Cohen

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.

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!"

• Ruble Sinks to 80 a Dollar Defying Surprise Russia Rate Increase (BBG)
• Oil slumps near $59 for first time since 2009 on oversupply (Reuters)
• Oil sinks, Russian moves fail to quell nerves (Reuters)
• Fed Seen Looking Past Low Inflation to Drop ‘Considerable Time (BBG)
• Students Among Dead as Pakistan Gunmen Kill 126 at Army School (BBG)
• Repsol to buy Talisman Energy for $13 billion (Reuters)
• Indonesia’s Rupiah Erases Decline After Central Bank Intervenes (BBG)
• Anti-Islam Rally Grows as Immigrant Backlash Hits Europe (BBG)
• Saudi Arabia is playing chicken with its oil (Reuters)

In a stunning rebuke of Preet Bharara's insider-trading prosecutions record, Businessweek reports a federal appeals court overturned and threw out the guilty verdicts of two hedge fund managers, Todd Newman and Anthony Chiasson, ruling jury instructions tainted their verdicts and imperiling other cases brought in his multiyear probe. In a 28-page decision that could rewrite the course of insider trading law, sharply curtailing its boundaries, the United States Court of Appeals for the Second Circuit in Manhattan tossed out the case on technicalities which could also lead to the release of SAC's Michael Steinberg - Bharara's signature prosecution - as Steinberg's lawyer remarked, "it sends a loud and clear message that the government will be rebuked when it tries to turn innocent conduct into a crime." So insider-trading is legal now... with the right lawyer and judge. We wonder how many shipments of Picassos to the three appeals court judges did the verdict cost Steve Cohen?