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NSA Admits: 'We Do Store All Your Data But We Don't Look At It All'





The Director of National Intelligence released three declassified "in the interests of transparency" documents this morning that authorized and explained the bulk collection of phone data - one of the secret surveillance programs that Snowden revealed. As Reuters reports, much of what is contained in the documents has already been divulged in public hearings by intelligence officials but the National Security Agency's "Bulk Collection Program," carried out under the U.S. Patriot Act, is now in the open. Have no fear though, "Although the programs collect a large amount of information, the vast majority of that information is never reviewed by anyone in the government," the report said. As Senator Patrick Leahy commented, "what has to be of more concern in a democracy is whether the trust of the American people is beginning to wear thin."

 
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Financial Sense And Nonsense





“…the best way to get interest rates up is to have low interest rates" —Fed Chairman Bernanke responding to a Congressional testimony question

“We all know it’s going to end badly, but in the meantime we can make some money.”  —Jim Cramer, CNBC

“Thank God for the Fed.” —Australian Treasurer Wayne Swan

“Let’s be clear. We’ve intentionally blown the biggest government bond bubble in history.” —Andy Haldane, Bank of England director of financial stability

 
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Dylan Grice On The Intrinsic Value Of Gold, And How Not To Be A Turkey





Today’s bizarre confluence of negative real interest rates, money printing, eurozone sovereign default, aberrant asset prices, high unemployment, political polarization, growing distrust… none of it was supposed to happen. It is the unintended consequence of past crisis-fighting campaigns, like a troupe of comedy firemen leaving behind them a bigger fire than the one they came to extinguish. What will be the unintended consequences of today’s firefighting? We shudder to think.

 
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Presenting The Location Of The NSA's Secret FISA Court





The nation's spy court has begun operations in a new, secure space on the third floor of the E. Barrett Prettyman Courthouse in downtown Washington, ending its 30-year run of issuing secret warrants from within the Justice Department, according to three sources connected to the Foreign Intelligence Surveillance Court who spoke on the condition of anonymity, citing the strict secrecy surrounding it.

 
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Count Yourself Among The Poor!





Go ahead, be a fool, tell yourself that you are still part of that once proud American “middle-class,” then dare look in the mirror and see yourself as nothing but a zombie. Or, rather, the new identifiable species in the US: the Amerizombie, a reanimated economic corpse, undead but politically clueless to the new global realities.

 
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It Really Isn't Ackman's Day As CIT Pulls JCPenney Credit





While we have heard this rumor before, the NY Post is reporting that CIT - the largest commercial lender/factor in the US apparel industry - has abruptly stopped supporting deliveries from smaller manufacturers to JCPenney stores. Insiders speculated that CIT got skittish after meeting with JCP officials yesterday and getting a glimpse of financials. It really is not Bill Ackman's day - HLF +10%, JCP -6.7%.

 
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The Financial System Doesn't Just Enable Theft, It Is Theft





It is painfully self-evident that our financial system doesn't just enable theft, it is theft by nature and design. If you doubt this, please follow along...

"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."

Ernest Hemingway, The Next War
 
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Fed Humiliated With Red Close Despite Dovish FOMC And GDP Revision





A very volatile day in stocks ended with a violent high volume dump from post-FOMC highs on heavy MoC selling pressure that left the S&P and Dow with red closes. S&P futures still managed their best month since Oct 2011 - though unable yet again to capture the 1,700 flag. The size and scale of the 'rotation' into the close (and strength in bonds) leaves us wondering who is buying and who is selling. For some context, post-FOMC, S&P -4pts, 10Y -8bps, Gold +$10, USD -0.15%; so it seems bonds benefited the most and stocks seem to be crying out for moar. The Dow has now closed red for 3 days-in-a-row - the worst streak in seven weeks.

 
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Chart Of The Day: Foreigners Are Quietly Getting Out Of Dodge





While the Fed is posturing daily whether it will or it won't monetize an ever greater portion of gross US issuance (and considering the drop in US funding needs, unless the Fed tapers it will soon very soon buy more than 100% of all 10 Year equivalent issuance going forward), foreigners have made their position vis-a-vis US paper loud and clear. What is their position? The following chart from today's TBAC presentation to the Treasury makes it very clear. With an ever declining, and recently the smallest on file, notional amount of Treasurys at auction going to foreigners since 2009 (and certainly much further back), they are not sticking around to see what happens.

 

 
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Shorting Stocks On These POMO Days Will Be Frowned Upon By The Fed





While 'tentative', the Fed's POMO schedule for August signals no Taper anytime soon. But, the Fed has generously 'allowed' 4 days for the shorting of stocks in August (Friday 2nd, Friday 9th, Wednesday 21st, and Friday 30th). Away from those days - BTFATH...

 
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Forget The FOMC, Here Is Hilsenrath





Anyone, or rather any vacuum tube algo, hoping that Fed mouthpiece Jon Hilsenrath's traditional post mortem would be kind enough and summarize the FOMC with a simple one or at most two-word phrase ("Buy" or "Superstrong Buy") will be disappointed. At best, the following summary can be summarized as "Neutral", or "Cautiously Non-committal", although as he correctly points out "Modest" is worse than "Moderate" as most recall from elementary school - it is unclear if this news is horrible enough to send the S&P to record highs.

 
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Algorithmic Knee Jerk To FOMC Signals Vacuum Tube Confusion





The usual schizophrenic reactions across asset classes are progressing but with 30 minutes down, it appears bonds are benefitting most (10Y -5bps), gold is up modestly (+$10 at $1320), and the USD down small after swinging both ways already. Stocks are the most 'confused' but just as they tumbled on the realization that the taper is not only still on the table but coming, a rumor spread like wildfire that Hilsenrath was about to provide the much needed "Strong Buy" interpretation of the virtually unchanged from June FOMC statement.

 
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Fed Releases Broken Record: "Prepared To Increase Or Reduce QE", No Taper Mention - Full Redline Comparison





The FOMC appears to have 'tweaked' its message to fit with Bernanke's confusing commentary and confirms that 'tapering is not tightening'.

  • FED SAYS INFLATION 'PERSISTENTLY' BELOW 2% GOAL COULD POSE RISK
  • FED SAYS ECONOMIC GROWTH WILL PICK UP FROM RECENT PACE
  • FED REPEATS RATES 'EXCEPTIONALLY LOW' UNTIL JOBLESS AT 6.5%
  • FED SAYS UNEMPLOYMENT WILL GRADUALLY DECLINE
  • FED SAYS 'DOWNSIDE RISKS' DIMINISHED 'SINCE THE FALL'
  • FED NOTES THAT MORTGAGE RATES HAVE RISEN SOMEWHAT
  • FED SAYS IT IS PREPARED TO INCREASE OR REDUCE THE PACE OF PURCHASES

Bullard no longer dissenting, George is sole dissenter. And don't forget, of course, that this is all pretense in the face of the inevitability of the taper due to refunding, political, and technical reasons. As we noted earlier, it seems preferable to pretend the economy is strong enough to withstand less-easing (tightening) than admit the Fed is cornered.

Pre: S&P Futs 1685, 10Y 2.65%, USD Index 81.80, WTI $104.65, Gold $1311

Redline to follow

 
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Bonds Face Worst July In 10 Years





As liquidity-slurpers the world over wait for the written words from the FOMC this afternoon, it seems the bond market has sold-first-asked-questions-later on its 'Taper' expectations (with 30Y yields now at 23-month highs). It is little surprise (given the real reasons for a Taper as we discussed here and here) but today's ADP and GDP data provide more 'headline' ammo for the Fed to cover the reality that they are cornered. It seems it is better to project the 'fallacy' that the economy is strong enough to withstand a 'tapering' of monetary policy than to admit that there is a technical limit to the extent by which the Fed can print money before it breaks the market and shifts sentiment to a realization that it's nothing but monetization. The US bond market has suffered losses for 3 months in a row now, and this is the first July loss in 10 years - or will the FOMC save them?

 
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Think Your Password Is Secure From The NSA? Try This





Seven minutes. That’s how long it would take to crack one of the passwords we had been using for more than ten years, according to the crypto experts at Silent Circle. The typical 'dog's name, daughter's nickname, favorite ice-cream' style password won’t typically thwart government agencies that are keen to spy on their citizens. They can easily be cracked in a matter of minutes. Since cracking algorithms succeed by picking up patterns in human behavior, the key to a secure password is randomness and disorder. In the security business, this is known as entropy.

 
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