Archive - Jun 2014 - Story

Hot on the heels of Eric Holder's domestic terrorism task force creation, Lindsay Graham's recent diatribe of the "inevitability" of another terror attack (on the US) by Syria or Iraq, adding that "according to our own Director of National Intelligence, FBI Director, the next 9/11 is coming from here," it seems the ultimate scaremonger has decided it is his turn to stir the pot. Appearing on Hugh Hewitt's radio show, Dick Cheney explained that he "doubted" whether the US would "get through this decade" without another "massive attack on the homeland." But it's what he said after that makes Obama's NYC nukes concerns pale in comparison...

The number of SWAT team raids in the United States every year is now more than 25 times higher than it was back in 1980.  As America has conducted wars overseas in recent years, our police forces have become increasingly militarized as well.  And without a doubt, many of our cities have become much more dangerous places. Once upon a time, police in America were helpful and friendly and the public generally trusted them.  But now our police forces are being transformed into military-style units that often act like they are in the middle of Iraq or Afghanistan.  The following are 10 facts about the SWATification of America that everyone should know…

While New Zealand's stock market is the 3rd smallest among AsiaPac exchanges, it is not immune from the "glitches" even the largest exchanges have become used to in the new normal era of 'liquidity providers'. For the 2nd time this month, equities trading in New Zealand (the entire market) is halted after a "technical fault" at the operator of the exchange. As one trader noted understatedly, "there seems to be a reasonably regular occurrence of issues, which is a bit of concern."

Something very dramatic happened overnight when, in a little noticed statement, Gazprom's CFO Andrey Kruglov uttered the magic words:

• GAZPROM READY TO SETTLE CHINA CONTRACTS IN YUAN OR RUBLES: CFO

In other words just as the US may or may not be preparing to export crude - a step which would weaken the dollar's reserve status as traditional US oil trading partners will need to find other import customers who pay in non-USD currencies - the world's two other superpowers are preparing to respond.

UPDATE: USDJPY has tumbled to 5 week lows and NKY has retraced all post-Fed gains

Japan is in trouble. Normally the news that a piece of macro data had utterly and completely collapsed would be greeted by thge BFTD mentality as bad news reinforces the printing-press of central planners' put guarenteeing future wealth for all... but not this time. Household spending collapsed 8.0% in May (echoing the plunge following the last tax hike in 1997) - more than double expectations and almost as bad as the month of the tsunami. Great news? That's the problem... the great limiter of central bank largesse is looming as Japanese CPI spiked to 3.7% - its highest in 24 years! (and Core CPI at 3.4% - its highest since 1982) This implicitly hobbles the BoJ from further exuberance and already JPY strength (and NKY weakness) are showing.

While Janet Yellen is bust ignoring "noisy" inflation and dismissing low volatility as indicative of any complacency, Goldman is a little more concerned. The decline in economic and asset market volatility this year from already low levels in 2013 has been striking, which as Markus Brunnermeier states, means "the whole system is more prone to a financial crisis when measured volatility is low, which tends to lead to a build-up of risk in the background – the so-called 'volatility paradox'."

Anyone saying "the Fedeal Reserve Act is bad" in Germany is, according to Lars Maehrholz, looked upon by the mainstream as being a Nazi. The organizer of the widespread "End The Fed" rallies that we discussed previously, explained that he is not only under attack by the main stream media and political system in Germany but also physical threats that resulted in a car he was in getting fire bombed by an anonymous perp.

With all eyes firmly focused on yesterday's disastrous GDP report (and ultimately dismissing it as 'weather' and one-off exogenous factors), we thought Bloomberg Brief's Rich Yamarone's analysis of a lesser-known (yet just as key) indicator of the state of US economic health was intriguing. As he notes, according to the latest data from the Bureau of Economic analysis, there has never been a time in history that year-over-year gross domestic income has been at its current pace (2.6 percent) without the U.S. economy ultimately falling into recession. That’s more than 50 years of history, which is about as good as one could ever hope for in an economic indicator.

How in the world does the government expect us to trust the economic numbers that they give us anymore? For a long time, many have suspected that they were being manipulated, and as you will see below it appears we now have proof that this is indeed the case.

The end game of three decades of excess is upon us, and we can't deny the weight of the debt imbalances that are currently in play. The medicine that the current administration is prescribing is a treatment for the common cold; in this case a normal business cycle recession. The problem is that the patient is suffering from a "debt cancer," and until the proper treatment is prescribed and implemented; the patient will most likely continue to suffer.

Isn't it odd that when 'officials' are no longer part of the status-quo-sustainers, how the truthiness flows... As former Fed Governor Kevin Warsh explained this morning, "on the fairness point - if you have access to credit, if you've got a big balance sheet, the Fed has made you richer," concluding rather too honestly for some people's liking, "I would say [Fed policy] has been in some sense Reverse Robin Hood." The bottom line, he chides, "this is a way to make the well to do more well to do because that's all the Federal Reserve can do."

"The revised outlook also reflects lower than expected crop protection herbicide sales, largely due to weather."

The typically more dovish Jim Bullard unleashed a torrent of "markets are wrong" this morning and along with dismal macro data sent stock reeling out of the gate - catching down to Treasury yields divergence since the Fed last week. Stocks stabilized as the hevay volume dump dried up and staggered sideways after POMO and Europe's close. Then USA went 1-0 down against Germany and VIX was dumped and stocks pumped and then double-pumped again to almost back to unchanged in the last hour. During all this excitment, bond yields slid lower (to 3-week lows); gold and silver pushed higher (though gold ended modestly lower on the day after China gold loans news); and credit entirely ignored the exuberant bounce...VIX closed unch along with stocks as indices were rescued from a notable red day via an epic AUDJPY lift and VIX slam on negligible volume.

As the war in Iraq goes from bad to worse, and as the Obama administration is tired of being humiliated by a bunch of extremist Al Qaeda tribesman, the president is once again pivoting to the place where it all started. It is here where he intends on arming the local Al Qaeda jihadists once again, and will request half a billion dollars from Congress to achieve just that. The good news: Obama will only arm just the "moderate" al Qaeda forces. So there is nothing to fear.

Not like there is much to discuss but President Obama is hosting a Town Hall meeting in Minneapolis where "the people" will be allowed to ask questions of his 'little-less-than-omnipotent' self. As he said in his introduction...he's feeling loose and will  "make it up as he goes along."