Archive - May 2014 - Story

If we continue down this path of ignorance, we will be left with a "tiny elite and a huge sprawling proletariat" who have no chance of "clawing their way out of a hand-to-mouth existence," is the loud and clear message from UK government advisor David Boyle. As The Telegraph reports, Boyle cautions, "we won't own our own homes, we won't be able to afford it," adding that "we cheerled the rise of property prices not realising that it would destroy, if not our own lives, but the lives of our children." His conclusion, "the middle classes have to wake up to prevent it happening and to create a political movement that will do it."

This evening's interview between Edward Snowden and NBC's Brian Williams is already stirring up controversy. In one excerpt, Snowden blames the State Department for "stranding him" in Russia, saying he "never intended" to wind up there. John Kerry has been quick to react to this "For a supposedly smart guy, that’s a pretty dumb answer, frankly," Kerry said. "If Mr. Snowden wants to come back to the United States today, we'll have him on a flight today." In an interview with Chuck Todd on MSNBC, Kerry called Snowden a "coward" and a "traitor," adding that "he should man up and come back to the United States," the secretary of state said. There is a live special at 11ET (below) after the televised interview.

We have often said that while 9/11 was a horrible event, our collective response to it has been the real tragedy ( How I Remember September 11, 2001 post). A terrible event is no excuse to become such scared children that we would relinquish the basic freedoms our ancestors fought so hard to secure for us. The only people who really benefit from an expansion of the surveillance state and a loss of liberties are the rich and powerful. With China’s economy in free fall and increased violence occurring, it appears the leadership there is taking a page out of our post 9/11 playbook. This is what the commute looks like at train stations in Beijing...

We have some bad news... for Africa: according to the latest data released by the International Labor Organization, your youth unemployment problem is almost as bad as that of Europe.

The last time we looked at the rather unpalatable issue of soaring bacon prices back in March, it was the direct result of exploding, no pun intended, prices of lean hogs stricken by the aptly named porcine epidemic diarrhea (PED) virus, which killed up to 7 million pigs and pushed the price of pork and its derivatives to record highs. We have bad news: according to Reuters an Indiana farm has become the first to confirm publicly it suffered a second outbreak of a deadly pig virus, fueling concerns that a disease that has wiped out 10 percent of the U.S. hog population will be harder to contain than producers and veterinarians expected. That's right, the PEDv, aka pig diarrhea bug, is back, and this time it may have mutated.

China may be bad, but there are far worse places to be.

Given the pre-tax-hike surge, the oh-so-smart economists around the world were expecting some give-back from dragged-forward demand but the 13.7% MoM decline missed expectations by 2 percentage points. This was the largest MoM decline on record. Talking heads are already blaming the tax hike (but they knew all about it?) and year-over-year was just as dismal (and less immediately prone to events) as it fell by the most since the 2011 Tsunami. Bad news (the worst) is good news though right? Well no - USDJPY is down as is Nikkei as remember, Japanese inflation pressures are building and Kuroda has pushed off any actions from the BoJ for now.

Renowned for something, Dennis Gartman has outdone himself once again (again). After explaining that bonds are rallying on pension fund rebalancing but stocks should not be lower and shorting bonds never works; the bearded market-timing philosopher gives a glimpse of the kind of insight that can only be purchased for $29.95: "the market will stop when it stops; not a moment before."

During the first internet boom, the business model of South Park's Underpants Gnomes was commonplace, as scores of companies flooded the marketplace, sustained purely by the promise of future profits that would somehow magically appear. As Grant Williams scoffs in his most recent letter, it was the corporate embodiment of George Costanza’s “yada, yada, yada”: “First we build a company... yada, yada, yada... we make billions.” Of course, most of these companies went the way of the dodo; but remarkably, a mere 14 years after the bursting of the original internet bubble, there are signs of what Yogi Berra so beautifully referred to as “déjà vu all over again” - signs which some real heavyweight financial minds have recently highlighted...

“I don’t know what to say. I’ve been investing since January and I’ve never seen anything like it.” – Unnamed Hong Kong housewife during the Asian financial crisis of 1997/8.

What follows is a continued personal perspective on some of the challenges facing today’s investor...

One of the many civil liberties related themes we have focused on over the past several years has to do with how emerging technologies can pose a threat, first to our basic 4th Amendment rights, and then ultimately to freedom itself. Two of the most high profile technologies in this regard, and which have extremely high potential for abuse, are license plate readers and drones.

Students consume almost 400 billion junk food calories at school per year, equal to almost 2 billion candy bars and while the epidemic of childhood obesity is not 'news' per se - for one big employer in America, it is a major problem. As Bloomberg Businessweek reports, the number one reason people can’t join the military is that they’re overweight or obese, and "still too fat to fight." The problem is large for active service members also with over 51% overweight (though better than the civilian population) as the DoD alone spends an estimated $1 billion per year for medical care associated with "weight-related health problems."

While the current bull market remains "bulletproof" at the moment to geopolitical events, technical deterioration, overbought conditions and extremely complacent conditions; it is worth remembering what was being said during the third phase of the previous two bull markets...

If there is one thing that the militarized warzone with the weapons ban (and which makes east Ukraine look like a kindergarten) namely Chicago, did not need in order to fall further into social chaos and disarray, it is a new tidal wave of unemployment: people freshly without jobs who for lack of better options would likely join the daily survival of the fittest routine on the streets of the windy city. And a tidal wave of unemployment is precisely what Chicago is likely to get if, as a group of Chicago aldermen have proposed, the minimum wage in the nation's third-largest city is nearly doubled to $15 an hour. Why $15? Because according to recently striking McDonalds line cooks, it's only fair, and is the minimum pay that fast-food workers have sought during national protests.

Presented with little comment aside to note that bond shorts have not covered (in fact they added last week) and the last time we got this disconnected (with negative breadth in stocks and super low volatility) - things went south very quickly...