White House

Frankly we have no idea what this is all about, because as far as we are concerned, CNN long ago became a politicized, ratings-starved farce, wrapped in a joke inside a humiliation (after once upon a time being the only go to place for objective breaking news), but it is rather funny. The Hill reports that "a White House petition calling for the deportation of CNN personality Piers Morgan, a U.K. citizen, over his recent comments criticizing U.S. gun laws rocketed past the 25,000 signatures it needed for an official response Monday. As of this writing, nearly 40,000 people had signed a petition demanding “Mr. Morgan be deported immediately for his effort to undermine the Bill of Rights and for exploiting his position as a national network television host to stage attacks against the rights of American citizens.” A petition on the White House's “We the People” website needs 25,000 signatures in the first month of being posted to earn an official administration response. “I don't care about petition to deport me,” Morgan tweeted Monday. “I do care about poor NY firefighters murdered/injured with an assault weapon today. #GunControlNow.”

If you share our sense of outrage at the way wounded veterans are treated by Delta Airlines and other commercial carriers, then please get involved.  Merry Christmas

The collapse of the Fiscal Cliff talks should come as no surprise to anyone (except, of course, for all those "expert" political commentators virtually all of whom saw a deal by December 31: a full list of names is forthcoming). The reason: a simple one - a House torn, polarized to a record extreme, and a political environment in which the two parties, in the aftermath of a presidential election humiliating to the GOP, reached unseen before antagonism toward each other. In this context, it was absolutely inevitable that America would see a replica of last summer's debt ceiling collapse, which mandated a market intervention, in the form of a crash, and the wipeout of hundreds of billions in wealth - sadly the only catalyst that both parties and their electorate, understand. We had prefaced this explicitly in early November when we said that "the lame duck congress will posture, prance and pout. And it is a certainty that in the [time] remaining it will get nothing done. Which means, that once again, it will be up to the market, just like last August, just like October of 2008, to implode and to shock Congress into awakening and coming up with a compromise of sorts." Which of course brought us to Thursday night's mini-TARP moment. With all that said, there are those forensic detectives who are addicted to every single political twist and turn, and who are curious just where and when the Fiscal Cliff talks broke down in the past week. In this regard, the WSJ provides a useful timeline.

Presenting Dave Collum's now ubiquitous and all-encompassing annual review of markets and much, much more. From Baptists, Bankers, and Bootleggers to Capitalism, Corporate Debt, Government Corruption, and the Constitution, Dave provides a one-stop-shop summary of everything relevant this year (and how it will affect next year and beyond).

... and all through the collocated server house, GETCO algos were stirring, hoping (as this is the only "strategy" left) that maybe, just maybe, Obama can pull a unicorn out of his skittles-dispensing hat. He won't, and most likely we will get one last does of stern fingerpointing, harsh language and accusative condemnation of those wascaly wepublicans. But find out for yourselves in 15 short minutes, when the market may be closed, but futures will still be open, although at least subject to the limit down rule. Of course, if the news was good, it would have come before 4 pm...

This manipulated market has become so predictable a blind, retarded monkey with a dartboard should have made enough money by now to retire 3 lifetimes over.

From 9:39 am:

@specsitinvestor we may well close >1% when the Fiscal Cliff deal rumor hits at 3:30pm

— zerohedge (@zerohedge) December 21, 2012

Sure enough, at 3:19 pm:

• White House Said to Consider Smaller Fiscal Cliff Deal: Politico

And cue melt up.

First gun sales soared, then Wal-Mart ran out of guns, then parents, stunned by the popular response in the aftermath of the Newtown mass murder which saw the White House threaten to curb the Second Amendment and lead to an even more unprecedented scramble for guns and ammo, and seeing nothing but confusion (but lots of bickering meant to extract nothing but political brownie points) out of the government instead of any hope of actual protection, decided it was time for some vigilante protection. The end result: sales of bulletproof backpacks have soared, with sales exploding as much as 500% since Friday. And since the white line from a defensive to an offensive posture is very thin, it is likely only a matter of time before we get the first media report of a 6 year old armed with a 44 caliber during recess.

Iraq quadrupled its gold holdings to 31.07 tonnes over the course of three months between August and October, data from the International Monetary Fund showed on yesterday. The IMF's monthly statistics report showed the country's holdings increased by some 23.9 tonnes in August to 29.7 tonnes. That was followed by a 2.3-tonne rise in September to 32.09 tonnes and then a cut of 1.02 tonnes in October to 31.07 tonnes.  There was no data for November. It is Iraq's first major move in years to bolster its gold reserves. More recently, Brazil raised its gold holdings by 14.68 tonnes, or 28 percent, in November, bringing its bullion reserves to 67.19 tonnes. The addition comes on the heels of an even bigger increase in October when the South American country added 17.17 tonnes to its reserves. In September, it  increased holdings by 2 tonnes. Meanwhile Turkey cut its gold holdings last month by 5.84 tonnes to 314 tonnes from October. The country allows commercial banks to use gold as collateral for loans, and changes to its balance sheet are often connected to such activity.

It may not be apparent immediately, but in the aftermath of last night's epic collapse in fiscal cliff negotiations, which incidentally was perfectly obvious to anyone with half a brain and who experienced last summer's debt ceiling fiasco, which sadly excludes all paid political and financial - including sellside - commentators, all of whom expected a prompt resolution to this polarized issue as recently as a week ago, there is major behind the scenes panic. Because while banks would write profuse, long-winded essays to explain the logic and rationality of the "deal", now that they are all faced with adjusting their narrative the best they can come up with are two sentence fragments such as this one from Citi's Steven Englander "Problem is that it is the right wing of the Republican Party that wouldn’t give Boehner their support, making it less likely that he could win broad support among Republicans for a compromise with the White House. Also he will have to spend next couple of days negotiating with both his own party and the Democrats without knowing how much he can deliver." The answer: nothing at all. In fact as Scott Rigell said “I’m not sure the people who have been up here 20 or 30 years really understand what the next iteration of this process is”.  He is speaking for pretty much everyone else who has now been made a total fool by the Black Swan that is Congress. As a reminder a 3 month delay resolution assures a US recession, and a ~20% or so minimum correction in the stock market, which has been priced for absolute perfection for months, and which will once again have to be used by Wall Street as a means to get a consensus out of DC. Just as we predicted over a month ago. Finally while we may have avoided the Mayan apocalypse, we do have a quad witching and a NASDAQ rebalance to look forward to. Enjoy!

Was the shooting of 20 students in Newtown, Connecticut the Neo-Liberal version of 9/11?  The question merits considerable thought, but let me explain further what I mean.  In the aftermath of the 9/11 World Trade Center attacks, a sense of shock and awe sunk into the minds of the American populace like nothing seen in decades.   This overwhelming fear, this logic crippling terror, infected the public to more destructive ends than any deadly virus in existence.  Conservatives were especially vulnerable to the infectious symptoms of the event, abandoning all reason and even their small government values to support the fascist inklings of the Bush Administration. More than a decade later, the Neo-Liberal (fake liberal) Obama Administration and its minions continue the Bush legacy by exploiting our latest tragedy at Sandy Hook Elementary as a means to an end; a political opportunity to assert federal authority as more valuable than constitutional freedom. If you can’t convince people through rational debate that your position is the correct one, and, if you have to threaten them, lie to them, or brainwash them before they will adopt your ideas, then there is something wrong with your ideas.

The subject of inflation has remained an emotionally charged topic of debate over the last several years.  As rising prices for individuals, and businesses, has negatively impacted their prosperity; reported inflation has remained at very low levels.  With the Fed pumping trillions of dollars into financial system the fear of much higher inflation, as the dollar is debased, has caused gold prices to soar in recent years. The sole purpose in measuring inflation is to help businesses, individuals and government adjust their financial planning for the impact of inflation.  Inflation erodes future purchasing power, and decreases economic prosperity, if not accurately accounted for.  The accuracy of measuring inflation, and accounting for it properly, is essential to long term economic prosperity. Shortly after Clinton entered the White House the Bureau of Labor Statistics (BLS) altered the calculation of inflation by changing the weighting of goods in the CPI fixed basket. But the manipulation of the data did not stop there.

• IMF Demands Partial Default for Cyprus (Spiegel)
• Boehner's 'Plan B' Gets Pushback (WSJ)
• Beijing criticises US ‘political checks’ (FT)
• White House Said to Tell Business Groups Talks Stall (BBG)
• NYSE tries to get hitched again: IntercontinentalExchange in talks to buy NYSE (Reuters) -> N-Ice coming?
• Greece faces ‘make or break’ year (FT)
• Fed rejects idea of consensus forecasts, "maybe forever": Fisher (Reuters)
• Rajoy Drives Spanish Revolution With Low-Cost Manufacture (BBG)
• Italian Senate Set for Budget Vote Before Monti Resigns (BBG)
• BOJ Loosens With Pledge to Review Inflation Objectives (BBG)
• Bowing To Abe, BOJ To Review Price Goal (WSJ)

So, John Kerry As Secretary of State and now Joe Biden as the new Gun Tzar... should be fine...

*OBAMA SAYS VICE PRESIDENT BIDEN TO LEAD EFFORT ON GUN VIOLENCE
*OBAMA SAYS HE WILL PUSH `WITHOUT DELAY' BIDEN RECOMMENDATIONS
*OBAMA SAYS BIDEN TASKED WITH `REAL REFORMS' ON GUN VIOLENCE
*OBAMA SAYS BIDEN TO REPORT BACK NEXT MONTH

Market reaction is RGR and SWHC rallying from the news...

Just as we predicted, the Republicans effort to vote on 'Plan B' and throw the blame back to Obama's Democrats for a failed Fiscal Cliff resolution has halted discussions (which no matter how it is spun is not a positive!!!)...

• *WHITE HOUSE SAYS TALKS HALTED ON BOEHNER'S 'PLAN B': POLITICO
• *WHITE HOUSE SAYS 'PLAN B' MAKES DEAL LESS LIKELY: POLITICO

Of course, the market does not care... why would it?

• Republicans put squeeze on Obama in "fiscal cliff" talks (Reuters)
• Inquiry harshly criticizes State Department over Benghazi attack (Reuters)
• Banks See Biggest Returns Since ’03 as Employees Suffer (BBG)
• Italy president urges election be held on time (Reuters)
• Bank of England Says Sterling Hurting Economy (WSJ) - there's an app for that, it's called a Goldman BOE chairman
• China slowdown hits Indonesian farmers (FT)
• China dispute hits Japanese exports (FT)
• Market to get even more monopolized by the HFT king: Getco wins Knight with $2 bln sweetened offer (Reuters)
• MF Global Cases Focus on 'Letters' (WSJ)
• UBS fined $1.5 billion in growing Libor scandal (Reuters)
• Spotlight swings to interdealer brokers (FT)
• China Widens Access to Capital Markets (WSJ)
• With Instagram, Facebook Spars With Twitter (WSJ)