Archive - Sep 23, 2015

As Bloomberg reports, "President Vladimir Putin, determined to strengthen Russia’s only military outpost in the Middle East, is preparing to launch unilateral airstrikes against Islamic State from inside Syria if the U.S. rejects his proposal to join forces, two people familiar with the matter said."

As far as we can tell, not only has democracy departed the Western world, but also compassion, empathy for others, morality, integrity, respect for truth, justice, faithfulness, and self-respect. Western civilization has become a hollow shell. There is nothing left but greed and coercion and the threat of coercion.In the Western World the aristocracy of wealth is being re-established.

With the new car bubble peaking, and the world's automakers having ramped up production across the globe after seeing Fed-driven signals that all is well and all is going to get better, the slowdown in China already has many hitting the panic button (with production plunging, capacity utilization tumbling, and workweeks tumbling). With this week's 'exogenous' diesel-defect 'event', the inventory-problem that US automakers are facing is nothing compared to the potentially catacylysmic wave of deflationary pricing (and deflationary lack of demand for raw materials) that VW faces with its record inventory.

AsiaPac stocks are broadly lower at the open, folowing US' lead as after being closed for 3 days, Japanese stocks open and catch down to global weakness with Nikkei 225 at 2-week lows. It appears it is time to "get back to work Mr.Kuroda," as stocks are below Black Monday's lows. Following last night's dismal data, China credit risk rose once again to new 2 year highs. Once again, industrial metals are under pressure with iron ore, copper, and aluminum all lower (following "peak steel" comments). After 3 days of weakening (and Xi's comments that China won't weaken), PBOC weakend the Yuan fix again, pushing the offshore-onshore spread to 2-week wides (over 500 pips apart).

The best position for a tyrant or tyrants to be in, at least while consolidating power, is tyranny by proxy. That is to say, the most dangerous tyrants are those the people do not recognize: the tyrants who hide behind scarecrows and puppets and faceless organizations. The worst position for the common citizen to be in is a false sense of security and understanding, operating on the assumption that tyrants do not exist or that potential tyrants are really just greedy fools acting independently from one another. Being the clever tyrants that they are, the members of the central banking cult hope you are too stupid or too biased to grasp the concept of conspiracy. If you cannot identify the agenda, you can do nothing to interfere with the agenda.

Anyone who looks at this index chart and thinks we are at the cusp of anything resembling a bull market is clinically insane and should be locked up for the protection of themselves and society at large.

A federal shutdown due to a funding lapse looks no less likely than it did two weeks ago, and Goldman Sachs believes the probability is nearly 50%. The Senate is expected to begin voting later this week on a funding extension, but the House looks unlikely to act until shortly before the September 30 deadline. The following attempts to answer the main questions surrounding the shutdown, debt limit deadlines, and ramifications...

If you have ever felt that in addition to being a quasi cargo cult (which in the case of central planners borders on religious dogma) rather than an actual science, not to mention far more destructive, economics was purposefully obtuse and opaque, meant to sound sophisticated and generally "baffle with bullshit" when in reality it was hollow, often contradictory and sometimes meaningless by design, then the following confession by David Hakes, professor of economics at the University of Northern Iowa is for you. In it the economist explains how he was turned down when he wrote articles that could easily be understood by a broad audience. So he made them more difficult to understand and got published immediately.

"The American people have no reason to believe that they’ve heard the full story and every reason to believe that Washington assumes they are too stupid or preoccupied to care about cyber security."

Japan is a useful analog in so many ways, not just about what the US and global economy can (has already?) become if allowed to follow into this same circle of Hell. It pretty much proves the incapacity of orthodoxists toward anything outside of their so very limited understanding and appreciation.

For those who have had the nagging feeling that something in the market has changed dramatically in the past few months, you are absolutely correct. Here is the full explanation.

It's all clear now...

There is blood on the streets wherever you look in Brazil today, but probably of most interest to the hundreds of US asset managers (the ones managing your mutual funds) is what happens to Petrobras as it remains so widely held. As we noted below, bond prices are collapsing and default risk is soaring, and with the nation's currency collapsing amid the lower-for-longer oil prices, $90 billion of dollar-denominated debt could soon potentially be too burdensome for the company to repay.

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