Archive - Feb 2015

Dear 1%,

You are receiving this invitation because you live in the most expensive postal routes of Los Angeles...

Following the disgusting images of a Jordanian pilot being burned (allegedly) burned alive by ISIS yesterday, the US coalition against the terrorists appears to be faltering. As The NY Times reports, The United Arab Emirates, a crucial Arab ally in the American-led coalition against the Islamic State, suspended airstrikes against the Sunni extremist group in December, citing fears for its pilots’ safety. The UAE made it clear its pilots will not return to the fight until the Pentagon improve its search-and-rescue efforts, shifting the base of support from Kuwait to Iraq, after foreign minister, Sheikh Abdullah bin Zayed bin Sultan Al Nahyan, "let [Barabara Leaf] have it over this," the new American ambassador, why Central Command, in his country’s view, had not put proper assets in northern Iraq for rescuing downed pilots.

"... we would, under most circumstances, “see” this unanimous direction of all ten markets to the upside to be a harbinger of a bearish move… the harbinger of the end of the current bull market; but… and this is perhaps the very biggest of “buts”…this time may be different… maybe. This time the markets seem to want to levitate skyward and thus far any attempts to “call” the top and positions ourselves in anticipation of a downward price correction have proven futile and badly wrong."

Presented with no comment...

Earlier today, when the Markit PMI and the ISM non-manufacturing data disagreed violently over a key aspect of the economy, namely that according to the first, the all important, forward-looking New Orders had dropped to the lowest since the great financial crisis, while according to the latter, they rebounded modestly in January, we decided to go straight to the source: the unadjusted data which does not incorporate any gratuitous seasonal adjustments (which for the ISM, were just adjusted as part of its annual revision spectacle).  This is what we found.

The economy being talked about in the media just doesn’t exist, no matter how you view the unemployment rate. There is no spending because there is no income(marginally deficient). Instead, what we see is instability where these low levels of activity and true wealth creation persist. There are no “tailwinds” to be found here, only confusion about the relative state of progress. Going from really bad to less bad is not recovery, just another fact of an unstable economy plodding its way toward the next, and eventual, dislocation.

 I was always a little curious how much my fair city was spending on these guys, who basically sit on plastic chairs and stare into space all day.

Marc Faber warned at the weekend that 2015 may be the year that investors will lose confidence in central banks and that investors will “suddenly realise what a scam that central banking is”.

First, from Bloomberg:

• GREEK GOVT WON'T ACCEPT TROIKA REMAINING IN COUNTRY: OFFICIAL

And from Reuters:

• EU'S SCHULZ SAYS GREEK GOV'T HAS NO CHOICE BUT TO KEEP ITS OBLIGATIONS TO EUROPEAN PARTNERS

"Mainly due to the weaker employment component of the ISM nonmanufacturing index, we reduced our forecast for January nonfarm payroll employment growth to 210k, from 250k previously."

“Keep Fear Alive”

While not entirely surprising, the fact that GM Financial has admitted that:

*GM FINANCIAL: SEC PROBING SUB-PRIME LOAN SECURITIZATION

Of course, we should not worry about this... we are sure it is "contained" as GM reports it is "investigating matters internally" - just like it did with the ignition switch year ago?

Cramer...

"Keep your friends close and your enemies closer," appears to be the 'do-nothing-stupid' strategy that Washington continues to play in The Middle East. How else to explain the continuing 'close-ally' relationship with Saudi Arabia given that, as Reuters reports, Zacarias Moussaoui - a former al Qaeda operative imprisoned for life for his role in the Sept. 11, 2001 attacks - has told lawyers for victims of the attacks that members of the Saudi royal family supported the Islamic militant group. Saudi officials were quick to denounce these statements as those of "a deranged criminal whose own lawyers presented evidence that he was mentally incompetent," as he included some "extremely famous" Saudi officials as 'donors' during Osama bin Laden's tenure.

And so the great chess game involving Saudi Arabia, Russia, the United States, Qatar, Syria, ISIS, Ukraine, natural gas and lots and lots of oil, is finally revealed.