Archive - Sep 2014

In modern times, war is never what it seems. Mainstream historians preach endlessly about grand conflicts over territory, resources, political impasse, and revenge, but the cold hard reality is that all of these “motivations” are actually secondary, if they are relevant at all. If you really want to understand the past, or the intricacies of war, you will be lost unless you accept that most conflicts are designed; they are not random or natural. They are not the product of too much national sovereignty or individual liberty. No; traditional war is a tool for the organized ruling class. It always has been and always will be.

What is most disturbing is that this photo is just as likely to be real as fake.

The Fed’s Dot Plot may look like a precise set of forecasts, with a series of purposeful markings meant to portray certainty and conviction. The math, however, as ConvergEx's Nick Colas notes, says something else entirely. Based on actual math, it isn’t until 2016 that an increase to Fed Funds becomes a statistical certainty, with a 2.7% mean estimate and a range of 0.75 – 4.7% Fed Funds at a 0.98 standard deviation.

Cable (GBPUSD) is surging as the first results from the Scottish Referendum hit and a resounding "No" to independence appears confirmed. Almost back to pre-Scottish-Vote-fears level (1.66), cable is up 250 pips in the last 24 hours (its biggest move in over a year). GBP is also strengthening notably against EUR (2-year highs), CHF (2 year highs) and of course the JPY (6 year highs) as the Japanese government admits defeat and downgrades its economic assessment for the first time in 5 months (hence sell JPY as they 'must' do more money printing (despite Japanese businesses all pushing for a stronger JPY). FX markets are extremely volatile this evening and implicitly, equity futures are clanging around cluelessly. The USD Index is flat (gaving retraced all FOMC gains). Gold is down on the Japan news (below $1220).

US Treasuries are breaking out, according to BofAML's Macneil Curry, which is very supportive of the US dollar (especially against the JPY and EM FX). The only caveat, he warns, keep a close eye on fixed income volatility...

Maybe what we want and what we need has been confused. Maybe the thin veneer of ebullient hollow markets has been confused for the real activity of real companies. Maybe the theatre of a Wise Man with an Answer has been confused for intellectually honest leadership. Maybe theoretical certainty has been confused for practical humility. The problem with sparking renewed economic growth in the West is that domestic politics in the West do not depend on economic growth. What we have in the US today, and even more so in Europe (ex-Germany), are not the politics of growth but rather the politics of identity.

The present global financial ‘crisis’ began in 2007-8. It is not nearly over. And that simple fact is a problem. Not because of the life-choking misery it inflicts on the lives of millions who had no part in its creation, but because the chances of another crisis beginning before this one ends, is increasing. What ‘tools’ - those famous tools the central bankers are always telling us they have – will our dear leaders use to tackle a new crisis when all those tools are already being used to little or no positive effect on this one?

Moments ago, the Senate passed a $1 trillion government-funding bill that according to the Hill, also gave the president new authority to battle the Islamic State in Iraq and Syria.  The legislation, which has now been approved by both chambers of Congress, now heads to the White House for Obama?s signature.  While the stopgap bill will prevent a government shutdown on Oct. 1, the vote will be remembered for a controversial provision that allows Obama to start a new training program for rebel fighters in Syria.  In other words, not only will Obama arm some folks, he will also drone some other folks, the same folks he was arming a year ago.

First, led by a "British-speaking" murderer, ISIS released beheading videos of US journalists. Then ISIS releases video of a British journalist hostage 'news' report to expose "the truth," and now, Australian police have raided hundreds of homes foiling a direct ISIS provocation to publicly behead a random citizen in Sydney. As Reuters reports, more than 800 police were involved in the pre-dawn security operation in Sydney and Brisbane, which was described as the largest in Australian history. A 22-year-old Sydney man was arrest, after links were found to top ISIS recruiter Mohammad Baryalei that PM Abbot stated were "clearly designed to shock and horrify, perhaps terrify" the community.

With a market capitalization of $168 billion after its pricing at $68/share, the upper end of the range which makes this the largest US IPO in history and would be the largest in the world if the greenshoe is exercised, Alibaba, while not a member of the S&P 500 (at least not immediately), will have a market cap that is larger than the following index members:

YouGov #IndyRef prediction: YES 46%, NO 54% - http://t.co/huG6uJFiJG

— YouGov (@YouGov) September 18, 2014

The deal is done...

*ALIBABA SAID TO PRICE IPO AT $68: CNBC CITES DOW JONES

At that price, BABA is valued at ~$170 billion - higher than 95% of the S&P 500 and the biggest US IPO ever at $21.8 billion (bigger than Visa's $19.7bn debut in 2008).  So if you want to buy some BABA shares, here's what happens next...

...when the cops have to Call 911.

Unlike Steve Jobs, who almost literally passed away engrossed by his lifetime legacy, his work, that "other" billionaire, Oracle's Larry Ellison, 70 years young, has decided to step aside and focus on the more enjoyable things in life such as buying Hawaiian islands.