Archive - 2014 - Story

There was some expectation following the loud public response following Ukraine's shut down of power to Crimea on Christmas Eve, that Kiev would treat the territory which it alleges is still part of Ukraine as, well, part of Ukraine. And sure enough, a few hours after the regionwide blackout was first reported, Ukraine restored power. Until today, when moments ago we learned that not only did Ukraine cut off electricity to Crimea earlier today, but also halted train services, moves which, according to the WSJ, could raise tensions with Russia, but which also will harden the local popluation's pro-Russian determination even further. Crimea’s Fuel and Energy Minister Sergei Egorov told Russia’s Interfax news agency that power was cut off at 1:50 p.m. Friday without warning. He said backup diesel generators and mobile turbine power plants were supplying critical infrastructure with electricity.

For the past few months, the one silver lining to the energy complex - with crude oil plummeting to levels not seen since 2009 - was nat gas, which soared to the mid-$4s in early November on expectations of a brutal polar vortex for the second year in a row sending heating demand surging. Well, so far the "harsh" weather, which was blamed for the epic collapse in the US economy in Q1 has not materialized, and all those buyers of natgas contracts have been scrambling to sell all of their exposure afraid they may suffer the same fate as their crude trading brethren. End result: as of moments ago, nat gas finally slide under $3, the first time it has done so since 2012!

"It becomes tempting to take on too much leverage, use financial wizardry to reward shareholders or even stretch accounting principles. S&P 500 profits are 86% higher than they would be if accounting standards of the national accounts were used, Pelham Smithers Associates notes. And the gap between the two measures is widening, the research firm finds." - Blackrock

Last week, after the unanimous passage of the Ukraine Freedom Support Act of 2014 in Congress we wrote that "World Awaits Russian Response As Obama Makes "Lethal Aid" To Ukraine Legal." We didn't have long to wait: one short hour ago, Putin adopted an updated version of its military doctrine, which "reflects the emergence of new threats against its national security" and which names both the NATO military buildup on Russia's borders, as well as the US and the destabilized situation in some regions (read Ukraine) as the main foreign threats to Russian security. The doctrine update also, for the first time, put protection of Russian national interest in the Arctic (read oil and nat gas) among the key priorities for Russia's armed forces. In other words, Putin is not only not backing down, but has once again explicitly warned NATO that any western action, either in Ukraine or elsewhere, will have a proportional response.

Iit was only this week that Bloomberg reported that "China Offers Russia Help With Currency Swap Suggestion." But in order to fully backstop Russia away from a SWIFT-world in which the dollar reigns supreme, one extra step was necessary: the launching of direct FX trade involving the Russian and Chinese currencies, either spot or forward - a move away from purely theoretical bilateral FX trade agreements - which would not only enable and make direct currency trading more efficient by sidestepping the dollar entirely, but also allow Russian companies to budget in Chinese Yuan terms. It is no surprise then that this is precisely the missing step that was announced overnight, and will be implemented starting Monday.

• Japan inflation slows to 14 month low, output slips (Reuters)
• Russia says ruble crisis over as reserves dive, inflation climbs (Reuters)
• Ruble rebounds sharply from lows as exporters sell dollars (Reuters)
• Xbox, PlayStation Networks Attacked, Hackers Claim Credit (BBG)
• Sony’s ‘The Interview’ Packs Theaters Without Violence (BBG)
• Oil edges above $60 as Libyan output slumps (Reuters)
• Shoppers’ Late Rush Gives Hope to Retailers (WSJ)
• Japan says close to deal with South Korea and U.S. on North Korea defense (Reuters)
• NYPD Arrests Seven for Threats After Slayings of Officers (BBG)

One group of Federal workers that is definitely not taking the day off, is the trading desk located on the 9th floor of the New York Fed, responsible for such things as preserving the "fair" value of the bond and the stock market and avoiding any sharp downward moves. Because if there is one thing on the "national security" agenda that must be avoided at all costs, it is a drop in the S&P in today's trading session - after all now is when the official Santa rally begins and judging by the futures, which after a steep selloff in the last minute of trading on Wednesday have restored all their losses and then some, we may finally hit Goldman's year end target of 2100, for 2015.

And just like that Americans got punk'd again. From one of the countless New Yorkers waiting in line to see The Interview: "We are taking a stand for freedom. We want to show the world that Americans won't be told what they can and can not see. If we want to see a movie we'll go see a movie and make up our own minds.... I came to express my very strong support for the free expression of ideas."

"I find it so disturbingly illogical that we Americans are willing to die so that our political class can enjoy ill gotten riches and power yet we cower when it comes to defending our great nation against the political class, something our founding fathers pleaded for us to do.  The truth, which the political class legislates so hard for us to overlook, is that they are powerless without us.   It is us that fight their fights, fund their wars and enforce their laws that enslave us yet we bow down and call them Mr. President and Madame Secretary.  And so I ask each and everyone of you, when will we wake up and recognize that we are the power and the wealth and that the political class has only managed, through deception, to harness our strengths and pass them off as their own?  For until that day of awakening, we will continue to live as an oppressed people ruled by others for others."

In what police called "a random act of 'I want something that person has and I am going to take it from them," a black teenager was shot and killed after attempting to rob a man of his $200 Air Jordans. After being unable to purchase the 'limited edition' shoes, 16-year-old Jawad "JJ" Jabar and 2 other Middletown, Ohio schoolmates, brandished a firearm at a man (of unknown color) who had just bought a pair. The man, who had a valid concealed carry permit, shot once and killed Jawad. Since the dead black teenager was not killed by a white policeman, we doubt there will be any protests, Al Sharpton commentary, or mainstream media blitz.

For about the first 22 years, being a parent at Christmas is a net losing proposition. But after that...

As Charles Dickens himself admits, Ebenezer Scrooge is a thoroughly peaceful man, guilty of no true crime, who has robbed no one. Therefore, we must conclude that his wealth is a sign of his ability to please at least some people, and as Michael Levin notes: “Dickens doesn't mention Scrooge's satisfied customers, but there must have been plenty of them for Scrooge to have gotten so rich.” As a miser and businessman, Scrooge provides numerous valuable services to the community including, as Walter Block has shown, driving down prices and making liquidity available to those who, unlike the wrongly maligned misers, have been either unwilling or unable to save in comparable amounts. His business prowess notwithstanding, however, a closer look at Scrooge’s economics suggests some significant blind spots in several areas. Scrooge, as displayed in many of his comments and observations, misunderstands some key economics concepts.

Over-burdened...

After weeks of preparation by an umbrella group that calls itself the Santa Claus Repudiation Organization Offering Greater Education, students at campuses across America spent Christmas Eve protesting what they consider a dangerous symbol of everything that is wrong with the world today.

Who needs helicopters? While China slashes reserves and unleashes its stealth-QE ('Pledged Supplementary Lending' - PSL), the streets of Hong Kong's salubrious Wan Chai district were awash with freshly-minted notes when a security van overturned spilling 15 million Hong Kong Dollars to the wind... We await the 'accidental' overturning of a security-van in Ferguson soon (if this works) to 'quell the masses'.