Reality

“We have come with our honor to recognize these adverse results, to accept them and tell Venezuela that the constitution and democracy have triumphed, We accept the results just as they have been announced by the electoral body.”

Terrorism works on the perception of the victims. It seems incredible that ten mediocre individuals, with a few primitive weapons, could cause world-wide panic. But it is a fact. Bolstered by the mass media, which thrive on such events, local terrorist acts turn themselves nowadays into world-wide threats. The modern media, by their very nature, are the terrorist’s best friend. Terror could not flourish without them. The next best friend of the terrorist is the politician. It is almost impossible for a politician to resist the temptation to ride on the wave of panic. Panic creates “national unity”, the dream of every ruler. Panic creates the longing for a “strong leader”. This is a basic human instinct.

“There have been arrests and crackdowns before on grass-roots labor organizations here,” one activist, He Shan, said in a telephone interview from Shenzhen, a mainland city that abuts Hong Kong. “But this is the most concentrated, the most serious. For us, this is unprecedented.”

As we approach the Fed meeting expect markets to get more volatile. While the odds favor a move, it isn’t a sure thing until it is actually done. We found out last week what happens when forward guidance turns out to be forward misdirection. All those traders who thought they had a sure thing, who assumed that Draghi wouldn’t dare disappoint the market, got whipped. Whipped good.

Until pro-growth, low taxation and less regulation policy changes are enacted, we don’t foresee any changes to central bank policy nor the unsustainable market divergences and asset price distortions. Expect more media propaganda on how great the economy is while the reality is another story. Early signs are that retail sales this holiday season are poor. Nobody can predict when reality will set in and equity markets revert back to pre QE levels in 2008/09. The longer this charade continues, the lower equity markets will eventually go, and in the short-term so will commodities. Then the super cycle in commodities will begin anew. Much this will hinge on next fall’s election cycle.

Inequality of wealth is inequality of power. A study just released finds that "America’s 20 wealthiest people — a group that could fit comfortably in one single Gulfstream G650 luxury jet — now own more wealth than the bottom half of the American population combined, a total of 152 million people in 57 million households.” How much political power do the people who would be inside that jet — and their friends — actually have?

...and a trader who doesn’t pay attention to the modern realities of market structure and liquidity provision is not long for this world.

As for the authoritarians who want to use incidents like the San Bernardino attack as a pretext to abolish the Constitution and institute a regime of total surveillance and outright repression: where was their vaunted surveillance system in this case? We didn’t detect this plot – and perhaps that’s because watching everyone, and collecting everyone’s information, blinds us to the real villains hiding in our midst. Then again, perhaps ferreting out villains isn’t the real purpose of government spying.

Uncivil disobedience...

For the hundreds of thousands of warehouse, retail and storage workers who will soon be made obsolete, please meet your nemesis: the robot who will do your job without complaints, asking for a pay raise (or salary), or ever threatening to unionize.

The mainstream media is increasingly suggesting that we have once again entered into a 'Goldilocks Economy.' The problem is that in the rush to come up with a 'bullish thesis' as to why stocks should continue to elevate in the future, they have forgotten the last time the U.S. entered into such a state of 'economic bliss.' You might remember this: "The Fed's official forecast, an average of forecasts by Fed governors and the Fed's district banks, essentially portrays a 'Goldilocks' economy that is neither too hot, with inflation, nor too cold, with rising unemployment." - WSJ Feb 15, 2007. Of course, it was just 10-months later that the U.S. entered into a recession followed by the worst financial crisis since the 'Great Depression.'

This is WAY beyond ‘if you see something, say something.’

"People are afraid. They don’t like to see the headlines and that is why they are withdrawing their money. It shows the panic that is going on from the investors’ perspective.”

For the 13th week of the last 14, US Oil rig counts declined. Down 10 to 545 rigs, this is the lowest since May 2010 as the temporary respite in the early Fall has given way to reality and rig counts track the lagged crude price lower...