Archive - Jul 2014

Just as the Federal Reserve cannot directly force you to stick the needle of monetary heroin (debt) into your arm, it also can't force employers to pay employees more. The ultimate hubris of the Keynesian Cargo Cult (which includes the global economy's central banks) is the naive notion that they can manipulate an entire system with a few levers such that the desired outcome--and only the desired outcome--is the output. The idea that you can change one input in an interconnected system of systems and only affect the one output you want is not just naive and simplistic: it requires a level of blindness and incompetence that is off the charts.

Judging by the total lack of reaction across any markets, traders are just as confused by the headlines blurting out of Hamas leader Mashaal:

• *SENIOR HAMAS OFFICIAL SAYS TRUCE TO BE ANNOUNCED SOON (ok great)
• *MASHAAL SAYS 'WE ARE FOR A TRUCE BUT WE ARE PATIENT' (wait... you just said)
• *MASHAAL SAYS NOBODY CAN DISARM PALESTINIAN RESISTANCE (hhmm)
• *MASHAAL SAYS HAMAS SEES 'NO REAL BREAKTHROUGH' IN TRUCE SEARCH (wait what?)

So there may be a truce, there may not be... Mashall adds "we are ready to accept a humanitarian truce" but any truce "must" mean a lifting of the embargo on Gaza; oh and "nobody can disarm the Palestinian resistance... does not sound too hopeful.

It had been almost a month without a GM recall announcement of some sort. So, as many knew was long overdue three weeks into the second half, GM just did what it truly excels in (aside from being bailed out by taxpayers at a massive loss): admit that it had skimped on the quality control and safety check of  another 717,950 cars, all of which were new models bult 2010 and later including Camaro, Equinox, Caprice, Regal, Malibu and so on. In other words, all cars built after GM emerged from bankruptcy. This bring the total number of recalls year to date to a ludicrous 29.2 million around the globe, or well over three time the total number of cars sold in the past three years.

With almost metronomic frequency, and perhaps related to Putin's emergency meeting of the State Duma, The Wall Street Journal is reporting that the Obama administration is prepared to expand a new set of economic sanctions against Russia if the country doesn't take steps to end Ukraine's conflict with pro-Russia separatist fighters. No details were exposed by the senior administration official, but as WSJ notes, current sanctions don't prevent U.S. entities from doing business with the Russian firms or freeze their assets. We await the new boomerang.

Despite Judge Griesa's demands that the holdouts and the Argentinian government hold "continuous" mediation until the debt conflict is resolved "or fear the worst," this morning's headlines are somewhat surreal:

*NEITHER SIDE IN ARGENTINE DEBT CONFLICT HAS ARRIVED TO MEETING

Argentina decided not to send the economy minister (just a 'delegation') as BTG analysts warn that "all the music from the Argentine government indicates default," and judging by the tumble in Argentina's black-market Peso (Dolar Blue) the last few days, that risk is starting to rise.

The Untold Story In the NSA Spying Scandal: Blackmail

What does Janet Yellen know about Biotech stocks (or anything really)? Remember, "don't fight the Fed" ... unless they say 'Sell'.

As the proof piles up, and retired/suspended traders increase, Bloomberg reports that talks to reach the first settlement in the FX-rigging probe are accelerating, with Britain’s markets regulator preparing to reach a deal with a group of banks this year, people with knowledge of the talks said.

*FCA SAID TO BE SEEKING FAST-TRACK SETTLEMENT WITH NARROW SCOPE
*FCA TALKS SAID TO INCLUDE BARCLAYS, CITIGROUP, JPMORGAN, UBS, RBS, AND HSBC

The question remains, will guilt be admitted... or is the pending fine just another cost of doing business in the trillion dollar market manipulation miasma in which we find ourselves.

History tells us that large governments almost invariably lead to waste, corruption, and overextension of power. It’s the large governments that rattle the sabers and constantly threaten warfare. It’s large governments that maintain police states, that spy on their citizens, and commandeer nearly every personal choice imaginable with regulatory agencies that tell us how to educate our children and what we can/cannot put in our own bodies. As Kohr theorized, bigness often leads to tyranny.

Today's dislocated markets are brought to by the number 4,398,201,000,000 and the word "Yellen"...

Yes, Israel is beautiful. Yes, Israeli hospitality is well-known. But now seems like an odd time to suggest a visit?

This is what happens when a priced to perfection global economy (and well beyond perfection based on the S&P 500) runs into the utterly and completely unpredictable and unforseeable "harsh winter weather."

In a somewhat disconcerting move, Russian President Vladimir Putin has recalled The State Duma from a planned vacation to participate in an unscheduled meeting because of the situation in eastern Ukraine. As Ukrinform reports, sources confirm "Something is being planned, because many deputies come, probably for a quorum." Rumors are spreading that Putin is set to issue Kiev an ultimatum over recognizing separatists or face military intervention.

The reality of what happened in Cyprus is a far different matter. And the reason that this reality has not been featured as headline news is because doing so would reveal the following:

There is no better way to describe what the recently departed CFTC commissioner Scott O'Malia just did when he bailed from the commodity watchdog to become the new head of the International Swaps and Derivatives Association, aka ISDA, the biggest banking group that has constantly opposed every intervention and attempt to regulate the swaps market by the CFTC since the Lehman crisis, than an epic farce.