Steve Bull's Blog, page 1358
June 20, 2017
The Middle East Is Blowing Up
Every day brings another scary headline from the Middle East — which makes it easy to treat them as background noise rather than a clear and present danger. But the latest batch is reminiscent of the Balkans circa 1914, which means it may be time to tune back in. Some examples:
A US Navy jet shot down a Syrian warplane.Syria is a Russian client state, so this puts the US and Russia on opposite sides in a shooting war.
Russia warned the US that it takes the destruction of its client’s military assets seriously. It suspended the hot line Washington and Moscow have used to avoid collisions in Syrian airspace and threatened to target US aircraft.
Iran has begun launching missiles into Syria targeting ISIS. This is new in at least two ways: 1) Iran hasn’t used those particular missiles in decades, and 2) it was not previously active in Syria. This escalation from advising the Assad regime to actually killing people and blowing things up adds another player on Russia’s side against the US.
Iran and the US trade threats. US Secretary of State Rex Tillerson accused Iran of destabilizing the region and promised that the United States would support “those elements inside the Islamic Republic which would bring about peaceful government transition.” Iran called those remarks “unwise and clear meddling in Iran’s internal affairs.”
Saudi Arabia claimed to arrest members of Iran’s Revolutionary Guard who were attacking a Saudi offshore oil facility, and said that three of the attackers were being interrogated. One day later Iran accused Saudi Arabian border guards of opening fire on Iranian fishermen in the area, killing one of them.
…click on the above link to read the rest of the article…
Trump Is Setting Himself Up To Take All The Blame When The Stock Market Tanks
In spite of low volumes, US stock markets made fresh all-time highs today:
The Dow Jones industrial average rose about 140 points and hit intraday and closing records, surpassing a previous all-time high of 21,391.97, which was set last week.
The S&P 500 gained 0.8 percent to also reached record levels, with information technology rising 1.4 percent to lead advancers. The Nasdaq composite outperformed, rising 1.65 percent.
In an article written for Single Dude Travel and published the day Trump took office, I stated what many others have already been saying for a long time; the market is far overdue for a correction to the downside, and when the whole charade comes crashing down, President Trump is gonna wear the whole thing around his neck:
Whether it was Clinton or Trump, whomever won the Presidency was going to be saddled with $20 trillion of debt (not counting the off-the-books liabilities like Social Security, Medicare and pensions), and a stagnant economy that consists largely of welfare recipients, a defunct healthcare system, and several states and municipalities on the brink of insolvency.
Not exactly a recipe for success.
Brandon Smith of Alt-Market elaborated on why Trump is the perfect personfor the Deep State / Central Bankers / Globalist movements to blame for the coming market collapse…
With interest rates increasing, I would point out that market behavior has changed. The meteoric rise has stalled. In the past few months stocks have barely budged 1 percent either up or down per week. Except for last week when something strange happened; markets suddenly dropped nearly 400 points in a single day. Why? Well, that is a subject up for debate, but the majority of mainstream news outlets will tell you that it was all Donald Trump’s fault.
…click on the above link to read the rest of the article…
Coming Apart: The Imperial City At The Brink
Thomas Cole Destruction of Empire 1836The Conflicts Forum, directed by former British diplomat and MI6 ‘ranking figure’ Alastair Crooke, sent me another unpublished article by Alastair and asked if the Automatic Earth would publish it. But of course. Previous articles by Alastair published here are: ‘End of Growth’ Sparks Wide Discontent in October 2016, Obstacles to Trump’s ‘Growth’ Plans in November 2016 and What is this ‘Crisis’ of Modernity? in January 2017.
Here’s Alastair again:
Alastair Crooke: David Stockman routinely refers to President Trump as the ‘Great Disrupter’. But this is not a bad quality, he insists. Rather, it is a necessary one: Stockman argues (my paraphrasing) that Trump represents the outside force, the externality, that tips a ‘world system’ over the brink: It has to tip over the brink, because systems become too ossified, too far out on their ‘branch’ to be able to reform themselves. It does not really matter so much, whether the agency of this tipping process (President Trump in this instance), fully comprehends his pivotal role, or plays it out in an intelligent and subtle way, or in a heavy-handed, and unsubtle manner. Either serve the purpose. And that purpose is to disrupt.
Why should disruption be somehow a ‘quality’? It is because, during a period when ‘a system’ is coming apart, (history tells us), one can reach a point at which there is no possibility of revival within the old, but still prevailing, system. An externality of some sort – maybe war, or some other calamity or a Trump – is necessary to tip the congealed system ‘over’: thus, the external intrusion can be the catalyst for (often traumatic) transformational change.
…click on the above link to read the rest of the article…
Why The (Collapsing) Global Credit Impulse Is All That Matters: Citi Explains
One week ago, we reported that UBS has some “very bad news for the global economy”, when we showed that according to the Swiss bank’s calculations, the global credit impulse showed a historic collapse, one which matched the magnitude of the impulse plunge in the immediate aftermath of the financial crisis.
But why is the credit impulse so critical?
To answer this question Citi’s Matt King has published a slideshow titled, appropriately enough, “Why buying on impulse is soon regretted”, in which he explains why this largely ignored second derivative of global credit growth is really all that matters for the global economy (as well as markets, as we will explain in a follow up post).
King first focuses on the one thing that is “wrong” with this recovery: the pervasive lack of global inflation, so desired by DM central banks.
As he notes in the first slide below, “the inflation shortfall isn’t new” and yet the current “level of credit growth would traditionally have seen inflation >5%”
To be sure central banks always respond to this lack of inflation by injecting massive ammounts of liquidity, i.e., credit, in the system: according to Citi, the credit addiction started in 1982 in the UK, while in 2009 it was in China. However, there was a difference: while in the 1982 episode, it took 3 credit units to grow GDP by 1 unit, by 2009 this rate had grown to 6 to 1. Meanwhile, central bankers “simply stopped worrying about credit.” That also explains the chronic collapse in interest rates starting in 1980 with the “Great Moderation” and their recent record lows: the world simply can not tolerate higher rates.
…click on the above link to read the rest of the article…
After the ISIS War, a US-Russia Collision?
Sunday, a Navy F-18 Hornet shot down a Syrian air force jet, an act of war against a nation with which Congress has never declared or authorized a war.
Washington says the Syrian plane was bombing U.S.-backed rebels. Damascus says its plane was attacking ISIS.
Vladimir Putin’s defense ministry was direct and blunt:
“Repeated combat actions by U.S. aviation under the cover of counterterrorism against lawful armed forces of a country that is a member of the U.N. are a massive violation of international law and de facto a military aggression against the Syrian Arab Republic.”
An ABC report appears to back up Moscow’s claims:
“Over the last four weeks, the U.S. has conducted three air strikes on pro-regime forces backed by Iran that have moved into a deconfliction zone around the town of Tanf in southwestern Syria, where there is a coalition training base for local forces fighting ISIS.”
Russia has now declared an end to cooperation to prevent air clashes over Syria and asserted an intent to track and target aerial intruders in its area of operations west of the Euphrates.
Such targets would be U.S. planes and surveillance drones.
If Moscow is not bluffing, we could be headed for U.S.-Russian collision in Syria.
Sunday’s shoot-down of a hostile aircraft was the first by U.S. planes in this conflict. It follows President Trump’s launch of scores of cruise missiles at a Syrian airfield in April. The U.S. said the airfield was the base of Syrian planes that used chemical weapons on civilians.
We are getting ever deeper into this six-year sectarian and civil war. And what we may be witnessing now are the opening shots of its next phase — the battle for control of the territory and population liberated by the fall of Raqqa and the death of the ISIS “caliphate.”
…click on the above link to read the rest of the article…
CNN Caught Faking News Again: Qatar Says News Agency Hacking Linked To Middle East, Not Russia
A couple of weeks ago we expressed some level of ‘amazement’ at just how sophisticated, efficient and pervasive the ‘Russian hacking’ community had become after CNN reported that they had managed to hack into a Qatari News Agency and post a ‘fake’ news story all in an apparent attempt to drive a wedge between the U.S., Qatar and some of it’s Gulf Arab neighbors.
Think about that for a minute. Set aside, if you will, the hacking event itself for just a moment and imagine how good the Russians had to be to know exactly what news story needed to be planted inside the Qatari news agency to provoke an immediate severing of diplomatic ties by numerous Arab neighboring states…it truly is mind boggling how it all played out exactly the way the Russians planned…these ‘Russian hackers’ are certainly not a bunch of amateurs.
And while that may sound like a joke, it is, quite unfortunately, not…at least it wasn’t at CNN anyway. Here are the details, as they were previously reported by CNN:
The FBI recently sent a team of investigators to Doha to help the Qatari government investigate the alleged hacking incident, Qatari and US government officials say.
Intelligence gathered by the US security agencies indicates that Russian hackers were behind the intrusion first reported by the Qatari government two weeks ago, US officials say. Qatar hosts one of the largest US military bases in the region.
The alleged involvement of Russian hackers intensifies concerns by US intelligence and law enforcement agencies that Russia continues to try some of the same cyber-hacking measures on US allies that intelligence agencies believe it used to meddle in the 2016 elections.
…click on the above link to read the rest of the article…
June 18, 2017
Mr Creosote is Full
Maitre D’: “And finally, monsieur, a wafer-thin mint.”
Mr Creosote: “No.”
Maitre D’: “Oh, sir! It’s only a tiny little thin one.”
Mr Creosote: “No. F**k off. I’m full…” [Belches]
Maitre D’: “Oh, sir… it’s only wafer thin.”
Mr Creosote: “Look – I couldn’t eat another thing. I’m absolutely stuffed. Bugger off.”
Maitre D’: “Oh, sir, just… just one…”
Mr Creosote: “Oh, all right. Just one.”
Maitre D’: “Just the one, sir… voila… bon appetit…”
[Mr Creosote somehow manages to stuff the wafer-thin mint into his mouth and then swallows. The Maitre D’ takes a flying leap and cowers behind some potted plants. There is an ominous splitting sound. Mr Creosote looks rather helpless and then he explodes, covering waiters, diners, and technicians in a truly horrendous mix of half digested food, entrails, and parts of his body. People start vomiting.]
Maitre D’: [returns to Mr Creosote’s table] Thank you, sir, and now the check.
The Monty Python skit depicted has a lot of truth in it.
Only idiots refuse to acknowledge excess. Society is littered with examples of the consequences. Eating too much results in indigestion and lethargy, and, if done, regularly obesity and an early grave.
We’d be forgiven for thinking that these simple truths don’t or won’t apply to the financial markets.
Indeed, the GFC was but one of the last examples of such excess, and Canada’s own Real estate market is now suffering what Mr Creosote suffered.
There are naturally other examples, many covered in my subscriber-only publication, but there is one elephant in the room worth looking at:
The above graph, which I nicked from Bloomberg, is actually only a few months old… and as such out of date.
How out of date can it actually be, you might ask? Heck, it’s less than a month old.
…click on the above link to read the rest of the article…
Derangement And Danger On The Potomac
The horrific shooting spree on the practice field of the GOP’s congressional baseball team happened early yesterday morning, but it was hardly the end of Wednesday’s madness on the Potomac.As it happened, the former was apparently another random eruption by of one of America’s sicko lone wolves — a wretch in the same league as South Carolina church killer, Dylann Roof. Notwithstanding that the latter had littered the nether regions of the internet with racist rantings while the former was apparently a prolific Never Trumper left-winger, neither represented a real threat to the nation’s equanimity — even if they did bring a savage rain of violence to bear on those unfortunate dozens caught in their immediate line of fire.
Not so for the 325 million American citizens who were pounded upon during the balance of the day by the allegedly “sane” Imperial City officialdom which rules the roost in America.
Specifically, we have in mind Janet Yellen’s hideous presser in which she declared “mission accomplished” and that the US economy is blessed with “solid fundamentals” that are getting ever stronger. And in the same vein of unreality, there soon came the Senate’s 97-2 vote to smack the Donald in his ample jaws and impose even more sanctions on Russia, thereby bringing the nation another step closer to the brink of war and bankruptcy.
Let us unpack this. The American people are being brought to ruin by three institutions that are mortal threats to liberty and prosperity. To wit, the Federal Reserve, the military/industrial/surveillance complex and a sinecured Congress that is burying unborn generations in debt — even as it sanctimoniously presumes that it is doing god’s work by servicing the beltway racketeers who keep it perpetually in office.
…click on the above link to read the rest of the article…
Yellowstone earthquake swarm hits entire park, more than 60 on Friday alone
Earthquakes as big as 5.0 were recorded on USGS censors placed throughout the Yellowstone region
YELLOWSTONE REGION (INTELLIHUB) — U.S. Geological Survey (USGS) seismology reports conclude that a massive swarm of earthquakes swept through the park triggering more than 60 separate events in which seismographs spiked to magnitudes of up to 5.0. Friday.
Experts fear that the supervolcano is long overdue for an eruption capable of wiping out a vast amount of human, animal, and plant life in the Continental United States.
Scientists currently believe that there’s a 10% chance that a “supervolcanic Category 7 eruption” could take place this century, as pointed out by theoretical physicist Michio Kaku who appeared on a segment for Fox News.
WYOMING — Yellowstone National Park (Jeff Gunn/Flickr)
The grey haired physicist told Shepard Smith that the “danger” we are now facing with the caldera is that it’s long overdue for an eruption which Kaku said could “rip the guts out of the USA.”
Kaku said that a “pocket of lava” located under the park has turned out to be twice as big as scientists originally thought.
Scientist concur that the last eruption of the caldera took place some 640,000 years ago.
The U.S. is currently under contract with at least 4 countries all of which have agreed to house displaced U.S. citizens in the unfortunate event the Yellowstone supervolcano were to erupt. Hundreds of billions of dollars were paid to foreign governments to facilitate the agreement which spans a ten year period from its signing, ending in 2024.
An excerpt from an article I authored in April of 2014 titled: “Report: Brazil, Argentina and Australia sign contracts worth hundreds of billions of dollars to house displaced U.S. populace when Yellowstone supervolcano erupts” reads:
…click on the above link to read the rest of the article…
Deutsche Bank: The Market’s Current “Metastability” Will Lead To “Cataclysmic Events”
With the VIX slammed at the close of trading on “quad-witch” Friday, sending it just shy of single-digits once again and pushing stocks back in the green in the last seconds of trading, the much discussed topic of (near) record low volatility simply refuses to go away, which means even more attempts to i) explain it, ii) predict what ends the current regime of “endemic complacency” and iii) forecast the “catastrophic” damage to markets when it does finally end as JPM’s Kolanovic did earlier this week, when he set the bogey on a modest increase in the VIX from 10 to just 15.
Overnight, applying his typical James Joycean, stream-of-consciousness approach to capital markets, Deutche Bank’s derivatives analyst Aleksandar Kocic penned his latest metaphysical essay on this topic, which covered most of the above bases, and which postulates that far from “stable” the current market equilibrium is one which can be described as “metastable”, the result of widespread complacency, and which he compares to an avalanche:”a totally innocuous event can trigger a cataclysmic event (e.g. a skier’s scream, or simply continued snowfall until the snow cover is so massive that its own weight triggers an avalanche.”
He also inverts the conventionally accepted paradigm that lack of volatility means lack of uncertainty, and writes that to the contrary, it is the ubiquitous prevalence of uncertainty that has allowed vol to plunge to its recent all time lows, keeping markets “metastable.”
How does the regime change from the current “metastable” regime to an “unstable” one? To Kocic the transition will take place when uncertainty, for whatever reason, is eliminated: “Big changes threaten to explode not when uncertainty begins to rise, but when it is withdrawn.” He also points out that while there is punishment for those who seek to defect from a “complacent regime”…
…click on the above link to read the rest of the article…
