Archive - Jul 3, 2014 - Story

In the mid-sixties at the height of the “social revolution” the line between democratic benevolence and outright communism became rather blurry. The Democratic Party, which controlled the presidency and both houses of Congress, was used as the springboard by social engineers to introduce a new era of welfare initiatives enacted in the name of “defending the poor”, also known as the “Great Society Programs”. These initiatives, however, were driven by far more subversive and extreme motivations, and have been expanded on by every presidency since, Republican and Democrat alike.At Columbia University, sociologist professors Richard Cloward and Francis Fox Piven introduced a political strategy in 1966 that they believed would eventually lead to the total transmutation of America into a full-fledged centralized welfare state (in other words, a collectivist enclave). The spearpoint of the Cloward-Piven strategy involved nothing less than economic sabotage against the U.S..

Does this look sustainable to you? Of course, it's different this time, right?

Same stuff... different country. Once again someone (former opposition leader Musallam al-Barrak) exposed the corruption among the elites (revealed documents that allegedly prove billions of illicit financial transfers were made to senior officials, including judges) and the leaders (Kuwait officials) decided he should be arrested and charged with slander. This has caused uproar among the people as hundreds of protesters rallied overnight in support of al-Barrack, marching from his house to the jail chanting: "The people want to cleanse the judiciary!" The police in the oil-rich nation of Kuwait used tear gas and stun grenades early Thursday to disperse the protesters. As we have noted previously, uprising against government corruption is a global trend and in the case of Kuwait (which is oil-rich, the last friendly place to US in the Middle East, and has the highest per capita Twitter usage on the planet), we suspect this 'spring' is far from over.

On July 4th, the United States will celebrate Independence Day once again.  But who in the world are we trying to kid?  Our founders intended to create a society where freedom and liberty would be maximized, but that is not what America looks like today.  Instead, we live in a country that literally has millions of laws, rules and regulations.  We have a government that is obsessed with spying on the entire planet and that tries to watch, monitor, track and record as much information about all of us as it possibly can.  A “Big Brother” surveillance grid is being constructed all around us, and our militarized police are becoming more brutal with each passing day.  Sadly, most Americans don’t seem too alarmed by any of this.  In fact, a new Gallup survey has found that 79 percent of Americans are “satisfied” with the level of freedom in this nation.  That is a very alarming statistic. If most people believe that everything is “just fine”, then our leaders are going to feel free to keep doing the same things that they have been doing.

Is this the reason for the blowout, on the surface, payroll number?

While Las Vegas faces an existential crisis (and appears to be ignoring it), California regulators are starting to clamp down on water waste. As WSJ reports, about 60 California cities and agencies have imposed mandatory water-use cutbacks, some as high as 50%. In many cases, the rules are enforced by charging higher fees for excess usage. In others, inspectors are deployed to crack down on scofflaws. Sacramento - the state's capital - is among the worst offenders and most heavily 'policed' as a team of 40 inspectors have handed out2,444 notices year-to-date, with fines of up to $1,000 for repeat offenders. Neighbors are encouraged to whistleblow - there has been 7,604 water-use complaints; but not everyone is embracing the change as lawn repair is down 40% - "The propaganda dictates we haven't much choice... It's either do it or you die."

According to a paper by economists at UC Northwestern University and UC Berkeley, Anna Cieslak and Adair Morse and Annette Vissing-Jørgensen, another, even more surprising trading pattern using FOMC announcement has emerged. Specifically, anyone who engaged in the simple "even" strategy of buying the stocks of the S&P 500 on the day before a Fed policy announcement, selling them a week later, then buying them again the following week and sticking with the pattern until the subsequent Fed meeting generated a whopping 650% return since 1994, far outperforming the inverse "odd" strategy which shocking had a negative return over the past two decades years, and jsut as surprisingly, outperforming the market's own 505% return during this period.

It doesn't seem logical that the S&P should be positively correlated to oil prices--so it is more likely that both records are correlated to the same thing--inflation. But what to make of the last 18 months, in which we see an almost vertical rise in the stock market without an increase in the oil price? Is an American renaissance in the works, powered by increased American oil production? Or is it due to the much rumored mass purchase of securities by financial institutions, powered by monetary creation? Is it being done to prevent another period of negative correlation, which might foretell another economic crisis?

The US and UK are the 'best' performing world economies based on PMIs. Despite slumping real incomes, surging gas prices, a dismal Q1, fading Q2 growth expectations, and the US being the worst relative performing macro-surprise index in the world this year, it is the cleanest clean shirt with the great expansion based on soft-survey data. France joins Korea at the bottom of the global pile of macro-economic performers with Russia, Brazil, Australia, and Greece also in contraction. Here is your 1-stop-shop guide to global macro - USA USA USA...

India’s gold policy over the last several years is about as dysfunctional as any government policy we have ever seen, and that’s saying a lot. In a nutshell, Indians were buying too much gold for their government’s comfort, so the “authorities” stepped in with duties and import restrictions in an attempt to stifle the trade. So smuggling soared. Fast forward to today. It appears the government has finally realized they can’t stop their citizens penchant for gold, so they have decided to dump central bank gold onto the market. They are justifying this act with a so-called 'swap' into phantom gold at the Bank of England - the favored global hub of shady, rent-seeking, banker oligarchs. This begs the question of who really needs the gold, the RBI, or London bankers?

How to start World War 3? Step 1) Hack IDF Twitter account; Step 2) Tweet that Israel's secret nuclear facility has suffered a potential leak after shelling; Step 3) wait for US response... It appears (though for now has not been confirmed) that the Israel Defense Force's Twitter account was hacked by the Syrian Electronic Army who then tweeted "#WARNING: Possible nuclear leak in the region after 2 rockets hit Dimona nuclear facility" The Tweet was deleted soon after - not before all major newswires picked it up - and the report has been denied by the IDF. We can only imagine the market response to this tweet if US traders were not all out buying beers and burgers..

The most surprising news of the day comes not from the contested region, but from Kiev where Ukraine's president Poroshenko appointed a new Ukraine defense minister, Valeriy Heletey. His first promise? To not only re-engage Russia in Crimea, but to be victorious in doing so. From BBC: New Ukrainian Defence Minister Valeriy Heletey has promised that the army would retake Crimea, restoring the country's territorial integrity. "Addressing parliament in Kiev, he said: "There will be a victory parade... in Ukraine's Sevastopol." Lt Gen Heletey, 46, was approved by MPs in Kiev after being recommended by Mr Poroshenko as someone who would work day and night to restore the military capability of the country's armed forces. His remark about Sevastopol was applauded by the chamber. We are confident Putin had a different, and far more amused reaction to the statement.

Meet XKeyscore - "a computer network exploitation system", as described in an NSA presentation, devoted to gathering "nearly everything a user does on the internet." The German site Das Erste has exposed the shocking truth about the rules used by the NSA to decide who is a "target" for surveillance. While the NSA claims to only "target" a small fraction of internet users, the perhaps unsurprising truth is very different. As Boing Boing concludes, one expert suggested that the NSA's intention here was to separate the sheep from the goats -- to split the entire population of the Internet into "people who have the technical know-how to be private" and "people who don't" and then capture all the communications from the first group.

2014 has not been kind to Barclays: first, the UK bank proved countless goldbugs right when it was first caught rigging the gold market (the first documented case, not the last) and a few short weeks later, the New York Attorney General crucified the bank for misleading its Dark Pool clients, and letting their order flow be, quite lucratively, front run by "aggressive" predatory algos - something it explicitly had stated it won't allow. So with one after another revenue stream crashing before its eyes, what is the Chairman of the scrambling bank to do? Why beg to at least keep the FX manipulation going. What follows is not from The Onion.

Tomorrow, Americans will celebrate their independence from an over-taxing tyrant by eating and drinking to excess - and rightly so. However, what many will find as they pile into their friendly local grocer (Costco), is that the price of the July 4th smorgasbord has never (ever) been higher (as perhaps, just perhaps, another tyrannical entity - the Fed - has taxed them in a much more pernicious manner). Ground beef burgers have never been more expensive (+16.5% from last year)... and nor has white bread, American cheese, iceberg lettuce, tomatoes, ice cream, and chips...