White House

The phrase New World Order is largely derided as a sophomoric conspiracy theory entertained by minds that lack the sophistication necessary to understand the nuances of geopolitics. But it turns out the core idea — one of deep and overarching collusion between Wall Street and government with a globalist agenda — is operational in what a number of insiders call the “Deep State.”

Government poses a threat to liberty, that much is clear. But what may be surprising is that almost half of Americans clearly identified government as a clear and “immediate” threat, and are obviously outraged about what is going on. It is time that Americans embrace their anger at government, and focus their attention past the politicians to the real problem. Start with the bankers, follow the money, and see where it goes...

In a startling turn of events, retired General John Allen will be stepping down as special envoy to the global coalition fighting ISIS and will be leaving government employment entirely. President Obama’s hand-picked choice to lead the U.S. in the international effort fighting the Islamic State will call it quits just as the harsh spotlight intensifies scrutiny over questionable decisions by the administration.

As Bloomberg reports, "President Vladimir Putin, determined to strengthen Russia’s only military outpost in the Middle East, is preparing to launch unilateral airstrikes against Islamic State from inside Syria if the U.S. rejects his proposal to join forces, two people familiar with the matter said."

A federal shutdown due to a funding lapse looks no less likely than it did two weeks ago, and Goldman Sachs believes the probability is nearly 50%. The Senate is expected to begin voting later this week on a funding extension, but the House looks unlikely to act until shortly before the September 30 deadline. The following attempts to answer the main questions surrounding the shutdown, debt limit deadlines, and ramifications...

Great companies like Hewlett-Packard are now being run not by adult professionals but day-trading punters. Carly Fiorina was one of the latter. She excelled at mastering her flash cards and pitching financial bubbles from the time of the misbegotten Lucent IPO, to her campaign for the Compaq acquisition, to her final days at Hewlett-Packard. What she didn’t excel at was learning a single thing that qualifies her to be President of the United States - not the least of which is humility. Fiorina needs to shut-up, sit down and flush her flash cards. The furtherance of liberty, prosperity and peace are not what Torquemada’s do.

As tipped last month, the IAEA is allowing Iran to self-police the sample collecting process at a controversial military installation. Although inspectors and Iranian officials give conflicting accounts, what's clear is that Tehran is not at all prepared to accept a situation that causes the Rouhani government to lose credibility with the Iranian public. Expect GOP lawmakers (not to mention presidential candidates) to hold this up as yet another example of why the deal is likely to blow up (figuratively speaking we hope) in the face of the Obama administration.

Home building is a miserable business. First you borrow to buy land, then borrow some more to develop land, then more to build, while paying out exorbitant executive compensation all along. Years later, you finally sell the finished product, maybe for a profit, maybe at a loss. Builders have been buying more land at much higher prices in hope for a continuation of optimal conditions. Lucrative margins can turn into large losses, much like 2006-07. Unless the Yellen Fed comes up with a big surprise, shorting rallies will be the way to go.

• Global Stocks Steady Despite China Slowdown (WSJ)
• European Recovery Saves Markets From China Gloom as Stocks Rally (BBG)
• Pope starts U.S. trip with tone of conciliation (Reuters)
• FBI Said to Recover Personal E-Mails From Hillary Clinton Server (BBG)
• Volkswagen chief faces grilling by board over diesel scandal (Reuters)
• 'European Detroit' Fear Grips VW Company Town as Scandal Widens (BBG)
• Berlin finds itself caught up in Volkswagen scandal (FT)

“Unless we get up off our fat surpluses and recognize that television in the main is being used to distract, delude, amuse, and insulate us, then television and those who finance it, those who look at it, and those who work at it, may see a totally different picture too late.”

The economics of Hillary Clinton is first and foremost about expanding the power and scope of the US government, and as government gains more control, the more employers and business owners need to be in the good graces of American politicians. To be blunt, Clinton believes that people like herself can continually loot US businesses, with business owners paying their protection money without complain. After all, Hillary knows best; just ask her.

As WaPo reports, "Hillary Clinton is proposing a $250 monthly cap on the amount patients with chronic and serious medical problems would have to pay out of pocket for prescription drugs as a way to reduce the effect of skyrocketing drug prices on consumers." "Nobody in America should have to choose between buying the medicine they need and paying rent," Clinton says. 

AsiaPac stocks are opening mixed after the US session gains. Perhaps the biggest news of the evening is, as China's bankiong regulator has been meeting with foreign banks to express concerns over lack of risk control around non-performing loans. As CBRC said, rather stunningly honest for a government entity, "the current situation is more severe than the time in 2008 during the financial crisis." With stocks up while commodities (Zinc) limit-down, PBOC injects another CNY50 bn and devalued the Yuan fix for the 2nd day in a row.

"Possible Actions: Publicize presence of transiting (or externally focused) extremist groups in Syria, not limited to mention of Hamas and PIJ. Publicize Syrian efforts against extremist groups in a way that suggests weakness, signs of instability, and uncontrolled blowback. The SARG,s argument (usually used after terror attacks in Syria) that it too is a victim of terrorism should be used against it to give greater prominence to increasing signs of instability within Syria."

Two weeks ago, when no one was talking about the possibility of a government shutdown, we warned it was coming. Today, as Politico reports, with very little time left to reach a deal, budget experts project a 75% chance of a shutdown. No matter how immaterial in terms of their economic impacts, government shutdowns create uncertainty and thus influence Fed decisions and as SocGen notes, with the odds of an October liftoff low, a government shutdown could lower them further. Although funding issues should be resolved by the December FOMC meeting, there is a small chance that the fiscal standoff extends into the end of the year (i.e. due to a temporary continuing resolution), creating another deterrent for the Fed.