When this indicator of global trade rises, everything is rosy and reams of asset-gatherers and talking-heads wil quote it as indicative of how great the world is. When it drops - silence. There's always an excuse - over- or under-capacity, too many ships, too few ships, etc. However, the last 2 weeks have seen a 35% collapse in the cost to ship bulk. There is a relative seasonal pattern over the holiday period - with shipping costs rising into the holiday and falling after but... this is the biggest drop from a Christmas Eve since at least 1984, 30 years! Seems like the inventory stacking of Q4 had absolutely no follow-through whatsoever...
What's not to "Like"?
This morning, probably in order to assuage fears that it has lost control more than usual, TEPCO released the following statement "Regarding Certain Overseas Reports on Fukushima Daiichi Nuclear Power Station." TEPCO's soothing words - "We found no abnormalities in the measured values (indicating the temperature and condition of the Reactor Building), or in the value of the monitoring post (monitoring the amount of radiation), even when the steam-like gas was being generated, therefore we are certain that there has been no influence on the outside. In addition, we measured the amount of radiation at the point from which steam-like gas was generated, and found that its amount was almost the same as for the other neighboring points."
It’s NEVER to Protect Us From Bad Guys
Nearly a year ago, we predicted that the party for bond traders was over. The reason: MBS bond trader Jesse Litvak, formerly of mid-tier, perpetual aspirational bulge bracket, and the place where every fired UBS banker has a safety cubicle, Jefferies, got not only too greedy (that's ok, everyone on Wall Street is), but what's worse, got caught, and as we said at the time, ended the party for Wall Street's bond trading cash bonanza. Little did we know how correct we would be, because not only did the former MBS trader, who "proceeded to rip virtually all of his clients on seemingly every single trade he executed for the three years he was employed at Jefferies, lying to everyone in the process: both clients and in house colleagues, generating some $2.7 million in additional revenue for Jefferies for the duration of his tenure, and who knows how much in personal bonuses", end the party, but it appears he unleashed the next big regulatory crack down on Wall Street. And one which may just cost perennial Department of Justice favorite JPMorgan another several billion in "litigation reserves."
The evidence here is clear. QE does not generate jobs in the broad economy.
Yesterday we described how so-called "Progressives" are pimping for the Empire. The same is true of so-called "Conservatives." Conservatives are masters at projecting a preachy devotion to a limited state, democracy, liberty and free enterprise while their support of the Central State undermines every one of these values. Conservatives are like the preacher who issues stern sermons on righteousness every Sunday while skimming big money from pimping sordid, destructive policies Monday through Saturday. "Conservatives" and "Progressives" alike are pimping for the Empire when they support the Central State's essentially unlimited powers.
As I step ever closer to the advent of a new monetary system...
If Americans in particular want to pursue any solution to the threat of globalism or dollar collapse, they are going to have to start with themselves, and the community around them. Online trade is the last thing they should be worried about. Only when neighborhoods, towns, and counties become producers and self suppliers will they be safe from financial instability. Only when those same communities band together for mutual aid and self defense will they be safe from tyrannical political entities. Bitcoin accomplishes nothing in either of these categories, making it possibly the most popular non-solution for liberty to date. Bitcoin is consistently touted as a superior option to precious metals as a way to decouple from central bank fiat. Under examination, though, it appears to me that bitcoin is instead a deliberate distraction away from gold and silver, and other tangible solutions; in other words, we believe it to be a form of controlled opposition.
Truth is instantly recognizable for its self evident nature. The difficulty isn’t in knowing what to do; the difficulty lay in doing what needs to be done.
Of all the case studies in our "it is easier to get into Harvard than to get a job at X" series (flight attendants, Goldman summer interns, McDonalds, etc), this one may be our favorite because it captures at its core, just how "strong" the US economic "recovery" truly is for all those who don't have a spare million or two in financial assets to throw at the levitating, centrally-planned markets. As the WaPo reports, when a Maryland ice cream plant, shut down in 2011 and subsequnetly was brought back to life when a Co-op of dairy farmers purchased it in the summer of 2013 to process milk and icream, sent out "jobs wanted" notices to fill some three dozen open job positions, it got a surprise: 1,600 applicants (and counting) "a deluge" - 44 applicants for every position - or nearly three times more difficult than getting into Harvard to get a simple job... To make ice cream!
Following October's disappointing bounce in the US trade deficit, it was only expected that the November data would come leaps and bounds ahead of the expected $40 billion print, instead sliding 12.9% to $34.3 billion from October's revised $39.3 billion - this was the lowest monthly trade deficit since October 2009. The delta was the result of a modest boost in exports, up $1.7 billion, to a record high of $194.9 billion, compounded by a more pronounced slide in imports, which were $3.4 billion less than October's $232.5 billion. Some other highlights: exports to China climbed to a record high (we certainly expect "matching" Chinese exports to the US to also rise to a record when reported next), while the US petroleum deficit was the lowest since May 2009 thanks to shale.
The flash crash had the hallmarks of price manipulation. In order to protect investors and the integrity of markets, regulators internationally should again investigate the gold futures market where such manipulation appears to be taking place nearly on a weekly basis now.
"Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations."
Evolutionary theory as a perspective for understanding human behavior within capital markets is a more useful perspective than what economic theory has become... a cloistered, brittle theology that day after day becomes more abstract in its formation and more narrow in its application. The first and most basic lesson of an evolutionary perspective properly applied: we are well served as investors to jettison the superiority complex that comes with living in the present and looking back on what naturally seems a benighted past. The notions of liberal progress and evolution-as-hierarchy are so deeply ingrained that we assume that whatever behaviors are new or modern, including modern investment management practices or modern investment strategies (or modern monetary policy), must be part and parcel of some advancement over what existed in the past. In truth there is no up-and-to-the-right arrow associated with evolution; there is no intelligent design pushing us “forward”.