There is a much larger structural risk for markets and investors than HFT and the whole Flash Boys brouhaha, it’s just totally under the radar and hasn’t surfaced yet. Investors may not know better yet, but they will soon, one way or another. Tomorrow a handful of governments will influence aggregate political behaviors by triggering small communications that Big Data tells them will be voluntarily magnified by individual citizens, snowballing into outsized, long-lasting, and untraceable “popular” actions. Tomorrow a handful of hedge funds will influence aggregate market behaviors by triggering small trades that Big Data tells them will be voluntarily magnified by individual traders, snowballing into outsized, long-lasting, and untraceable “market” actions. Tomorrow Big Data will be primarily an instrument of social control, with a powerful and ubiquitous impact on all citizens and all investors.
Crude oil prices are once again following the path of least deja vu resistance this morning. Having spiked into NYMEX close on Friday (exactly as they did following the rig count data the previous week), WTI is back to a $48 handle this morning following news that Saudi Arabia has increased production to its higest level since 2013. Iraq (another OPEC nation) stirred the pot further by forecasting increased supplies in the next month. This comes as US production hits record highs and vital Oklahoma storage tanks will fill up even sooner than expected, driving the "JK" spread above $2.50 (April delivery drastically cheaper than May). As on analysts noted, as "Cushing continues to fill massively, we could see a '3' handle on WTI."
And so it begins... the intentional demonization of a growing segment of the U.S. population that rightly believes the government is run by a collective of thieving, corrupt, immoral sociopaths. Commingling dissent, violence and “right wing” ideology will be key in the ultimate division of government critics in these United States, and a successful attempt to scare people away from questioning a clearly degraded and parasitic status quo.
When a member of the New York Fed staff releases a paper on the topic of Anxiety, Overconfidence, and Excessive Risk Taking, and in which there is a section on "Self-Manipulation with Alcohol and Drugs", which explains that "pathological gambling is more common among people with alcohol use disorders," adds that "there is evidence that drugs are used strategically to induce performance changes, and particularly so for individuals with greater degrees of horizon-dependent risk aversion", observes that 'Anecdotal evidence on the “widespread use of [...] cocaine by professional traders” is consistent both with strategic self-manipulation and with our observations about cross-sectional overconfidence across environments", and finally recommends to all the risk-averse BTFDers and BTFATHers, that "the performance of anxiety-prone individuals should then improve with moderate levels of drug-induced overconfidence"one should probably listen and trade - since the Fed's only remaining wealth effect and "monetary transmission channel" is to BTFATH - while both drunk and high.
Are we on the verge of a major worldwide economic downturn? Well, if recent warnings from prominent bankers all over the world are to be believed, that may be precisely what we are facing in the months ahead.
"Enjoy the party, but dance near the door."
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The morphing of “terrorism” and “domestic dissent” into an all encompassing and convenient category known as “domestic terrorists” or “domestic extremists” has been a long time coming. It has always been our contention, and continues to be, that the oligarchs who have funneled all of the wealth to themselves since the 2008 banker bailouts know exactly what they are doing. They also know that it will eventually result in severe domestic unrest during the next cyclical downturn. As such, the agenda has been to utilize the entirety of the intelligence-industrial-military complex created by the “war on terror” against the domestic population once it recognizes how badly it has been looted.
The United States government and the American people cannot contend with reality, because they do not know what the reality is. In America’s make-believe world, neoconservative toadies such as New York Times columnist Thomas Friedman, set the Group-Think tone, while knowledgeable experts are tuned out. In effect, America is both blind and deaf. It lives in delusions. Consequently, it will destroy itself and perhaps the world.
- ECB to decide on bond-buying plan to revive euro zone (Reuters)
- Draghi Is Pushing Boundaries of Euro Region with QE Program (BBG)
- Investors Wonder Whether ECB Will Do Enough (WSJ)
- Treasuries Drop With Bunds Before ECB; U.S. Futures Rise (BBG)
- European shares hit seven-year high (Reuters)
- At least eight civilians killed in shelling of Ukrainian trolleybus (Reuters), both sides blame each other
- OPEC Will Blink First in Battle With Shale Drillers, Poll Shows (BBG)
- China Injects $8 Billion Into Banking System (WSJ)
- New York says Barclays not cooperating in 'dark pool' probe (Reuters)
The Long/Short Strategy for the New Reality
1. Go long companies that cater to the 1%.
2. Short companies that cater to the middle class.
3. Go long companies that cater to the poor.
There was one world leader who was out of step with the rest of political elite during yesterday's theatrical procession of world leaders for French unity and for press freedom (even as the bulk of them engage in prosecution of freedom of speech across their own nations): Israel's prime minister Benjamin Netanyahu. In fact, as Reuters reports, he managed to "ruffle a few feathers while taking part in the "Charlie Hebdo" rally in Paris on Sunday" because this was an event his office initially said he would not be attending following a specific request form French president Hollande not to come to Paris, but ultimately ended up participating in much to the Chagrin of the French president.
Top Russian, American and Polish Leaders Warn that Continued Fighting In Ukraine Could Lead to Nuclear WarSubmitted by George Washington on 01/09/2015 19:54 -0400
The Stakes Are Too High NOT to Negotiate Peace
“There are far more people in the market, including mutual funds, than there is intelligence to go around.”
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"