Archive - Dec 27, 2013

Inflation without compensation and a consumption tax hike make a very toxic mix

The only way this could be any better is if it was spotted on the back of a Tesla...

Can't go to bed without first spending 10 minutes on and then sleeping next to your smart, or cell, phone? You are not alone. According to a recent Pew study, America has never been more wired, or rather, unwired to some form of constant form of telecommunications. Among the findings: 91% of all American adults have a cell phone, with this number rising if one is male (93%), black non-Hispanic (93%), is between 18-29 (97%), college graduated (95%), lives in a city (92%), and makes over $75,000 (98%). But that's just the tip of the iceberg. As the chart below shows, Americans have never owned more, or had a broader selection of gadgets to chose from, than they do now.

As we noted earlier, political instability is spilling into social unrest:

*TURKISH POLICE SEEK TO BREAK UP PROTEST IN ISTANBUL: NTV TV
*TURKISH POLICE USE TEAR GAS, WATER CANNONS TO END PROTEST

The crowd was chanting "Thief Tayyip Erdogan" in reference to Turkey's graft-probe-implicated PM. And the nation's European cousins are "growing concerned" at events in Turkey, calling for "transparent, impartial justice."

Someday, and I cannot say when, Gold will catch its next leg up. When it does, we’ll finally see the market action that a $10+ trillion expansion in Central Bank balance sheets warrants.

In September 1939, six days after the United Kingdom declared war on Germany, Charlie Chaplin began filming one of his most epic films ever... and the first “talkie” for the silent film star. It was a courageous project - the ‘Great Dictator’ directly poked fun at Adolf Hitler. At the end of the movie, Chaplin looked into the camera and gave a stirring speech about timeless principles– peace, mutual respect, freedom from evil men who aspire to lead nations. This did not win Chaplin any friends in Washington who were keen to maintain official neutrality. And he paid dearly for it; the Great Dictator was the beginning of an entire decade of turbulent trouble between Chaplin and the US government. His rousing speech at the end of the Great Dictator calls for a world free of violence, intimidation, and government control. Unfortunately, we don’t get to live in that world. This our reality. The world is beautiful. Life is beautiful. But the leaders of humankind surely make it all damned hard to appreciate sometimes.

The People Want Peace, But D.C. Wants War

Wondering why TWTR is down today? Wonder no more... The Wall Street Journal has seen fit to publish the full unadulterated story of how Reuben Kressel, 66, of Rego Park bought (and then stunningly sold) 500 shares of Twitter in just a few weeks for a 76% profit. "I sold out completely," Kressel warns, adding that he "didn't want to take any more chances."  Of course, the brokers love it... "in stocks like Twitter, the retail investor is finally starting to come back," Wedbush's director of equity trading gloats, "for the first time in a long time, retail investors are really starting to act differently." Forgive our modest sarcasm and incredulity but when this is an important business news story, believing that we are in anything but a bubble is akin to admitting to be the greater fool.

Less than two weeks after Federal Judge Richard Leon ruled that the NSA's "indiscriminate and arbitrary" invasion of privacy is "likely" unconstitutional, giving a trace of hope that America may rise above its Orwellian Banana republic status, here comes New York City District Judge William Pauley to slam the coffin shut on US privacy and the Fourth amendment, and make a mockery of Edward Snowden's alternative Christmas message. Moments ago the WSJ reported that "a federal judge in New York City has ruled that a massive U.S. phone-tracking program is legal." Bananas for everyone!

Is Digital Currency the Original "Smart Money"? Here's what most are missing...

While Wall Street's hordes of lawyers are doing their best to find the various loopholes in the Volcker Rule that will allow them to resume unconditional prop trading, they are being kept busy with all the various other forms of regulation that have been thrown at them by regulators and the government in an attempt to make it appear that it is not Wall Street but DC that calls the shots. Some, however, such as Morgan Stanley have decided instead of engaging in costly fight with domestic regulation, to engage in cross border regulatory arbitrage, and focus on other, more prop-trading jurisdiction. Like India. As the Economic Times reports, the Indian brokerage arm of global investment banker Morgan Stanley has sought RBI's approval to start proprietary trading under which it will be able to buy and sell securities on its own account in India.

If past history is any indication, consumers usually get taxed with higher prices in the end.

Having failed miserably in the "control" of capital outflows from the Rupee (via Gold), the India government (following a Reserve Bank Of India advisory) has raided one Bitcoin seller and issued a warning cautioning citizens against acquiring and trading virtual currencies. As VentureBeat reports, the RBI did not outright ban the currencies, but it slammed them as risky and potentially illegal. On Thursday, the "Enforcement Division" raided the premises of Mahim Gupta who provides trading platform through his website - buysellbit.co.in - finding it in clear violation of Foreign Exchange Management Act (FEMA) rules. Whether smuggling gold or utilizing Bitcoin, it seems the government is fighting a losing battle...cue confiscation?

In the course of conducting public opinion surveys and demographic analyses, the Pew Research Center found a wide range of data milestones, breakthroughs, peaks and valleys in 2013, including record support for same-sex marriage and the legalization of marijuana; record levels of distrust of the federal government; record numbers of mothers who were the primary breadwinners for their families; and record numbers of Millennials living with their parents. Here is a look at the highs and lows Americans reached this year, according to Pew's data.

For all the endless talk of a recovery during the past five years, there is a very tangible reason why for most people this is nothing but spin, propaganda and lies: when one strips away the retroactively adjusted GDP, the seasonally adjusted (and politically mandated) counting of temp jobs, the constantly upward revised jobless claims, the Fed's $4+ trillion balance sheet of course, and even the declining (yes, declining) real disposable income per capita, what one is left with is the lowest loan creation out of a recession (or depression) in history, and is at indexed levels last seen during the Lehman collapse over five years ago!