Archive - Nov 2014

"Think of the press as a great keyboard on which the government can play." – Joseph Goebbels

"Politics determines who has the power, not who has the truth." – Paul Krugman

Does this look like the earnings picture painted by a thousand talking heads on financial news networks?

This misdirection of capital, labor and raw materials away from that allocation and use consistent with people’s actual decisions to consume and to save, means that every monetary-induced inflationary boom carries within it the seeds of an eventual and inescapable economic downturn.

Remember when last December, a bout of cold weather crushed the US economy for the next 3 months, and subtracted about $100 billion from trendline growth, and when one after another economist (who were then predicting the yield on the 10 Year would "greatly rotate" to 4% by right about now, and who expected the US economy to have reached escape velocity in the second half only to see a 2014 GDP trendline as follows Q2: 4.6%, Q3: 3.5% (soon to be reviser lower), and Q4 now estimated just about 2.0%) blamed the then -3.0% GDP print on snow in the winter? Well here comes round two, because as CBS reports, "prepare for an invasion from the north. A blast of polar air is about to send temperatures plunging in the heart of America." The polar vortex is back, and this time it means even less business: A mass of whirling cold air will dip southward this weekend, sending the mercury plunging. As the cold air moves south and east, it has the potential to affect as many as 243 million people with wind chills in the single digits in some places and snow.

What these voters said with their votes was “I’m in favor of making it illegal for people with low productivity to get a job. Teenagers, people who were poorly educated by failing public schools, people who have never had a job, and people who are not very intelligent, should all just stay home and do nothing because we want to make sure that no one can afford to hire those people.”

This week's 'shellacking' of the administration suggests all is not well among the people of the Land of the Free. While headlines crow of plunging unemployment rates and record high stock prices, middle-class incomes remain stagnant at best (and sliding in most cases) and job quality continues to tumble. There is, however, a silver lining... as Bloomberg reports, "in a sign of lower income and middle income consumer stress, some prostitutes are dropping prices." Of course, this is terrible news for GDP (now what happens if the price of 'blow' also drops). This confirms our previous note on the deflation of prices in the oldest profession in the world... question is, will Yellen abhor this price drop too?

"Weakness, indecision and unreliability are terrible characteristics in a dangerous world. Strength does not mean bombing everyone. It means having capabilities, choosing one’s spots, and doing what you say you will do." The West might be war-weary, but the jihadis and other combatants in the Middle East are just getting started.

Just for fun, let's look at one chart and ask one question: is this stock continuing its downtrend or is it in the process of reversing?

After a brief hiatus the previous week, speculators have piled back into the most-over-crowded trade in the world - Long The US Dollar. As Goldman Sachs notes, overall USD speculative net long positioning increased $2.0bn to $45.7bn - a new record high.

"What I’m describing here is a sea change in investor attitudes that has profound implications for the rest of the market. What you do with that information is up to you."

Russian President Vladimir Putin believes that a serious confrontation with the West is coming. In a recent speech at the Valdai conference in Sochi, laced with geopolitical and historical references, he stated that “changes in the world order – and what we are seeing today are events on this scale – have usually been accompanied by if not global war and conflict, then by chains of intensive local-level conflicts.” What type of conflict is he referring to?

Yesterday, when we presented what we thought at the time was "The Strangest Number In Today's Jobs Report" namely the near record surge in workers aged 16-24, which amounted to 528K, or the vast majority of job additions in the month of October we may have been a bit premature. As it turns out breaking down the job surge from September to October by gender provides an even more peculiar result then an age distribution. Because as the chart below shows, of the 416K jobs added in the 20 and over category, a meager 10% of these went to men: some 90%, or 370,000, went to women! Men aged 20 and over were the recipients of a paltry 48,000 jobs, or 10% of the total increase.

What if global capitalism is not about to collapse?  What if the sun rises next week, and the great apocolypse called for and predicted does not materialize yet, what then for the dollar?  

Two days ago we quoted an ex-CIA officer who warned that the "Saudis Have Good Reason To Be Concerned" as a result of what appears to be a redirection of ISIS tactics, and attacks, toward the one country which has, at least for public consumption purposes, been - together with the US - at the forefront of the anti-ISIS campaign in the middle east. End result: a crackdown by the Saudis to prevent any future attacks by alleged Jihadists, and as Al-Arabiya reported earlier, overnight authorities in Saudi Arabia arrested 33 people with reported links to the al-Ahsa killings, disrupting plans of another attack by the same cell, Al Arabiya News Channel reported.