SPY

As if emerging markets didn't have enough things to worry about following a week in which both the Turkish and Argentina currencies are in free fall, overnight we got a stark reminder from Thailand that the country where the 1997 Asian Crisis originated, is also on the brink and getting worse following news that a anti-government protest leader was shot and killed. Reuters reports, citing a spokesman for the national police, that the dead man as Suthin Tharatin - one of the protest leaders- was shot in the head and in the chest.

While Edward Snowden's legacy has already been felt in official, government circle most recently with Obama's amusing, if completely meaningless, theatrical reformation of the NSA (so wait, the Utah's superstasi spy center is now closed, right?), it is now the private sector's turn. Moments ago, Verizon - in what is hopefully the first such action of many - provided an extensive "Transparency Report" in which it disclosed the "number of subpoenas, orders, and warrants we received from law enforcement in the United States last year. We also received emergency requests and National Security Letters. The vast majority of these various types of demands relate to our consumer customers; we receive relatively few demands regarding our enterprise customers." So regular retail customers are being actively spied on, but corporations are safe. Good to know.

In his 712-page tour de force, The Great Deformation, David Stockman dissects America’s descent into the present era of “bubble finance.” it’s hard to refute Stockman’s perspective on the Fed’s role in the housing bubble. But that won’t stop some from trying, and especially the many academic economists beholden to the Fed. Research papers have stealthily danced around the Fed’s culpability for our crappy economy, as we discussed here. More importantly, if Stockman is right about bubble finance, there’s more mayhem to come. Consider that denying failure and persisting with the same strategy are two sides of the same coin. Just as investors avoid the pain of admitting mistakes by holding onto losing positions, Fed officials who claim to have done little wrong are also more committed than ever to propping up asset markets with cheap money. For those concerned about another policy failure, a key question is:  “As of today, where do we stand with respect to bubbles and bubble finance?”

Remember when Obama said he would have engaged in a dramatic overhaul of the NSA with or without Edwards Snowden? Funny as that statement may have been at the time (and recall that Comedians have psychotic personality traits, study finds), we will never know just what Obama would have done if... but we do know that at 11 am this morning, Obama will say he is ordering a transition that will significantly change the handling of what is known as the telephone "metadata" program from the way the NSA currently handles it. In other words, if you like your phone records, you can keep your phone records. It goes without saying that the number of people who believe anything the president says at this point is the same number or less than the dozen or so Chinese enthusiasts who waited in "line" to get a new China Mobile phone.

The Administration Treats Congress Just Like the American People: With Scorn and Disdain

Day two of the bounce from the biggest market drop in months is here, driven once again by weak carry currencies, with the USDJPY creeping up as high as 104.50 overnight before retracing some of the gains, and of course, the virtually non-existant volume. Whatever the reason don't look now but market all time highs are just around the corner, and the Nasdaq is back to 14 year highs. Stocks traded higher since the get-go in Europe, with financials leading the move higher following reports that European banks will not be required in upcoming stress tests to adjust their sovereign debt holdings to maturity to reflect current values. As a result, peripheral bond yield spreads tightened, also benefiting from good demand for 5y EFSF syndication, where price guidance tightened to MS+7bps from initial MS+9bps. Also of note, Burberry shares in London gained over 6% and advanced to its highest level since July, after the company posted better than expected sales data. Nevertheless, the FTSE-100 index underperformed its peers, with several large cap stocks trading ex-dividend today. Going forward, market participants will get to digest the release of the latest Empire Manufacturing report, PPI and DoE data, as well as earnings by Bank of America.

The 1,582-page (apparently bipartisan) omnibus spending bill announced last night adds up to a cool $1.1 trillion. As Bloomberg reports, lawmakers notes "not everyone will like everything in this bill," and we can see why. There is no IMF funding, nothing that "blocks Obamacare," the IRS gets a reprimand - barring them from targetng groups based on their ideological beliefs, preserves language that blocks Federal funding for abortions and spending any money to legalize marijuana. But, perhaps the most critical aspect of the bill is the NSA is required to give Congress number of phone records collected, reviewed during last 5 yrs, including estimate for records of U.S. citizens (among other things). Will that be one step too far for the administration?

The rally is running out of steam, and there is a real possibility of a trend change.

After a banner year for the former KGB spy, who first neutralized Prince Bandar and John Kerry (not to mention the president of the US), and subsequently reannexed the Ukraine into the Russian sphere of influence now that the second coming of the former USSR is in the works, it should come as no surprise that Russia's Vladimir Putin has been named the third most admired person in the world. Then again when one considers who is ahead of Putin in the Time poll, perhaps this distinction is nothing to write to the NSA about - third spot is located behind Microsoft founder Bill Gates and US President Barack Obama. Indicatively, this also means that Barack Obama is inexplicably still the second most respected person in the world.

If you’ve ever sought advice from a financial advisor, you probably asked the question: “How much of my portfolio should I hold in stocks?” Somewhere in the answer, you were probably offered long-term return estimates. These estimates probably placed stock returns at approximately inflation plus 5 or 6%. But what if standard estimates are too optimistic, as they were in the 1990s when advisors typically predicted double-digit long-term returns? Shouldn’t this change your investment allocations? We’ll argue that the usual estimates are overoptimistic, and that investment allocations should be based on more realistic expectations. Worse still, the discrepancy has reached enormous proportions.

It’s NEVER to Protect Us From Bad Guys

A spiral of Looneyism...

The Media Needs to Point Out the Hypocrisy of These Blowhards

"Members of Congress have the same privacy protections as all U.S. persons" - NSA

2013 already saw violent unrest in some of the most stable countries in the world like Singapore and Sweden, all underpinned by absolute disgust for the status quo. Whether today or tomorrow, this year or next, there will be a reckoning. The system is far too broken to repair, it must be reset. It’s simply absurd to look at the situation objectively and presume this status quo can continue indefinitely... that this time is different… that we’re somehow special and immune to universal principles.