Archive - Aug 2014

President Obama's cunning plan to 'quasi-ouster' Shiite PM Maliki, in the vague hopes that a more egalitarian all-inclusive Iraqi government could be formed that will magically lead the 'people' of the Sykes-Picot-defined nation to coalesce in sovereignty against The Islamic State has, somewhat understating it and perhaps unsurprisingly, hit a roadblock. As Bloomberg reports, Obama's effort to have Arabs take the lead in combating Islamic State suffered a setback when Sunni lawmakers quit talks on forming a new Iraqi government after Shiite gunmen killed scores of worshipers at a Sunni mosque. The killings in Diyala province derailed attempts to form an Iraqi government with bigger roles for Sunni Arabs and Kurds that would strengthen the fight against the terrorist group. It appears the common knowledge of who is friend and who is foe remains very much in the air. We suspect, in some dark corner of Washington, Hillary is grinning from ear to ear.

There is an ongoing belief that the current financial market trends will continue to head only higher. This is a dangerous concept that is only seen near peaks of cyclical bull market cycles.The problem for most investors is that by they time they recognize the change in the underlying dynamics, it will be too late to be proactive. This is where the real damage occurs as emotionally driven, reactive, behaviors dominate logical investment processes.

Under the imposition of StealthFlation, the Velocity of Money lies dormant while increasing Inflationary risks build below the surface.

Overview of the technical outlook for the major currencies, bonds, Treasuries, stocks, CRB and oil.

Moments ago Iceland's meteorological service reported that the island's Bardarbunga volcano, having been closely observed by volcano-watchers for the past month due to heightened seismic activity, has begun to erupt which means in addition to Russia's trade war, Europe now has another volcanic eruption to blame its latest GDP contraction on. As the local Met office summarizes, a "small" eruption of lava has occurred to the northeast of the volcano leading the Icelandic National Broadcasting Service to declare that "all air traffic is now prohibited in a large radius around the volcano."

USA is #1 once again... that'll teach the cynics. Oh wait...

So much ado for nothing. Following nearly 2 weeks of artificial tension and fake selloffs that brought the S&P within a fraction of 2000 only for Yellen to "not be Dovish" enough and spoil the party, with the first red Jackson Hole close in 5 years, the Russian "humnatiarian" convoy which the objective media led everyone to believe was a Trojan horse just itching to launch a war in Ukraine, has left Ukraine after delivering its cargo.

If you’re a girl and you’re old and you’re grey and you’re the size of a hobbit, who’s going to get angry at you? If your predecessor had all the qualities anyone could look for in a garden gnome, and his predecessor was known mainly as a forward drooling incoherent oracle, how bad could it get? Think they select Fed heads them on purpose for how well they would fit into the Shire? Janet Yellen has a serious problem: the story no longer fits.

Americans must realize an important fact: There is no power over us but that which we give away. The original intent of our republic is that the people ARE the government — not a select few elitists handpicked by corporate bankers. Politicians are supposed to be our employees, not a ruling class that sits above the populace. The current growing conflict between the citizenry and the government is igniting exactly because our government does not represent the common man anymore. The government is not “by the people, for the people.” It is a separate entity, representing corrupt and hostile parties. It cannot be changed from within.

The stigma surrounding Ebola poses a serious obstacle to efforts to calibrate the outbreak in Liberia, Sierra Leone, Guinea and Nigeria. As Reuters reports, the scale of the world's worst Ebola outbreak has been concealed by families hiding infected loved ones in their homes and the existence of "shadow zones" that medics cannot enter, according to the World Health Organization (WHO). "As Ebola has no cure, some believe infected loved ones will be more comfortable dying at home," the WHO statement said, concluding rather ominously, "frankly, no one knows when this outbreak of Ebola will end."

Libertarians tend to agree with each other on most things. We all favor less government regulation, lower taxes, less involvement in international conflicts, and more personal freedom. There are a few areas, however, in which the movement remains sharply divided. One of these areas involves the nature of money. The two schools of thought are essentially the “gold standard” crowd versus the “competing currencies” crowd.

With no Instagram #selfie image or YouTube clip as proof (yet), The White House issued a statement proclaiming that today, in violation of its previous commitments and international law, Russian military vehicles painted to look like civilian trucks forced their way into Ukraine... and that Russia has no right to send vehicles, persons, or cargo of any kind into Ukraine, whether under the guise of humanitarian convoys or any other pretext, without the express permission of the government of Ukraine. Furthermore, the actions "only amplifies international concerns about Russia’s true intentions...for which it will bear additional consequences." If that sternly-worded email was not enough, President Obam took time away from the course on Martha's Vineyard to chat with Angela Merkel and then issued a joint statement somewhat sheepishly noting that this is "further provocation" and represents a "dangerous escalation."

Nyuk, nyuk, nyuk...

Crude Oil and gasoline prices have been sliding notably recently, but, as Carl Larry, president of Oil Outlooks & Opinions LLC in Houston notes, "the focus is definitely on the U.S. and on concern about demand as we head into the maintenance season." While Brent remains more concerned about Russia and Ukraine, WTI is "focused on supply, demand fundamentals," which with production surging, leaves "everybody wondering if demand will stay steady. People are reducing risk exposure now." What we wonder is - does that explain why the US Oil Rig Count dropped this week by its most since 2012...?

It is clearly not in the interests of the long-standing members of the EU to escalate a 'sanctions and financial conflict' with Russia. This is why politicians are walking on eggshells, paying lip-service to America and the scared Eastern fringe members of NATO while hoping this goes no further. So long as this is the case it is clear that NATO members are powerless to stop Russia from wresting control of all or parts of Ukraine from the government in Kiev. Putin knows this; unfortunately it is not clear to us that the American government does. All in all it seems likely that after a period of slow-burn as Putin dictates the pace of developments, the political situation in Ukraine will deteriorate with some unhelpful nudges from Russia.