Archive - Aug 26, 2013

In Part 1 of this article we documented the insane remedies prescribed by the mad banker scientists presiding over this preposterous fiat experiment since they blew up the lab in 2008. In Part 2 we tried to articulate why the country has allowed itself to be brought to the brink of catastrophe. There is no turning back time. The choices we’ve made and avoided making over the last one hundred years are going to come home to roost over the next fifteen years. We are in the midst of a great Crisis that will not be resolved until the mid-2020s. The appearance of stability is illusory, as the civic fabric of the country continues to tear asunder. Record high stock markets do not trickle down. The masters of propaganda seem baffled that their standard operating procedures are not generating the expected response from the serfs. They have failed to take into account the generational mood changes that occur; propaganda loses its effectiveness in proportion to the pain and distress being experienced by the citizenry.

Just what does Hitler have to do to catch a break?

29 months after ramping his initial stake to over 39 million shares (and witnessing a collapse of the stock from Over $40 to under $13), Ackman has decided that enough is enough. Through a just filed Citi-sole managed prospectus, Pershing Square is set to sell his entire 39,075,771 share stake in the beleaguered firm. The stock price's initial plunge on the news was immediately met by an avalanche of algo-driven buying to enable those that can to escape quick but as we post, JCP is heading back to its lows. With an overall cost-basis in the mid $20s, this one will sting a bit.

Infiltrate these thoughts Sunstein!

All was well in the world early on. Dismal durable goods orders were terrible enough to provide the index-watching-muppets with the bad-news-that-is-good-news to pump stocks higher. Other markets reacted in a pro-Taper-off mode (aside from Gold and silver which were man-handled back down from the $1,400 level). Volume is/was terrible in stocks but they clung to earlier highs as homebuilders surged (seeming to ignore Friday's data entirely). Then Kerry spoke... first WTI broke higher (catching up Brent), then gold (and silver), the USD sold off (as JPY strengthened as a million carry traders were suddenly silenced), and US equity markets fell out of bed with a thump. The dow lost 15,000; S&P futures tested down to their 50DMA; gold traded up to $1,403; silver well over $24; VIX snapped 1 vol higher to 15.0%; and AAPL tumbled from early highs (holding above $500 though). An ugly close at the lows of the day for stocks...

UPDATE 2: the valiant $1400 defense failed. Gold at $1405 now

UPDATE: Dow lost 15,000. AAPL $502 (from $510), Gold $1399

It seems defending the critical levels we highlighted on Friday remains the market's mission today. AAPL over $500, check! Dow over 15,000, check! Gold under $1,400, check... for now (oh and Silver under $24, check). We can't help but wonder who the magnificently positioned 'trader' is that keeps wiping away the bid-stack every time we touch $1,400 - especially as the contrarian in us notes that more than half the analysts in Bloomberg's survey expect price to fall (the most since just before gold bottomed nine weeks ago)... With Kerry's briefing appearing to raise the chances of war, it will be tough for 'them' to defend this push...

"Anyone who could claim that an attack of this staggering scale could be contrived or fabricated needs to check their conscience and their own moral compass. What is before us today is real, and it is compelling."

No matter how hard the Washington crowd tries to sell an economic recovery, inconvenient and contrary facts keep rearing up to shatter their mythmaking. Few people any longer believe the claims of declining unemployment or low inflation at least based on purchases they make. The fable of a housing recovery is now crumbling. The recession, declared over in June 2009, never ended. Some wonder how bad the recession/depression might have been had government not acted. Others worry that we will find out when the Fed tapers. For lack of a better term, the process the entire country is headed for is “Detroitification.” At this stage, the damage is done and cannot be undone quickly enough to avoid this crisis. Even if there were time, there is no way that politicians would willingly address the problem.

What the Falafel? There are times when you wish you could just dig a big hole and throw yourself into it and let someone else fill it in with shovel-loads of muck.

The planting and harvesting of false flags in Syria will need a crop rotation following the latest "revelation" by Germany's Focus magazine (on Saturday), subsequently reported by the Times of Israel, that Israeli Defense Forces had listened in on senior Syrian officials discussing a chemical attack last Wednesday. TOI reports that "according to the report Saturday in Focus magazine, a squad specializing in wire-tapping within the IDF’s prestigious 8200 intelligence unit intercepted a conversation between high-ranking regime officials regarding the use of chemical agents at the time of the attack. The report, which cited an ex-Mossad official who insisted on remaining anonymous, said the intercepted conversation proved that Bashar Assad’s regime was responsible for the use of nonconventional weapons."

These issues did not simply go away based on the fact that people were on vacation. So expect volatility to increase going forward.

UPDATE 3: He speaks... and it's over

UPDATE 2: KERRY STILL MIA (NO PUN INTENDED)

UPDATE: KERRY COMMENTS ON SYRIA DELAYED UNTIL 2:30, STATE DEPT SAYS

Following the weekend's escalations (and today's intelligence intercepts, inspections, and attacks), US Secretary of State John Kerry is back from vacation and takes to the teleprompter (and hopefuly some Q&A) to brief us on which red line is next and when the US goes back to war (removing the Taper fears)...

*RUSSIAN, TURKISH FOREIGN MINISTERS DISCUSSED SYRIA BY PHONE
*PUTIN, CAMERON DISCUSSED SYRIA IN PHONE CALL, KREMLIN SAYS
*CAMERON, PUTIN SAY CHEMICAL WEAPON USE MERITS SERIOUS RESPONSE
‘IDF intercepted Syrian regime chatter on chemical attack’ - Times of Israel

Pre-Kerry: S&P 500 (Fut) 1663.25, 10Y 2.8055%, USD 81.45, WTI $106.15, Gold $1393.55

Just two weeks ago, agriculture commodity-watchers were celebrating: “we are in for an exceptionally good year, perhaps one of the best in the last four or five years in terms of crop production,” as prices for corn, wheat and soybeans were falling amid global relief of the escalating inflation of food prices. So much for that... as SocGen notes, prices will be at or above current levels as hot, dry weather threatens U.S. Midwest crops. In addition, a shift in Chinese policy (following corruption concerns) is having a positive impact on price. Sure enough, Corn, Wheat (impacted by Brazil's frosts cutting forecast by 26%), and Soybean prices are screaming higher today as crops appear to be "decidely not in good shape." Corn is having its biggest gain since July 2012, Soybeans up most since 2010 and limit-up, and Wheat up its most since June 2012.

[Summer|Winter]: watch out.

• OBAMA TO USE ADMINISTRATIVE AUTHORITY TO FIGHT CLIMATE CHANGE
• OBAMA TO INVEST IN TECHNOLOGY TO MAKE FOSSIL FUELS CLEANER
• OBAMA CLIMATE PLAN IS NOT A WAR ON COAL, MONIZ SAYS

We have no idea what any of that means or what administrative authority Obama has to unilaterally declare war on, well, climate. But if Obama is taking on the unprecedented Arctic heat cold and is about to usher in centrally-planned weather, we would be nervous if we were Syria. Very nervous.

German Federal Office for Security in Information Technology: "Loss of Control Over the Operating System and the Hardware"