, was found dead (with two bullets to the heart) in a wooded area north-west of Tehran. This follows the assassination of five Iranian nuclear scientists and the country's ballistic missile program head since 2007 - all blamed on Israel's Mossad. An eyewitness said two people on a motorbike had been involved and "the extent of the injuries indicated he had been assassinated from close range." Western officials (the 'essential' ones) said the information was still being assessed.

First, the good news. During a Senate hearing earlier today, Gen. Keith Alexander (in charge of America's Secret Cyber Army) said: "We have over 960 Ph.D.s, over 4,000 computer scientists, over a thousand mathematicians. They are furloughed. Our nation needs people like this."

Now the bad news. While the number of NSA employees is officially classified, in 2012 the NSA said more than 30,000 employees work at Ft. Meade and other facilities. In 2012 John C. Inglis, the deputy director, said that the total number of NSA employees is "somewhere between 37,000 and one billion" as a joke, and stated that the agency is "probably the biggest employer of introverts." In 2013 Der Spiegel, likely using source data from Edward Snowden, said that the NSA had 40,000 employees.

"The American people are being bamboozled into believing that you have to keep spending for ever," Ron Paul exclaims, as "neither side is truly looking for spending cuts." As he explains they all know that increasing spending is all that can maintain the status quo. In this brief CNBC clip, Paul says playing the blame game is ignorant of the reality that both sides are "rigid with bad ideas," dismissing Obama's 'faction' comments. For a glimpse at the chaos underlying the status quo (that is being exposed this week), Paul blasts that "it is a philosophy of government that is to blame; Keynesianism, Militarism, and Interventionism, and the funny-money system that we use. All that has come together and the country is bankrupt and nobody wants to amid it."

What would you say to working in either Switzerland or Yemen? The choice wouldn’t take too long to ponder over I guess when it comes to providing a healthy environment in which factors that would lead to long-term economic success that might be taken into consideration.

It truly is a case of deja vu all over again... No matter how much the politicians try to make the public understand what a total disaster the US economy is about to become, someone somewhere feels the need to test the market at 330ET and then smash VIX lower levitating stocks into the close... smells like algos igniting momentum to enable blocks to exit to us... Welcome to our new "efficient" markets...

In an interview with CNBC's John Harwood, Obama once again shows why the polarization in Congress is at record levels. In a brief: he said he is "exasperated", and that the shutdown is "entirely unncessary" but adds that he is (finally?) prepared to negotiate, however only after he gets his way namely after the government is reopened. And another important talking point: Obama added that while gridlock in D.C. is nothing new, "this time I think Wall Street should be concerned." It is unclear how that statement makes any sense in light of Obama's right hand senator Chuck Schumer telling the man who is really in charge, Ben Bernanke, to get to work. Unless of course, Obama is now angling for a "concerning" market crash, which sends the Dow down by 20% like in the summer of 2011, and Obama can tell the stunned public "I told you so."

Bonds were well bid into the US open this morning and stocks had given up all their 'shutdown' gains and slid further on the ADP news which had nothing to further the case for taper or no taper. The big turnaround happened when rumors circulated of a 'deal' - which were later denied - but by then the momentum had caught on. Luckily the rumor coincided with POMO and we lifted a majestic 7 S&P points into the European close. Treasuries initially ignored the rise but gave in after a while with yields rising but stocks remaining notably disconnected from bonds by the close. The late-day collapse in VIX yesterday evaporated was smashed higher, divergent from stocks in the afternoon until another pathetic ramp into the close which lifted the S&P to its day-session highs but closed down for the 8th of the last 10 days. Gold and Silver blew higher on the day recovering all yesterday's losses.