Archive - Aug 2013

We are propagandized to assume the existing hyper-structures of our centralized state-cartel economies will deliver us jobs, happiness, wealth, health and financial security. They will not. The following insightful essay is not just a critique of our current centralized economies but an outline of a community-based alternative economy that offers freedom instead of dependence. Though the examples are drawn from the U.K., the dynamics are the same in America and other advanced state-cartel economies.

The headlines come pouring in:

• OBAMA SPEAKS ON SYRIA DURING MEETING WITH BALTIC LEADERS
• OBAMA CALLS SYRIA CHEMICAL WEAPONS ATTACK CHALLENGE TO WORLD
• OBAMA SAYS SYRIAN USE OF CHEMICAL WEAPONS THREATENS U.S.
• OBAMA SAYS HE'LL CONTINUE TO CONSULT WITH CONGRESS ON SYRIA
• OBAMA SAYS HE HASN'T MADE FINAL DECISION ON SYRIA ATTACK
• OBAMA SAYS SYRIA ACTION WILL BE LIMITED WITH NO GROUND TROOPS

So... he hasn't made a decision, but the action will be limited. Is this like the Schrodinger economy where everything is dead if one collapses the Fed's wave function.

White House has declined TV networks request for live coverage of Pres. Obama's remarks on Syria at 230pm.

— Mark Knoller (@markknoller) August 30, 2013

Presented with little comment aside to note that volumes surged as US equities initially dipped and then ripped back to the entirely algorithmically-controlled VWAP level before starting its fade back... Happy Holidays, Johnny 5...

It seems clear that it is not "if" but "when" an attack takes place and as the following world-cloud confirms; the US "know"... as the strategy "better to ask for forgiveness than permission?" And that with the Russia meeting due next week, and a UN inspector report that appears pointless now that we have social media, that the attack will occur sooner rather than later...

Below is the government's assessment of the "Syrian Government’s Use of Chemical Weapons on August 21, 2013" - it is largely as expected, putting the full blame on Assad. What however is absolutely mindblowing is the following: "We have identified one hundred videos attributed to the attack, many of which show large numbers of bodies exhibiting physical signs consistent with, but not unique to, nerve agent exposure. The reported symptoms of victims included unconsciousness, foaming from the nose and mouth, constricted pupils, rapid heartbeat, and difficulty breathing. Several of the videos show what appear to be numerous fatalities with no visible injuries, which is consistent with death from chemical weapons, and inconsistent with death from small-arms, high-explosive munitions or blister agents. At least 12 locations are portrayed in the publicly available videos, and a sampling of those videos confirmed that some were shot at the general times and locations described in the footage. We assess the Syrian opposition does not have the capability to fabricate all of the videos, physical symptoms verified by medical personnel and NGOs, and other information associated with this chemical attack." In other words, America may be about to launch World War III on the basis of one hundred videos, which it believes "the Syrian opposition does not have the capability to fabricate."

"Forget the Brits" , "Yes, Assad did it" , "No, the Saudis are our friends" , "Yes, Putin is a bad guy, he's Russian you know" , "The French are with us" , "We could show you 'definitive' proof but it's confidential and would put American lives at risk" , "chemical weapons... did u see those images" ,"Surgical" , "USA, USA, USA"... Secretary of State Kerry is due to make a statement at 1230ET (with no word on whether there will be a Q&A) on "The Situation In Syria" Grab your popcorn...

"In the spring, the risks to growth seemed to be fading. The economy was weathering the fiscal shock. Politicians decided to delay battles over the budget and the debt ceiling, passing a continuing resolution to fund the budget through September and postponing the debt ceiling drop-dead date to some time in the fall. Meanwhile, financial markets in Europe had settled down, the European economy showed signs of improvement, and commodity prices were stable. In their June directive the FOMC made it official: “The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall.” Unfortunately, we seem to be entering another of those periods of elevated risk. Three concerns are emerging."

- Bank of America

The EuroStoxx50 (Europe's Dow) is down 3.3% on the week - it's 2nd worst week in 11 months. Yesterday's dramatic EUR weakness against the USD extended today back below 1.32 (EURUSD's worst week in the last 8) but today that weakness spread into peripheral bonds and stocks as it would appear anxiety and risk-aversion is taking its toll. Interestingly German stocks were just as hard hit as Spanish and Italian stocks this week (down 3.25 to 4%) and while Spanish and Italian bond spreads jumped 16bps (2nd worst week in 5 months), Portuguese bonds were the hardest hit, widening 25bps on the week. Peripheral bond spreads are all hovering near critical resistance levels for the year. Europe's VIX saw its 2nd biggest spike in 21 months.

As if the federal government were not already doing enough to kill the U.S. airline industry with restrictive workplace rules, over-regulation, and a monetary policy that supports higher fuel prices, earlier this month anti-trust authorities at the Justice Department blocked the merger between American Airlines and US Air. The truth is that our impoverished citizenry can no longer support the airline industry we once had. That's why American and U.S. Air had to merge in order to stay competitive and profitable. That is the sad truth behind the headlines. Ironically blocking the merger could result in more flight reductions and larger fare increases than what might have been the case had the merger been allowed.

Americans are taught that "effortless" is the path to happiness, when really it is the path to diabetes, hip and knee replacements, bankruptcy, no sex life, and MOAR DEBT! 

As we showed mere days ago, it appears the truth of who the real puppet-master in the Middle-East is becoming plainer to see. The incredibly frank discussion between Saudi's spy-chief Prince Bandar and Russia's Putin exposed a much deeper plot is afoot and the following details from the actual people on the ground in the chemically-attacked region of Syria suggest Obama is playing right into the Saudi's plan. While Obama is 'certain' that the chemical attacks took place on al-Assad's orders, as MPN reports, "from numerous interviews with doctors, Ghouta residents, rebel fighters and their families, a different picture emerges. Many believe that certain rebels received chemical weapons via the Saudi intelligence chief, Prince Bandar bin Sultan, and were responsible for carrying out the dealing gas attack."

This week will see the end of August trading and September is, along with November, one of the strongest months to own gold. This is seen in the charts showing gold’s monthly performance over different time frames - 1975 to 2011, 2000 to 2011 and our Bloomberg Gold Seasonality table  from 2003 to 2013 (10 years is the maximum that can be used).

Thackray's 2011 Investor's Guide notes that the optimal period to own gold bullion is from July 12 to October 9. During the past 25 periods, gold bullion has outperformed the S&P 500 Index by 4.7%.

The UK may be out, but Saudi Arabia isn't taking any chances. Moments ago, Reuters reported that the regime which as we reported is behind the entire conflict in Syria (hint: nat gas) has raised its level of military alertness in anticipation of a possible Western strike in Syria, sources familiar with the matter said on Friday.  Saudi Arabia's defense readiness, their version of DefCon, has been raised to "two" from "five", a Saudi military source who declined to be named told Reuters. "One" is the highest level of alert. "It is a must, no one knows what will happen," he said. And so all those who thought there would be no war and sold off gold and crude, are suddenly caught short. More curious is why Saudi is leaking this information to the media: another provocation, and an attempt to accelerate a conflict which is rapidly fizzling? Remember: for Saudi Arabia "no war" is the worst possible outcome. If so, expect more mysterious "chemical attacks" in the coming hours and days to cement the Western resolve to blow up Assad.

Consumer sentiment and confidence has been a smorgasbord of confusion recently. Bloomberg's Consumer Comfort index just had its biggest 3-week plunge in 16 months falling back to its lowest since the first week of April. Conference Board confidence was 'stable' at 5.5 year highs and now UMich Confidence, which missed expectations for the first time in 2013 last month in its preliminary print, has been revised up with its final data to the best level in 4 months. The schizophrenia is completed with this little beauty from Gallup. As we have warned before, beware 'the big con' and as these two charts suggest, confidence seems very much in the eye of the beholder.