Archive - Sep 2014 - Story

"Silicon Valley as a whole... is taking on an excessive amount of risk right now. Unprecedented since '99." The widely accepted model is that it's acceptable for companies to be "[b]urning cash and losing money.. with the emphasis on the losing." "It reminds me of 2000, when investment capital was flooding into startups and flooded a lot of marginal companies. If 2000 was a bubble factor of 10, we are at an 8 to 9 in my opinion right now."

French vegetable farmer have set a tax office and a building on fire destroying the government facility which was the symbol of the increasing administrative burden and sanctions that is killing farming. The background is that for years the bureaucracy for farmers have magnified the economic decline and their plight with constant new regulation of everything. The economic situation of farming in Europe has been seriously pushed too far with the US sanctions against Russia. The agricultural crisis caused by Obama is increasingly deteriorating with far too many farmers throughout Europe losing everything. The economic numbers in France are simply devastating, and we only see more regulation and raising taxes to support bloated government especially in France. The French government has not the faintest idea how to fix the economy because Hollande will not admit socialism does not work.

Gold prices are up around 1.5% from last night's close. Here's why...

Whether as a result of recent icy to quite icy diplomatic relations between the two nations, or just because it has other motives, Israel had clearly abstained from joining the US effort to contain the CIA-created ISIS terrorist juggernaut. However, overnight, with the US finally doing what Israel has hoped it would do for so long, namely being engaged in a bombing campaign of Syria (recall that it was Israel which was one of the biggest supporters of a US-led military intervention in Syria in the summer of 2013), it decided "hell, why not" and joined the fray, when shortly before 3 am Eastern time, this hit:

• ISRAELI SAYS IT DOWNED SYRIAN AIRCRAFT IN ISRAELI AIRSPACE
• ISRAELI ARMY SAYS DOWNED SYRIAN AIRCRAFT WAS FIGHTER JET

Quite notable because it was the first time in three decades that Israel had downed a Syrian warplane, so Israel needed a strong pretext for such aggression. An aggression, incidentally, not against ISIS, but Assad's regime itself, which clearly is what Obama's latest operation is all about - to take down a sovereign while doing the bidding of Qatar and Saudi Arabia, just like in 2013.

• U.S., backed by Arabs, launches first strikes on fighters in Syria (Reuters, BBG)
• But not all all back: Turkey Bars Kurds From Entering Syria to Fight Islamic State (BBG)
• Dollar Weakens on Airstrikes; Europe Stocks Drop (BBG)
• Ready for Rate Riot? Emerging Markets Set to Follow Fed (BBG)
• White House fence jumper had ammunition, machete in car, prosecutors say (WaPo)
• El-Erian "would have done things differently" (Reuters)
• Eurozone business growth slows in September, PMI survey finds (BBC)
• Shrinking Bond Desks Taken by Journeymen as Masters Fade (BBG)
• Manufacturing Rebound Relieves Growth Concerns in China (BBG)
• Former Trader Quits Playboy Club to Open Own Restaurant (BBG)

European stocks, U.S. equity index futures fall after Euro area PMI for Aug. missed ests., while bond yields for German, Spanish, U.K. debt fall. Copper rises with positive Chinese PMI data, while oil gains as OPEC discusses output cut. European health care stocks among largest underperformers as U.S. plans tighter rules on tax inversion M&A.

Oil and other commodity prices have recently been dropping. Is this good news, or bad? Many people have the impression that falling oil prices mean that the cost of production is falling, and thus that the feared "peak oil" is far in the distance. This is not the correct interpretation, especially when many types of commodities are decreasing in price at the same time. We would argue that falling commodity prices are bad news. It likely means that the debt bubble which has been holding up the world economy for a very long time – since World War II, at least – is failing to expand sufficiently. If the debt bubble collapses, we will be in huge difficulty.

Jack Ma believes people lose out in life because of these 4 reasons: Being myopic to opportunity, Looking down on opportunities, Lacking understanding, or Failing to act quickly enough. "You are poor, because you have no ambition." Go big, or go home. Otherwise, you’re wasting your youth.

Six months ago the topic of click fraud at Facebook hit the headlines but was rapidly dismissed as the company's share price rose implying that the world is great and we should not worry. With Facebook increasingly becoming the advertising outlet of choice for many of the world's companies, MIT Technology Review reports on a study to dig deeper into just where the "likes" come from. As the authors note, recently, the number of likes of a Facebook page has become a measure of its popularity and profitability, and an underground market of services boosting page likes, aka "like farms," has emerged. While careful to avoid pointing the finger too aggressively, the findings show that one "like" is not like another as the use of "honeypot" pages to generate "likes" attracts 'users' (bots) that are significantly different from typical Facebook users (i.e. non-human money-spending users).

Because sometimes, when you're an Alaska pot-club-owning TV reporter... you just have to say "F##k It!"

President Obama’s neo-Cold War is not about ideology or respect for borders. It is about money and global power. The current battle over control of gateway nations - strategic locations in which private firms can establish the equivalent of financial boots-on-the-ground - is being waged in the Middle East and Ukraine under the auspices of freedom and western capitalism (er, “democracy”). In these global gateways, private banks can infiltrate resource-rich locales fortified by political will, public aid and military support to garner lucrative market advantages. ISIS poses a threat to global gateway control that transcends any human casualties. That’s why Congress decided to authorize funds to fight ISIS despite the risk. The common thread of today’s global gateway nations appears to be oil.

Tonight's Kodiak Moment is brought to you courtesy of the NYPD and one protesting polar bear, which apparently did not get the memo that bears are, how should one say, not welcome on Wall Street...

"Today, Treasury is taking action to reduce the tax benefits of — and when possible, stop — corporate tax inversions. This action will significantly diminish the ability of inverted companies to escape U.S. taxation.  For some companies considering mergers, today’s action will mean that inversions no longer make economic sense." And yet, to think: the US government would have spared itself so much jawboning effort and fake work if all the Treasury did was promise that the 10 largest shareholders of the "unpatriotic inversion offender" would get the "tea party" treatment by the IRS. Then watch as inversions end with a thud, never to be heard of again...

Some British newspapers have declared that “the dream is over” for Scottish independence. That seems hardly likely, unless by “over,” the newspapers mean “over for the next few years.” Europe-wide, the drive for more regional independence and autonomy will only continue to grow as economies stagnate, and as elites from Brussels or Rome or Madrid continue to maintain that they know best. Eventually, the promises of the centralizers will fall on very deaf ears. Even without a majority vote for secession, the campaign for separation from the United Kingdom has already provided numerous insights into the future of secession movements and those who defend the status quo.