Archive - Dec 27, 2013 - Story

Can't go to bed without first spending 10 minutes on and then sleeping next to your smart, or cell, phone? You are not alone. According to a recent Pew study, America has never been more wired, or rather, unwired to some form of constant form of telecommunications. Among the findings: 91% of all American adults have a cell phone, with this number rising if one is male (93%), black non-Hispanic (93%), is between 18-29 (97%), college graduated (95%), lives in a city (92%), and makes over $75,000 (98%). But that's just the tip of the iceberg. As the chart below shows, Americans have never owned more, or had a broader selection of gadgets to chose from, than they do now.

As we noted earlier, political instability is spilling into social unrest:

*TURKISH POLICE SEEK TO BREAK UP PROTEST IN ISTANBUL: NTV TV
*TURKISH POLICE USE TEAR GAS, WATER CANNONS TO END PROTEST

The crowd was chanting "Thief Tayyip Erdogan" in reference to Turkey's graft-probe-implicated PM. And the nation's European cousins are "growing concerned" at events in Turkey, calling for "transparent, impartial justice."

In September 1939, six days after the United Kingdom declared war on Germany, Charlie Chaplin began filming one of his most epic films ever... and the first “talkie” for the silent film star. It was a courageous project - the ‘Great Dictator’ directly poked fun at Adolf Hitler. At the end of the movie, Chaplin looked into the camera and gave a stirring speech about timeless principles– peace, mutual respect, freedom from evil men who aspire to lead nations. This did not win Chaplin any friends in Washington who were keen to maintain official neutrality. And he paid dearly for it; the Great Dictator was the beginning of an entire decade of turbulent trouble between Chaplin and the US government. His rousing speech at the end of the Great Dictator calls for a world free of violence, intimidation, and government control. Unfortunately, we don’t get to live in that world. This our reality. The world is beautiful. Life is beautiful. But the leaders of humankind surely make it all damned hard to appreciate sometimes.

Wondering why TWTR is down today? Wonder no more... The Wall Street Journal has seen fit to publish the full unadulterated story of how Reuben Kressel, 66, of Rego Park bought (and then stunningly sold) 500 shares of Twitter in just a few weeks for a 76% profit. "I sold out completely," Kressel warns, adding that he "didn't want to take any more chances."  Of course, the brokers love it... "in stocks like Twitter, the retail investor is finally starting to come back," Wedbush's director of equity trading gloats, "for the first time in a long time, retail investors are really starting to act differently." Forgive our modest sarcasm and incredulity but when this is an important business news story, believing that we are in anything but a bubble is akin to admitting to be the greater fool.

Less than two weeks after Federal Judge Richard Leon ruled that the NSA's "indiscriminate and arbitrary" invasion of privacy is "likely" unconstitutional, giving a trace of hope that America may rise above its Orwellian Banana republic status, here comes New York City District Judge William Pauley to slam the coffin shut on US privacy and the Fourth amendment, and make a mockery of Edward Snowden's alternative Christmas message. Moments ago the WSJ reported that "a federal judge in New York City has ruled that a massive U.S. phone-tracking program is legal." Bananas for everyone!

While Wall Street's hordes of lawyers are doing their best to find the various loopholes in the Volcker Rule that will allow them to resume unconditional prop trading, they are being kept busy with all the various other forms of regulation that have been thrown at them by regulators and the government in an attempt to make it appear that it is not Wall Street but DC that calls the shots. Some, however, such as Morgan Stanley have decided instead of engaging in costly fight with domestic regulation, to engage in cross border regulatory arbitrage, and focus on other, more prop-trading jurisdiction. Like India. As the Economic Times reports, the Indian brokerage arm of global investment banker Morgan Stanley has sought RBI's approval to start proprietary trading under which it will be able to buy and sell securities on its own account in India.

Having failed miserably in the "control" of capital outflows from the Rupee (via Gold), the India government (following a Reserve Bank Of India advisory) has raided one Bitcoin seller and issued a warning cautioning citizens against acquiring and trading virtual currencies. As VentureBeat reports, the RBI did not outright ban the currencies, but it slammed them as risky and potentially illegal. On Thursday, the "Enforcement Division" raided the premises of Mahim Gupta who provides trading platform through his website - buysellbit.co.in - finding it in clear violation of Foreign Exchange Management Act (FEMA) rules. Whether smuggling gold or utilizing Bitcoin, it seems the government is fighting a losing battle...cue confiscation?

In the course of conducting public opinion surveys and demographic analyses, the Pew Research Center found a wide range of data milestones, breakthroughs, peaks and valleys in 2013, including record support for same-sex marriage and the legalization of marijuana; record levels of distrust of the federal government; record numbers of mothers who were the primary breadwinners for their families; and record numbers of Millennials living with their parents. Here is a look at the highs and lows Americans reached this year, according to Pew's data.

For all the endless talk of a recovery during the past five years, there is a very tangible reason why for most people this is nothing but spin, propaganda and lies: when one strips away the retroactively adjusted GDP, the seasonally adjusted (and politically mandated) counting of temp jobs, the constantly upward revised jobless claims, the Fed's $4+ trillion balance sheet of course, and even the declining (yes, declining) real disposable income per capita, what one is left with is the lowest loan creation out of a recession (or depression) in history, and is at indexed levels last seen during the Lehman collapse over five years ago!

One of these is not like the others. Well, two...

Muammer Akkas, the prosecutor who complained his government corruotion investigation efforts were being blocked by the government - has been removed from the investigation. Prime Minister Erdogan's efforts to rein in "the final attack" on "new Turkey" are failing even after his cabinet reshuffle but this morning's rhetoric has sent asset prices tumbling once more:

*'THE NEW TURKEY IS UNDER SERIOUS ATTACK': ERDOGAN
*IN NEW TURKEY, SOVEREIGNTY CAN'T LIE WITH JUDICIARY: ERDOGAN
*LAWMAKERS SHOULD AVOID REMARKS HURTING ERDOGAN: ARINC
*ERDOGAN SAYS HE'S ISSUING LEGAL COMPLAINT AGAINST MEDIA LEAKS

As one analyst noted, "Erdogan continues to present the developments as a conspiracy despite having to shuffle his cabinet, which indicates that there may be some serious findings behind the probe."

As the 10Y broke solidly through 3.00% so precious metals began to move and after testing $20 in Silver overnight a few times, both gold and silver have just run stops through key levels and are jumping like Twitter (or Bitcoin) for a few minutes. WTI Crude has also just broke $100.

The only leverage available to all is extreme frugality in service of accumulating productive capital. There are only three ways to better oneself financially: marry someone with money, inherit money or accumulate capital/savings and invest it in productive assets. (We'll leave out lobbying the Federal government for a fat contract, faking disability, selling derivatives designed to default and other criminal activities.) Debt is serfdom, capital in all its forms is freedom.

While a few media outlets had premature releases yesterday, Bloomberg data just confirmed that for the second time this year, 10Y US Treasury yields have crossed 3% (it was 3.005% in Sept 2013) breaking to the highest since July 2011 (right before the yield collapse after the US debt-ceiling downgrade debacle). We are sure the media will proclaim this as 'proof' that the recovery is different this time, except the term structure continues to flatten (suggesting less faith in the future) and to spice things up 30Y mortgage rates have surged to 4.63% - almost the highest since May 2011 - but again, apparently, this won't affect the housing recovery either (even though mortgage apps are down two-thirds from their highs).

On Thursday, Japan prime minister Shinzo Abe stunned the world by defying everyone - including the EU and the US whose embassy sent a tersely worded letter in which is said that it is "disappointed that Japan's leadership has taken an action that will exacerbate tensions with Japan's neighbors" - when he visited the Yasukuni Shrine where Japanese leaders convicted as war criminals by an Allied tribunal after World War Two are honored along with those who died in battle, for the first time in 7 years. The response was fast and furious. Below, courtesy of Reuters, is a snapshot of the morning after in the Chinese media. The reviews of Abe's action were not glowing.