Holier than Thou: Why Should Anyone Believe the US, Ukraine, or Russia? What is the US Attempting to Hide?
by ilene - July 21st, 2014 10:51 pm
Courtesy of Mish.
I am quite tired of rhetoric from the Obama administration and Kiev regarding the situation in Ukraine. Hardly any of it is believable.
Indeed, some Ukraine propaganda efforts of Kiev are so amateurish they appear as sloppy acts of desperate coverups.
If so, then it is far more likely Ukraine is the guilty party, not the separatists. If you are innocent, you do not choose such tactics.
What is the US and Kiev Attempting to Hide?
Earlier today, Obama Issued a Stern Warning to Russia coupled with a statement “What exactly are they trying to hide?“
That’s a good question. But let me turn the tables by asking: “What exactly is the US and Kiev attempting to hide?“
Challenge From Russia
Please consider Russia Challenges Accusations that Ukraine Rebels Shot Down Airliner.
Russia’s Defence Ministry on Monday challenged accusations pro-Russian rebels were to blame for shooting down a Malaysian airliner and asked the United States to produce satellite images to support its assertions.
At a briefing in which generals used flashing radar images on big screens in a state-of-the-art conference room, the ministry said a Ukrainian fighter jet had tracked the airliner despite Kiev’s assertions that no aircraft were nearby.
The hi-tech presentation appeared a direct response to video and audio recordings used by Ukrainian security officials to back up their accusations of Russian and rebel involvement – recordings the ministry’s comments suggested were fabricated.
by ilene - July 21st, 2014 10:15 pm
Courtesy of Andy Tully via OilPrice.com
A leading Vietnamese military officer said July 16 that China’s decision to remove a huge oil rig from waters claimed by both countries shows that it is backing down in a dispute that has raged since May.
Maj. Gen. Le Ma Luong told PetroTimes, a Vietnamese news outlet, that China was moving the rig because of Vietnam’s “strong reactions” to its presence in the South China Sea near the Paracel Islands. The region is near the Vietnamese coast but Beijing considers it Chinese territory.
In the interview, Luong dismissed a suggestion by the Voice of Vietnam, a state run news agency, that the rig was being moved to protect it from the approaching Typhoon Rammasun. The general called that “just an excuse.”
The China National Petroleum Corp. said the operation was ending now that the rig had found “signs of oil and gas.” It said the company would assess the findings before deciding on its next steps.
Meanwhile, it said, the rig was being moved to undisputed waters near the Qiongdongnan basin.
In Beijing, the Chinese Foreign Ministry said moving the rig should not be interpreted as a retreat from inclement weather or from Vietnam, but simply that it had completed its work of exploring for oil in the area. It also reiterated the assertion that the Paracel Islands are Chinese territory.
Still, China may be motivated by a desire to improve relations with neighboring Vietnam, according to Bonnie Glaser, who specializes in Asian affairs at the Center for Strategic and International Affairs, a Washington think tank. “It could be a face-saving way to end the over two-month-long standoff with Vietnam,” she said.
Beijing set up the oil rig, the $1 billion Haiyang Shiyou 981, on May 1 in the disputed waters, triggering violent and often deadly demonstrations in Vietnam. There also were daily confrontations at sea between Vietnamese boats that tried to approach the rig and Chinese coast guard vessels sent to protect it.
by ilene - July 21st, 2014 9:14 pm
Courtesy of Michael Snyder of The American Dream
Cases of the chikungunya virus are appearing in the United States at a level that is far higher than anything health officials have seen in recent years, and now there are two confirmed cases of people that have not even traveled out of the country getting the virus. That means that the chikungunya virus is starting to spread in America, and once it starts spreading it is really hard to stop. Instead of spreading human to human, this virus spreads “person-to-mosquito-to-person.”
According to Slate, the name of this virus “comes from a Makonde word meaning ‘that which bends up,’ referring to the contortions sufferers put themselves through due to intense joint pain.”
Fortunately, the U.S. has not really been affected by this disease in recent years, but an epidemic has already been declared in Puerto Rico, and some experts are now saying that it is only a matter of time before we see one in the United States.
From 2006 to 2013, the largest number of cases of the chikungunya virus in the U.S. in a single year was just 65.
But by July 15 of this year there were already 357 reported cases, and health officials are bracing for the worst.
Of course of biggest concern is what just happened in Florida. For the first time, health officials have isolated cases of the chikungunya virus that they know were transmitted locally…
U.S. health officials on Thursday confirmed two locally acquired cases of chikungunya in Florida. In Puerto Rico, the government has declared an epidemic of the mosquito-borne virus, with reports of more than 200 diagnosed cases since June 25 in San Juan and surrounding areas.
On Thursday, the CDC confirmed a 50-year-old male in Palm Beach, Fla. was diagnosed with the virus, and had not recently traveled outside the country. Florida state health officials are also reporting a 41-year-old woman in Miami Dade Country has been diagnosed with locally transmitted chikungunya. The CDC has not yet provided confirmation on the second case. Local transmission occurs when the insect bites a person with the infection and then transmits the virus by biting others.
by ilene - July 21st, 2014 7:00 pm
The moral of compound interest, explained by Morgan Housel, whose investing advice includes some of the best articles on investing that I've read on the web. ~ Ilene
You've probably heard the story about the guy who invented the game of chess.
It goes like this: An inventor brought his chess board to the emperor of China, who was so impressed he offered to grant the man one wish. The inventor had a simple wish: He requested one grain of rice for the first square on the board, two grains for the second square, four for the third, eight for the fourth, and so on. Sounding like a modest proposal, the emperor agreed. But filling the chess board's last 10 squares would have required 35 quintillion grains of rice – enough to bury the entire planet. Unamused, the emperor had the inventor beheaded.
While I doubt the story is true, its message is important to understanding the power of compound interest: When things grow exponentially, gains look tiny at first, modest in the middle, and then — very suddenly — they shoot utterly off the charts.
Keep reading I Prefer to Keep Things Simple (MO).
by ilene - July 21st, 2014 6:32 pm
Courtesy of Joshua M Brown
Everyone is worried about the divergence between small caps and big caps. Everyone is talking about the split between the Russell 2000 and the S&P 500 as the former currently sports a year-to-date loss of roughly one percent while the latter continues to make new highs and spanks anyone who would dare attempt to call a market top.
In March and April, small caps dropped by 10 percent while the big caps of the S&P 500 held at all-time record highs, completely unfazed. It was the first time in recent history during which something like that had ever happened – and then small caps embarrassed the technicians by rocketing right back up to all-time highs from May through the first week of July. Anyone reading market internals felt like a chump for worrying about the small cap divergence and, god forbid you’d acted on it, you felt even worse. I fully cop to being one of those who had pointed this divergence out at the time.
But despite this rally back that drove everyone crazy, the small cap index (Russell 2000) never actually broke through to a new high.
And since peaking out just below the prior high at the beginning of this month, it’s quickly dropped almost 5%, almost in a straight line since. And because small cap stocks have tended to top out before the overall market during the majority of previous cycles, the worries about this divergence has come roaring right back again.
Charlie Bilello points out the huge disparity in performance between the big caps and small caps in a post at Pension Partners by telling us “The largest 500 stocks in the Russell 3000 are up an average of 8.5% this year, while the smallest 500 are down an average of -6.1%. There continues to be an uncanny relationship between a company’s market capitalization and year-to-date returns.” For now, he’s chalking this up to a mean reversion trade of sorts, as small caps have been outperforming the S&P 500 for fifteen years. He also notes that the valuation of the Russell on a price to earnings basis has led to a rotation as managers seek out the relative lower valuations in the mega-cap stocks.
by ilene - July 21st, 2014 6:19 pm
Courtesy of Joshua M Brown
My friend Ivanhoff has nailed a very important truth here:
“The stock market is not a place, where for one party to win, another has to lose. It is a place, driven by cycles – periods, when almost everyone is a winner followed by periods, when almost everyone is a loser. Everyone could make a lot of money during market rallies, when liquidity and performance chasing lift all boats and trump all bad news. Not everyone keeps that money when the inevitable correction comes.”
Something worth considering as you step in front of that steamroller for the very last nickel you feel entitled to.
by ilene - July 21st, 2014 6:13 pm
Courtesy of Wade of Investing Caffeine
By several measures, this economic recovery has been the slowest, most-challenging expansion since World War II. Offsetting the painfully slow recovery has been a massive bull market in stocks, now hovering near all-time record highs, after about tripling in value since early 2009. Unfortunately, many investors have missed the boat (see Markets Soar – Investors Snore and Gallup Survey) with stock ownership near a 15-year low.
But it’s not too late for the “sideliners” to get in…is it? (see Get out of Stocks!*). Milfred and Buford are asking themselves that same question (see Investor Wake-Up Call). Milfred and Buford are like many other individuals searching for the American Dream and are looking for ways to pad their retirement nest egg. The seasoned couple has been around the block a few times and are somewhat familiar with one get-rich-quick strategy…day trading stocks. Thankfully, they learned that day trading stocks didn’t work out too well once the technology boom music ended in the late 1990s. Here’s what the SEC has to say about day trading on their government site:
Be prepared to suffer severe financial losses. Day traders typically suffer severe financial losses in their first months of trading, and many never graduate to profit-making status. Given these outcomes, it’s clear: day traders should only risk money they can afford to lose. They should never use money they will need for daily living expenses, retirement, take out a second mortgage, or use their student loan money for day trading.
Milfred & Buford Day Trade House
Milfred: “Now, Buford, I know we lost of our IRA retirement money day trading tech stocks, but if technical analysis works and all the financial news shows and talking babies on TV say it will make us a lot of cabbage, maybe we should try day trading our house?”
Buford: “Now I know why I married you 60 years ago – it’s that brilliant mind of yours that complements that sexy figure!”
Veteran readers of Investing Caffeine know I’ve been a skeptic of technical analysis (see Technical Analysis: Astrology or Lob Wedge), but a successful investor has to be open to new ideas, correct? So, if technical analysis works for stocks, then why not for houses? The recovery…
by ilene - July 21st, 2014 5:03 pm
Courtesy of Mish.
President Obama came out swinging today and issued a Stern Warning to Russia on Isolation in response to the crash of MH17.
Barack Obama has warned Russia it risks further international isolation if it does not intervene directly with the pro-Russian separatist rebels to “compel them to co-operate” with the investigation into the crash of MH17.
He questioned why the rebels would want to prevent international observers and investigators access to the crash site. “What exactly are they trying to hide?”
He said his Russian counterpart, Vladimir Putin, had “direct responsibility” for the actions of the armed men on the ground.
“Russia has extraordinary influence over these separatists,” he said. “No one denies that. Russia has urged them on, Russia has trained them, we know that Russia has armed them with military equipment and weapons including anti-aircraft weapons.”
“Compel Rebels to Co-operate”
The US cannot control its own border with Mexico, in peacetime. Yet, Obama expects Russia to not only control its border with Ukraine, but to also control rebels outside Russia. That’s ridiculous.
To top it off, Putin offered to let Ukraine monitor border checkpoints from the Russian side, but Ukraine turned down the chance.
“Russia has extraordinary influence over these separatists. No one denies that,” stated Obama.
That too is ludicrous. Russia denies that claim. And any one with any bit of common sense can detect Obama’s statement as blatant self-serving propaganda.
Email from Ukraine Portfolio Manager
Ilya Porkalov, a Ukraine pottfolio manager writes:
This allegation about the billboard has already been disproved. You just can not see the address on the billboard no matter how hard you try. And that network of car dealers can be found in many cities. How stupid it would be for Ukraine to make stuff up (like this video, or the phone recordings) when all secret services of the world will be watching and checking this, and with a single fake all credibility would be lost?
by ilene - July 21st, 2014 4:31 pm
By John Mauldin
“Measurement theory shows that strong assumptions are required for certain statistics to provide meaningful information about reality. Measurement theory encourages people to think about the meaning of their data. It encourages critical assessment of the assumptions behind the analysis.
“In ‘pure’ science, we can form a better, more coherent, and objective picture of the world, based on the information measurement provides. The information allows us to create models of (parts of) the world and formulate laws and theorems. We must then determine (again) by measuring whether these models, hypotheses, theorems, and laws are a valid representation of the world.”
“In science, the term observer effect refers to changes that the act of observation will make on a phenomenon being observed. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner.
“It was, perhaps, the most unusual episode in the long running duel between the two giants of twentieth century economic thought. During World War Two, John Maynard Keynes and Friedrich Hayek spent all night together, alone, on the roof of the chapel of King’s College, Cambridge. Their task was to gaze at the skies and watch for German bombers aiming to pour incendiary bombs upon the picturesque small cities of England….
“Night after night the faculty and students of King’s, armed with shovels, took it in turns to man the roof of the ornate Gothic chapel, whose foundation stone was laid by Henry VI in 1441. The fire watchmen of St. Paul’s Cathedral in London had discovered that there was no recourse against an exploding bomb, but if an incendiary could be tipped over the edge of the parapet before it set fire to the roof, damage could be kept to a minimum. And so Keynes, just short of sixty years old, and Hayek, aged forty-one, sat and waited for the impending German onslaught, their shovels propped against the limestone balustrade. They were joined by a common fear that they would not emerge brave nor nimble enough to save their venerable stone charge.”
by ilene - July 21st, 2014 2:11 pm
Courtesy of Mish.
Steen Jakobsen, chief economist and CIO at Saxo Bank, has a interesting article today on War & Markets I present below as a guest post.
Steen says …
Prepare for less growth, less certainty and more geopolitical risk
Crude oil price is simplest proxy for geopolitical risk
Wars reflect a world where growth is low and energy expensive
“There are causes worth dying for, but none worth killing for” – Albert Camus
The world is increasingly becoming engaged in civil wars and general turmoil where Camus’ words could and should play a central but never will. This article is one of the hardest to write as war is never about right or wrong. They are per definition always wrong and extremely personal and emotional. The fact is, however, that we need to put “the risk of wars” into our macro outlook as they are increasing not only in intensity but also in the numbers of casualties.
I will not condone anyone or any party involved in the present conflicts – I learned my hard lesson advocating the removal of Saddam Hussein, only to learn that his successors are just as bad. Therefore, Camus’ words will remain my mantra.
The simplest way to “measure” geopolitical risk is to look at the price of energy. Energy is everything for a macro economist as it’s a tax on the economy when high, and a discount when low. High energy consumption levels makes it a critical part of any projection but despite this, energy assumptions are often exogenous (given!).
Think about this: Everything you did this morning involved energy consumption: Waking up to your smart phone (charging overnight), putting on the coffee, pouring the cold milk from the fridge, taking a shower, driving the car to work and walking into your air-conditioned office. Likewise, the rest of your day will be one big consumption of energy. The world’s energy resources are primarily extracted from “volatile” or underdeveloped regions, creating a real risk of disruption of supply. Herein lies a clear and quantifiable risk.
The way I measure this geopolitical risk is through measuring the spread between the 5th contract of WTI crude oil and the first contract. Of course, there are other factor at work, but in the absence of a better alternative, I use this War Risk Premium Indicator.