Archive - Sep 2014

Perhaps unsurprisingly, numerous reports (from both sides) state that the long-awaited cease-fire in Ukraine is over. As RIA reports, the pro-Russian separatists noted Ukrainian special forces continued shelling towns and militia positions in the Donetsk region late Friday despite the ceasefire established hours before. Several reporters in the strategic 'land-bridge' city of Mariupol claims to have seen flashes from explosions and heard powerful detonations, where tanks are moving rapidly towards the eastern checkpoint. France24 also reports the Ukraine military is now accusing rebels of violating the cease-fire. AP further confirms sustained explosions outside the city of Mariupol with journalists reporting "people dying of bullet wounds." So it looks like more sanctions will be coming on Monday (European blowback any minute), no Mistral delivery (French losses), and a NATO rapid response team engage (more costs for Europe), leaving Putin with some decisions to make.

Just 2 months ago, the illustrious muppet catchers at Goldman Sachs stated that both stocks were 30-45% overvalued but lifted its year-end target in what we subjectively described as 'moronic drivel'. Then, 2 short weeks after that 'upgrade', the same thought-provoking sell-side strategist downgraded stocks on the basis that a 'sell-off in bonds could lead to short-term weakness in stocks'. Now, with the S&P 500 closing at new record highs on the worst employment data of the year, Goldman is at it again - upgrading equities to overweight for the next 3 months, rolling index targets forward, and piling investors into high-yield credit. Welcome to muppetville...

Tears of joy (over getting his way on a cease-fire enabling him to push out his pressure until Winter comes) or tears of sorrow (over NATO's rhetoric)? You decide...

“I’m beginning a new effort to fix as much of our immigration system as I can on my own, without Congress....  Deputies will identify actions my administration can take on our own, within my existing legal authorities, to do what Congress refuses to do and fix as much of our immigration system as we can. I expect their recommendations before the end of summer and I intend to adopt those recommendations without further delay." - White House, June 30

"Because of the Republicans’ extreme politicization of this issue, the president believes it would be harmful to the policy itself and to the long-term prospects for comprehensive immigration reform to announce administrative action before the elections" - White House, September 6

So far, and contrary to most expectations, the latest ceasefire between Ukraine and the eastern separatists, which was announced early yesterday, has managed to hold up. "Contrary" because while it is the talking point of the west that it is Putin's desire to perpetuate the proxy civil war, in reality it was Ukraine's own troops who voiced against a ceasefire as we reported yesterday:  "A ceasefire would be a disaster, we would lose everything. By fighting we can resist the invasion and send them back. With a ceasefire they will consolidate and carry on after a while," said Ukrainian soldier Taras. Ironically, their rebel opponents share the same but opposite opinion: "The ceasefire is looking good for now but we know they (the Ukrainian side) are only using it to bring in more forces here and ammunition and then to hit us with renewed strength," said one rebel commander in Donetsk known by his nickname Montana. In other words, both sides believe their adversary is merely using the break in the fighting to regroup and reinforce. But for all the rhetoric and posturing, one person summarized it best: "This is no ceasefire but a theatre," said Donetsk resident Ksenia. "This war will go on for five to nine years. Slavs are killing Slavs, there can be nothing worse than that."

A permanently high plateau of stock prices is a marvelous innovation: you can practically set your watch to the steady tick of new all-time highs, and all you need to plan your retirement or cash-out of your stock options is a ruler and a pencil--just extend the price line as far forward as you want, and calculate your wealth. The only downside of this permanently high plateau of stock prices is that it eliminates the need for the financial punditry and the workforce of money managers. With bearish influences and volatility both eradicated, there is nothing left to talk about except the upward slope of the permanent plateau.

A new definition for dry rot...

Given the 2008 Russian invasion of Georgia and escalating conflict between Russia and the Ukraine, JPMorgan asks, where is Russia on the road to recreating something like the Soviet Union as an economic, political and financial counterweight to the West?

The euro has fallen an unprecedented eight weeks in a row.  The dollar set new five year highs against the yen before the weekend.  Here is an overview of the near-term technical outlook.  

What else is there left to say: "Customer Base: Our customer base includes professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers, governments and central banks."

Decision making it has a lot of implications for your success as an investor, as a business person, and even in your personal relationships. It is a skill which needs to be constantly developed, honed and refined.

When Lee Goldsmith drives by one of the many fake cellphone towers being discovered throughout the U.S., his $3,500 CryptoPhone 500 will immediately display the warning message in the thumbnail image to the left. When you drive by the same fake towers, known as “interceptors,” your run of the mill iPhone or Samsung Galaxy won’t alert you to any potential security breach. And that’s exactly how those people who installed these interceptors, whoever they are, like it. What Lee Goldsmith and other users of the CryptoPhone 500 have discovered while driving across part of America will shock and disturb you.

Remember, it's for Main Street...

Judging by these photos taken moments ago above the Islamic State (i.e. ISIS) capital of Raqqa, a triggerhappy remote-control operator in Whiteman Air Force Base is about to get jiggy with some jihadists located nearly 7000 miles away.

The Bank Of Japan (BOJ) says it is looking for consumer spending to stay on a recovery path, focusing on the relatively small increase in nominal wages rather than the steep slide in real wages. Goldman believes the BOJ’s view is founded on money illusion; and crucially, expect the positive effects to be clearly outweighed by the negative impact of lower real wages, and on a net basis see consumption falling. Simply put, once people wake up to the illusion of money, its impact will also fade.