Turkey has cracked down on press "freedom" and whipped the public into a "terror" paranoia frenzy ahead of new elections set for November. The bottom line: while the Western media is preoccupied with China's censorship and stock market selloff witch hunt, a NATO member is busy nullifying a democratic election outcome and instigating a civil war, all in the pursuit of political power and all with Washington's explicit blessing.
Through the 20th century, the people of the West built up a very high compliance inertia. They complied with the demands of authority and taught their children to do the same, until it became automatic. People obeyed simply because they had obeyed in the past. Authority quickly became addicted to this situation, basing their plans on receiving every benefit of the doubt. Automatic obedience, however, is a brittle thing. Economies of scale are failing, the money cartel has been exposed, government schools have lost respect, mass media is fading away, and the game continues because the populace is distracted and afraid. And that will not last forever. The ‘walls’ of reflexive compliance are growing thinner. Any serious break may ruin the structure.
FX Traders Fear "Worst Case Scenario" For Brazil As FinMin Cancels Travel Plans, Rousseff Meets With LulaSubmitted by Tyler Durden on 09/03/2015 18:24 -0400
The situation in Brazil is deteriorating rapidly after finance minister Joaquim Levy canceled a G20 appearance in Turkey (irony) and convened a meeting with embattled President Dilma Rousseff. FX traders fear a worst case scenario involving Levy's exit. Meanwhile, former President Luiz Inacio Lula da Silva is en route to Brasilia tonight to meet with Rousseff one-on-one.
Now that we’re in the classic “crash season,” the situation only looks worse. This season technically started in mid-August, and won’t end until mid-October. This is not to say the chaos won’t continue later on into the end of this year. It just means the worst decline, this first wave down, is likely to come in the next several weeks. So consider this current bounce a gift. The signs are all there that this global bubble is done. Use this time to get out of any passive investments in stocks.
Bridgewater's 'All-Weather' Fund Goes Negative For 2015 After Risk-Parity's Worst Quarter Since LehmanSubmitted by Tyler Durden on 09/03/2015 17:24 -0400
The $80 billion Bridgewater All Weather Fund, a risk-parity model managed by hedge fund titan Ray Dalio, was down 4.2% in August, according to Reuters citing two people familiar with the fund's performance. This leaves the fund down 3.76% for 2015 as the frameworks for these funds are forced mechanically to reposition as correlations and volatilities across asset classes break down. Just as we saw in the summer of 2013's Taper Tantrum, the last 2 weeks have seen 4 to 5 sigma swings in daily returns and 'generic' risk-parity funds have suffered the biggest 3-month losses since the financial crisis.
News That Matters
To answer the question: yes, the US recession is hiding just under the "question mark" at the unexplained and perplexing divergence between industrial production, and actual end sales all of which result in a record inventory stockpiling which as we showed before, is what recently boosted Q2 GDP to an unsustainable 3.7% growth rate.
"There is no reason to embarrass the president of China..."
The REAL RISK currently is not missing some of the upside if the bull market does begin to resume, but rather catching the downside if this correction turns into a full-fledged bear.
"...we live in an age in which the policies of the past are coming to an end. The Keynesian model does not work, and our Empire does not work. This total failure has to change, and we need to present the alternative."
"... we estimate that only about half (or slightly more than half) of total technical selling was completed to-date (mostly completed by VT funds, half by CTAs, and a smaller fraction by RPs). We estimate that a further ~$100bn of selling remains to be completed over the next 1-3 weeks. As a result, we expect elevated volatility and downside price risk to persist."
Back in early 2014, when IRS director Lois Lerner pleaded the Fifth, it became clear that not all is well with the official narrative. Fast forward to this week when another prominent democrat caught up in another email scandal has just indicated they would plead the Fifth. And no, its not Hillary Clinton, at least not yet, but her former staffer, Bryan Pagliano, who oversaw her private email server. As reported by Politico, he too plans to invoke his Fifth Amendment right not to answer incriminating questions before the House Benghazi Committee, according to a letter his lawyer sent the panel.
While the market nervously eyes the petrodollar reserves of Saudi Arabia and the UAE as the countries juggle domestic expenditures, dollar pegs, and the cost of war, Yemen itself is coming apart at the seams - literally. As WSJ reports, it now looks as though the country may in fact split, as Aden residents have eschewed the red, white and black for the flag of South Yemen, which existed as an independent republic for more than two decades.