Archive - Mar 2014 - Story

The profane alliance between big banks, big corporations, and big government has created the Big Brother surveillance society we are living under today. And 95% of the populace is either willfully ignorant or perfectly happy with a boot stomping on their face forever. We have willingly become hopelessly enslaved while believing we are free. A population unable or unwilling to think critically doesn’t comprehend the extreme danger to our civil liberties from the unwarranted intrusion into our private lives by a surveillance police state bent on bribing, coercing and silencing dissent, truth and First Amendment rights.

In what Democrats must be hoping is not a bellwether for the mid-term elections, Republican David Jolly won a closely watched special election in a battleground district in Florida yesterday. As WaPo reports, Democrats and Republicans spent millions of dollars with Jolly favoring repealing and replacing Obamacare, which was a central focus of the campaign, while his Democratic opponent did not. The race was close (Jolly won by 3,400 votes of the 183,000 cast), but as WaPo notes, the Florida result is likely to raise Democrat concerns (especially considering the Democrat's money advantage in the race).

Three weeks ago, John Kerry came, saw, and launched a blitz-diplomatic campaign which promptly resulted in, well, Russia annexing Crimea. Now it is the turn of that other foreign policy titan, neo-con John McCain, to complete Kerry's job and finally launch the GDP-boosting World War III. He may have the chance to do that as soon as Thursday, when he, along with other senators, is slated to travel to Ukraine to "show support for the government there." Or, said otherwise, to show support for the government that is in power thanks to an illegitimate and deadly coup that took place just over two weeks ago, despite the formal signing of a memorandum, endorsed by all Western powers, that stipulated a peaceful transition as well as presidential elections in the coming months. When presented like that, one almost thinks back to the roaring success that was the US endorsement of the Egyptian Muslim Brotherhood regime (where the US too had zero involvement, repeat zero involvement) that also took over following a violent coup. As well as the largely predictable countercoup that overthrew said regime.

The Fed and the other major central banks have been planting time bombs all over the global financial system for years, but especially since their post-crisis money printing spree incepted in the fall of 2008.  Now comes a new leader to the Eccles Building who is not only bubble-blind like her two predecessors, but is also apparently bubble-mute. Janet Yellen is pleased to speak of financial bubbles as a “misalignment of asset prices,” and professes not to espy any on the horizon. Actually, the Fed’s bubble blindness stems from even worse than servility. The problem is an irredeemably flawed monetary doctrine that tracks, targets and aims to goose Keynesian GDP flows using the crude tools of central banking. Not surprisingly, therefore, our monetary central planners are always, well, surprised, when financial fire storms break-out. Even now, after more than a half-dozen collapses since the Greenspan era of Bubble Finance incepted in 1987, they don’t recognize that it is they who are carrying what amounts to monetary gas cans.

The last few days have seen credit markets weaken drastically, Treasuries rallying, precious metals bid, and copper prices collapsing... but amid all of that stocks are "staying the course." Perhaps the following 3 charts of the last few days will explain where that magical bid is coming from...

It would appear record inventories of Iron ore and plunging prices due to China's shadow-banking unwind have started to weigh on the all-too-important-when-it-is-going-up-but-let's-blame-supply-when-dropping Baltic Dry Index. With the worst start to a year in over a decade, the recent recovery in prices provided faint hope that the worst of the global trade collapse was over... however, today's 8% plunge - on par with the biggest drops in the last 6 years - suggests things are far from self-sustaining. Still think we are insulated from the arcane China shadow-banking system, which suddenly everyone is an expert of suddenly? Think again.

For the 2nd day in a row, US Treasuries and precious metals were well bid as it seems safe-havens were in strong demand. EUR strength (repatriation flows after risk-aversion in Europe from Ukraine - EURUSD closed at highest since Oct 11) drove the USD Index lower (-0.15% on the week) and while gold and silver benefitted from that modest weakness they are now up 2% on the week (with gold above $1365 and at 6-month highs). Oil slipped (on SPR release talk) and copper lifted modestly (as Yuan strengthen very mildly). Credit markets have lost all gains from Putin. Once again the magic elixir of the US day-session open spiked AUDJPY and supported stocks up to unchanged from overnight weakness but once Europe close (well in DST terms) US equities drifted sideways to lower leaving the Dow and S&P red into the last hour.  Another late-day scramble to sell VIX managed to get the S&P just green!

Yes, rates can be raised too. Just out from the Reserve Bank of New Zealand which just hiked rates by 25bps to 2.75%, as was largely expected.

Wall Street bonuses (on average) in 2013 rose 15% to the highest since 2007. As OSC Tom DiNapoli notes, "Securities industry employees took home significantly higher bonuses on average... although profits were lower than the prior year." In fact, as we noted earlier, profits at the banks fell 30%. Average compensation for securities industry professionals in New York City ($360,700) were 5.2 times greater than the rest of the private sector ($69,200). Thank You Ben...

Despite the relentless protests of Kiev, and of course the G7 group of world's most indebted nations, in the past two weeks Vladimir Putin once again succeeded in outplaying the west and annexed the Crimea peninsula without firing a single shot (granted there is still potential for material situational deterioration, one which would involve military participation by NATO whose outcome is not exactly clear). The market has "priced in" as much, with prevailing consensus now dictating that Russia will preserve its foothold in the Crimea however without additional attempts for annexation: certainly Poland is hoping and praying as much. However, as the following photos taken on the Russian side of East Ukraine, next to Belgorod, the Russian airborne troops ("VDV") are now piling up, only not in Crimea, which needs no further Russian military presence, but ostensibly to prepare for the next part of the annexation: that of Russian-speaking east Ukraine.

Does anything about 2014 remind you of 2008? The long lists of visible stress in the global financial system and the almost laughably hollow assurances that there are no bubbles, everything is under control, etc. etc. etc.  certainly remind me of the late-2007-early 2008 period when the subprime mortgage meltdown was already visible and officialdom from Federal Reserve chairman Alan Greenspan on down were mounting the bully pulpit at every opportunity to declare that there was no bubble in housing and the system was easily able to handle little things like defaulting mortgages. The party, once again, is clearly ending and raises the question: "If asset bubbles no longer boost full-time employment or incomes across the board, what is the broad-based, “social good” justification for inflating them?"

As is widely known, Ukraine's acting post-coup PM Arseniy Yatsenuk is currently in the US and holding heating talks with president Obama on just how to define the "costs" to Russia should Putin conclude his annexation of the Crimea this weekend in a way that the Russian leader will finally pay attention. As was less known, after his meeting, at 8 pm tonight, the PM was supposed to hold a press conference at the National Press Club.  As of moments ago, this propaganda meet and greet has been cancelled.

• DUE TO A SCHEDULING CHANGE, THE PRIME MINISTER HAS CANCELED THIS EVENT

Scheduling change? Really? Did Yatsenyuk ask Obama, in passing, to show him where the Ukraine gold, which as we reported a few days ago was rumored to have been airlifted to the NY Fed, which resulted in a less than pleasant response by the US president?

Yesterday we highlighted the dot-com-esque surge in earnings-less IPOs in the last few months. Today we point out two more Yellen-ignoring bubble-implying charts that must surely be ignored by the cognoscenti of all-knowing stock market gurus.

HERBALIFE RECEIVED TODAY A CIVIL INVESTIGATIVE DEMAND FROM FTC
HERBALIFE SAYS IT'S CONFIDENT IT'S IN COMPLIANCE
HERBALIFE COMMENTS ON FTC PROBE, WELCOME INQUIRY
HERBALIFE WON'T FURTHER COMMENT UNTIL MATERIAL DEVELOPMENTS

US equities surged... Japanese stocks soared.. and Europe recovered greatly but on a risk-adjusted-return basis, Goldman Sachs notes, nothing beat Bitcoin in 2013...