Archive - Aug 2013

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"

The reality is that the recession never ended for 95% of U.S. households, and by many metrics the recession has deepened. The trick is to not measure those metrics; what isn't measured doesn't exist, especially recession.

As Syria 'welcomed' the UN team of scientists to dispel the myth that al-Assad had used chimcal weapons, one of the team's two vehicles came under sniper fire and was rendered 'unserviceable'. The team "collected some samples" and interviewed survivors, witnesses and doctors on its first day on inspection but the attack on the UN team prompted secretary-general Ban to file a "strong complaint" with Syrian officials. We await John Kerry's pending statement at 2pmET for clarification of whether the Fed can Taper or not Taper...

Demand that Fish Be Tested for Radiation (Or Buy a Geiger Counter)

Pervasive, unchecked spying on millions of Americans and NSA agents eavesdropping on exes? A war with Syria? Fed tapering? A US that has been at its debt ceiling for months? A looming spending fight? Markets halting for hours due to "glitches"? Even Donald Trump? Naaaaah. According to Google Trends, this is what keeps America "up" at night.

“Indians want to maintain a store of value, so they go to gold.”

‘Gold is the last man standing as rupee fuels inflation’ was not published on Bloomberg.com but the story was published on Live Mint.

 What is happening in India is a prelude to what will be seen in other economies in the coming years as currencies depreciate.

With the UK on holiday (vacation), European markets were relatively quiet - apart from Italy... The Berlusconi debacle rolls on and sparked the worst sell-off in Italian sovereign bonds in 9 weeks and pushed the spread on BTPs over Bunds to its highest in 3 weeks. Most European equity markets closed mildly lower (with Germany's DAX unch - recovering from its EUREX-halting drop earlier in the day. Italian stocks were the big underperformer (down 2.2%). For the 3rd day in a row, Europe's VIX was smashed lower from an opening high print to close at its lows. The UK and its 'credit police' will be back tomorrow.

It's google to be evil...

2013 has not been kind to Hugh Hendry, whose Eclectica Absolute Macro fund has posted an unchanged performance year to date, broadly underperforming (alongside the bulk of the hedge fund community) the market. Below are his most recent macro thoughts, his holdings (few changes most notable of which is the closure of the Yen short), and his take on how Bernanke "infamously marched his troops to the top of the hill only to march them down again, one moment promising tapering, the next, unlimited accommodation."