Archive - Nov 22, 2015

There’s an old adage among veteran stock traders that goes something like his, “If I told you the news before it were made public – it’s still a 50/50 bet you would guess the market’s reaction correctly.” That was when the markets had some resemblance of normalcy. Today, normalcy has been replaced with sheer lunacy as to the speculation and interpretations for where these markets go from here.

Following the attacks in Paris, gun sales are booming across the United States, not only from those who were already armed, but first time gun owners as well. "We were busy right out of the box," Russell Durling, owner of Last Resort Guns in Madison County, Alabama, told local station WAFF. "The truth of it is, when America is scared, America buys guns.”

Those who don’t understand history are doomed to repeat it, those that do understand are doomed to watch in horror while everyone else repeats it.

The latest poll following the attacks in Paris, by Fox News, shows Donald Trump moving ahead of Democrat-front-runner Hillary Clinton (in a head-to-head match up if the election were held today), but it is the turmoiling below the surface of the GOP nominations that is garnering most headlines. After a week or two of hope for GOP leadership, as Ben Carson appeared to catch up to Trump, the retired neurosurgon's lies and weakness on foreign policy ("he clearly has no idea what he's talking about," as one Iowa GOP insider noted), have sent his poll numbers reeling... and Cruz surging.

The hardest questions we are trying to reconcile here are how is that possible to see all these signs of weakness under the surface – including weak commodities, tightening credit, retrenching consumer spending – being balanced by very strong equity markets and upbeat employment picture. One of these sides has to be wrong in its assessment of the current macro environment, and seeing both of them extending well into the future appears unlikely to us.

France doesn't know who he is yet, so if you think you might have seen this guy at any point in the past several months (you know, like if you happen to have been rafting in the Mediterranean lately or maybe if you were recently hanging out with friends in Molenbeek and noticed someone making a suicide belt in the kitchen), you're encouraged to contact French intelligence immediately...

"The Islamic State has grown that strong due to the irresponsible policy of the United States," exclaimed Russian PM Dmitry Medvedev this morning, demanding that "really consolidated efforts" are needed to counter ISIS' terrorist threats. This comes just hours after President Obama toughened his rhetoric, vowing that the global coalition formed to destroy ISIS "will not relent," adding, rather oddly, that the group responsible for the Paris terror attacks is "a bunch of killers with good social media."

All great monetary fiascos are forged upon a foundation of misperceptions and flawed premises. There’s always an underlying disturbance in money and credit masked by supposed new understandings, technologies, capabilities and superior financial apparatus. The notion back in 2006 and 2007 that the world was at the brink of a major crisis was considered absolute wackoism. Incredibly – and well worth contemplating these days - virtually no one saw the deep structural impairment associated with the protracted Bubble in “Wall Street Finance.” An even more momentous monetary fiasco has been perpetrated since the 2008 crisis, constructed upon a foundation of even more outlandish misperceptions and flawed premises.

"The EU is increasingly about war," exclaimed the outspoken UKIP leader in 2013 in front of Francois Hollande and his European parliamentarian peers... "taking on fundamentalist, radical Islam in battle is something that will launch ourselves... on a decade of unending, unwinnable misery."

With enough monetary deception anything’s possible. But, nonetheless, gravity still exists.

“Brazil is confronting a toxic combination of a primary budget deficit, high public debt (relative to EM countries), very high real interest rates (the Selic stands at 14.25%), sluggish trend growth, a negative commodity price shock and potential contingent liabilities for the sovereign, which together spell trouble for public debt dynamics.”