Month: September 2014

Second-Ever Libertarian Elected in Russia

The people of Russia have spoken, and they
have elected a libertarian.

Or, at least, 662 individuals
cast ballots for Russian Libertarian Party Chairman and
independent candidate Andey
Shalnev in the Moscow City Council race. That might not sound
like much, but at 28.36 percent of the vote in the Pushkino
District, he received the second-most votes, which earns him the
seat as the deputy councilman of a district with over 100,000
constituents.

Shalnev, who has been
party chairman since 2010, is the second-ever Libertarian Party
member to be elected to office in Russia. The first, Vera Kichanova
(read her Reason interview
here), describes Shalnev as “a principled politician” and
his victory as “huge for our team.”

Getting here wasn’t easy. Russia is already ranked by Freedom
House as
“not free” (and getting worse) and Vladimir Putin is engaging
in a major crackdown on Russia’s political opposition,
independent journalists, and social media activists. This almost
certainly puts Shalnev in the crosshairs. The candidate claims
there was “in comparison with previous elections, an increased the
percentage of early voting” that he believes is the result
of “systematic vote-buying of alcoholics, local [hooligans]
and needy pensioners.” People were paying these individuals 200
rubles (about $5.25) to vote for the candidate of Putin’s United
Russia Party.

Kichanova reported on Facebook
during the election that the polling station aired commercials for
the United Russia candidate, and that there were dubious,
unexplained “mobile reserve polling stations” set up in buses
exclusively in that district.

Read more Reason coverage of the Libertarian opposition
to Putin
here, a major non-libertarian opposition figure whom I
speculated could be the “Ron
Paul of Russia,” and Russia’s war in Ukraine (which the Russian
Libertarian Party
opposes) here .

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It Seems The CME Is Still Rigged

Two weeks ago, as we noted here, the CME unveiled Rule 575 – designed to put an end to ‘disrputive trading practices’ or “rigging.” Today is the first day Rule 575 is unleashed to stop “spoofing,” “quote stuffing practices,” and the “disorderly execution of transactions.” So, as Nanex notes, why is the CME still allowing major quote-stuffing?

 

Each bubble represents the relative number of quotes-per-second… and it appears, despite Rule 575, that CME is still allowing quote-stuffing and spoofing.

 

h/t @Nanexllc




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The Great Keynesian Lunacy is Finally Beginning to End… For Now

The great Keynesian lunacy is finally beginning to end.

 

Generally since 1999, and especially since 2008, the financial world has been dominated by Keynesian lunacy. Collectively, Central Banks have cut interest rates over 500 times and printed more than $12 trillion combating a brief 9-12 month period of deflation.

 

The pinnacle of this madness hit the US in 2012 when the Fed announced an ongoing QE 3 and QE 4 programs. However, globally, we hit peak Keynesian insanity in Japan in April 2013 when the Bank of Japan announced a $1.4 trillion QE program. For clarity’s sake, this represented a single QE program equal to 28% of Japan’s GDP.

 

The results speak for themselves. Japan saw about an uptick in economic growth for two quarters before the whole thing fell apart. Household spending is down 6% year over year in July 2014. Japan’s economy shrank at an annualized rate of nearly 7% in the second quarter of 2014.

 

The rest of the world hasn’t fared much better. This is, hands down, the weakest recovery on record since the Great Depression. By the Fed’s own admission unemployment is only lower 0.13% better thanks to its insane policies. The negative consequences have been horrific: with interest rates at 0% those depending on interest income (retirees and others) have been screwed while the wealthy elite have been able to leverage up to increase their wealth dramatically.

 

In a nutshell, we’ve found that global Central Bank’s Keynesian policies:

 

1)   Failed to create sustainable economic growth

2)   Increased wealth disparity and concentrated wealth and assets in the hands of the few

3)   Wasted trillions of dollars in capital

 

With the Fed looking to end QE completely in October the Keynesian lunacy is finally beginning to end… for now. Between this and the ECB’s decision to cut interest rates to negative, the US Dollar has now rallied for 9 weeks straight.

 

 

A strong dollar has historically been stock negative. Which is why the massive stock market bubble is looking more and more precarious:

 

 

Buckle up. Big trouble is brewing.

 

This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://ift.tt/170oFLH.

 

This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.

 

Best Regards

 

Phoenix Capital Research

 

 

 




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Ukraine President’s Days Numbered After Broad Accusations Of “Betraying National Interests”

As we summarized late on Friday, while Europe has been banging the populist drums over ever-escalating Russian sanctions, it quietly and without much fanfare folded in the one place where Russia could have been truly hurt, the Free Trade (DFCTA) agreement between Ukraine and the EU. But while Europe would have loved for nobody to notice, some did, and not just on these pages: far more importantly, so did the citizens of Ukraine where as the WSJ reports, Ukrainian President Petro Poroshenko faces rising criticism for his decision to delay implementation of part of a European Union deal to avoid threatened Russian retaliation.

And this is why neither side can afford to blink, because the moment one side folds, its domestic support collapses. And blinking is precisely what Ukraine just did and with that it set in motion the events that will likely terminate prematurely the brief, irrelevant presidency of Ukraine’s “Chocolate Baron” Poroshenko.

From WSJ:

A senior diplomat resigned in protest over the weekend, and pro-European politicians who are competing with Mr. Poroshenko’s party in parliamentary elections next month blasted the decision as caving to Russia, which wants Ukraine to give up the deal and remain in its orbit. The tensions highlight how difficult it will be for Mr. Poroshenko to manage the competing pressures of a Kremlin that isn’t backing down and a domestic electorate that wants closer ties to Europe and no concessions to Moscow.

 

On Friday, Ukraine and the EU agreed to put off implementing a landmark trade deal, which is part of a broader pact aimed at strengthening their ties, after Moscow threatened trade restrictions that would have crippled Ukraine’s already limping economy.

 

A cease-fire in the east, where Russia-backed rebels hold several towns and cities, is still largely holding despite scattered fighting. A government spokesman said Sunday that Ukrainian troops had repelled an assault on Donetsk airport by 200 pro-Russia rebels.

 

In Kiev, pro-Western rivals of Mr. Poroshenko’s party railed against the president’s move to compromise at congresses to announce candidates for snap parliamentary elections scheduled for Oct. 26.

It got so bad over the weekend, that former Prime Minister Yulia Tymoshenko, who was the person least actively supported by the CIA and US state department in Ukraine‘s less than peaceful transition in February, and thus lost a May presidential election to Mr. Poroshenko, said the delay in implementing the EU free-trade part of the pact until 2016 was “a betrayal of national interests.”

“There can’t be a single day of applying the brakes on our path to Europe,” she told a party meeting. She also called a referendum on potential membership of the North Atlantic Treaty Organization.

So as the public mood suddenly and dramatically shifts in its impotent rage directed at Putin up until this point, into a domestic direction in general, and at the new president in particular, Poroshenko appears set to antagonize the public even more, following his disclosure moments ago that he proposes temporary self-governance in separatist-held areas in eastern regions of Donetsk, Luhansk, news service Ukrayinska Pravda reports, citing copy of draft law. Bloomberg has the details:

  • Local elections would be held in those districts this yr on Nov. 9
  • Local authorities in special districts would have right to participate in appointment of local prosecutors, judges
  • People’s militia would be created from local citizens in special districts
  • Kiev authorities wouldn’t open criminal cases against participants of uprising in east
  • Kiev guarantees right to use, learn Russian language; grants it equal status in special areas, for all Ukrainian citizens
  • Ukraine to allocate annual budget spending to rebuild infrastructure, create jobs, back economical development of eastern regions
  • Ukraine to allow areas’ “good neighborly relations” w/ Russia to deepen and strengthen
  • Law, if approved, to remain in effect for 3 yrs from date of approval
  • Parliament may consider draft law among other issues on Sept. 16
  • Lawmakers have received copy of draft

And this is how the Ukraine people, at least those in the west and who care about such things, will interpret the move: Poroshenko is handing over East Ukraine to Russia which will now control not only Crimea but also the land corridor leading to it.

The only question we have here is what the over/under is on number of days before Ukraine has yet another presidential crisis, and whether the next president will also be another US-backed puppet?




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Ukraine President's Days Numbered After Broad Accusations Of "Betraying National Interests"

As we summarized late on Friday, while Europe has been banging the populist drums over ever-escalating Russian sanctions, it quietly and without much fanfare folded in the one place where Russia could have been truly hurt, the Free Trade (DFCTA) agreement between Ukraine and the EU. But while Europe would have loved for nobody to notice, some did, and not just on these pages: far more importantly, so did the citizens of Ukraine where as the WSJ reports, Ukrainian President Petro Poroshenko faces rising criticism for his decision to delay implementation of part of a European Union deal to avoid threatened Russian retaliation.

And this is why neither side can afford to blink, because the moment one side folds, its domestic support collapses. And blinking is precisely what Ukraine just did and with that it set in motion the events that will likely terminate prematurely the brief, irrelevant presidency of Ukraine’s “Chocolate Baron” Poroshenko.

From WSJ:

A senior diplomat resigned in protest over the weekend, and pro-European politicians who are competing with Mr. Poroshenko’s party in parliamentary elections next month blasted the decision as caving to Russia, which wants Ukraine to give up the deal and remain in its orbit. The tensions highlight how difficult it will be for Mr. Poroshenko to manage the competing pressures of a Kremlin that isn’t backing down and a domestic electorate that wants closer ties to Europe and no concessions to Moscow.

 

On Friday, Ukraine and the EU agreed to put off implementing a landmark trade deal, which is part of a broader pact aimed at strengthening their ties, after Moscow threatened trade restrictions that would have crippled Ukraine’s already limping economy.

 

A cease-fire in the east, where Russia-backed rebels hold several towns and cities, is still largely holding despite scattered fighting. A government spokesman said Sunday that Ukrainian troops had repelled an assault on Donetsk airport by 200 pro-Russia rebels.

 

In Kiev, pro-Western rivals of Mr. Poroshenko’s party railed against the president’s move to compromise at congresses to announce candidates for snap parliamentary elections scheduled for Oct. 26.

It got so bad over the weekend, that former Prime Minister Yulia Tymoshenko, who was the person least actively supported by the CIA and US state department in Ukraine‘s less than peaceful transition in February, and thus lost a May presidential election to Mr. Poroshenko, said the delay in implementing the EU free-trade part of the pact until 2016 was “a betrayal of national interests.”

“There can’t be a single day of applying the brakes on our path to Europe,” she told a party meeting. She also called a referendum on potential membership of the North Atlantic Treaty Organization.

So as the public mood suddenly and dramatically shifts in its impotent rage directed at Putin up until this point, into a domestic direction in general, and at the new president in particular, Poroshenko appears set to antagonize the public even more, following his disclosure moments ago that he proposes temporary self-governance in separatist-held areas in eastern regions of Donetsk, Luhansk, news service Ukrayinska Pravda reports, citing copy of draft law. Bloomberg has the details:

  • Local elections would be held in those districts this yr on Nov. 9
  • Local authorities in special districts would have right to participate in appointment of local prosecutors, judges
  • People’s militia would be created from local citizens in special districts
  • Kiev authorities wouldn’t open criminal cases against participants of uprising in east
  • Kiev guarantees right to use, learn Russian language; grants it equal status in special areas, for all Ukrainian citizens
  • Ukraine to allocate annual budget spending to rebuild infrastructure, create jobs, back economical development of eastern regions
  • Ukraine to allow areas’ “good neighborly relations” w/ Russia to deepen and strengthen
  • Law, if approved, to remain in effect for 3 yrs from date of approval
  • Parliament may consider draft law among other issues on Sept. 16
  • Lawmakers have received copy of draft

And this is how the Ukraine people, at least those in the west and who care about such things, will interpret the move: Poroshenko is handing over East Ukraine to Russia which will now control not only Crimea but also the land corridor leading to it.

The only question we have here is what the over/under is on number of days before Ukraine has yet another presidential crisis, and whether the next president will also be another US-backed puppet?




via Zero Hedge http://ift.tt/1saiAQU Tyler Durden

This Is What Happens When The ‘Unrigged’ Market Breaks

It appears Rule 575 is having an impact today. Quietly this morning, CBOE traders were told at 1027ET that the S&P 500 index was “currently unavailable for trading.” As the following chart shows, this halted a drop in the market and instantly enabled a levitation to near the day’s highs. Unrigged?

 

This happens…

 

 

And then this happens…

 

It appears Rule 575 is really messing things up for the high-beta chasers…





via Zero Hedge http://ift.tt/1qZihfy Tyler Durden

This Is What Happens When The 'Unrigged' Market Breaks

It appears Rule 575 is having an impact today. Quietly this morning, CBOE traders were told at 1027ET that the S&P 500 index was “currently unavailable for trading.” As the following chart shows, this halted a drop in the market and instantly enabled a levitation to near the day’s highs. Unrigged?

 

This happens…

 

 

And then this happens…

 

It appears Rule 575 is really messing things up for the high-beta chasers…





via Zero Hedge http://ift.tt/1qZihfy Tyler Durden

Smartphone Experiment Shows How Your Metadata Tells Your Story

Somebody tell Siri that snitches get stitches.For one short week, a Dutch
volunteer named Ton Siedsma with the digital rights group Bits of
Freedom agreed to allow researchers to have full access to all his
smartphone metadata. This is the information the National Security
Agency (NSA) and other governments have been collecting from its
own citizens while insisting the information did not violate our
privacy.

Few actually believe the government’s arguments, but how much
can somebody figure out just from smartphone
data? Thus, the experiment with Siedsma. It turns out, as has
been growing increasingly clear, you can figure out a lot.
According to an article subsequently published in Dutch media,
researchers (from a university and a separate security firm)
gathered 15,000 records in a week, complete with timestamps. Each
time he did pretty much anything on the cell phone they were able
to determine physically where he was. And they were able to

figure out a lot about both his personal and professional
life:

This is what we were able to find out from just one week of
metadata from Ton Siedsma’s life. Ton is a recent graduate in his
early twenties. He receives e-mails about student housing and
part-time jobs, which can be concluded from the subject lines and
the senders. He works long hours, in part because of his lengthy
train commute. He often doesn’t get home until eight o’clock in the
evening. Once home, he continues to work until late.

His girlfriend’s name is Merel. It cannot be said for sure
whether the two live together. They send each other an average of a
hundred WhatsApp messages a day, mostly when Ton is away from home.
Before he gets on the train at Amsterdam Central Station, Merel
gives him a call. Ton has a sister named Annemieke. She is still a
student: one of her e-mails is about her thesis, judging by the
subject line.

They were able to determine what kind of silly viral videos
Siedsma had been watching and what sort of companies were sending
him email newsletters offering deals (apparently some folks don’t
automatically opt out of those). From the data they were able to
determine that Siedsma worked as a lawyer for Bits of Freedom. They
were able to make a fairly good estimate of what sort of issues he
hands for the organization and what he does for the Bits of Freedom
website.

In response to the “So what?” crowd there’s more to be concerned
about. Because Bits of Freedom is a politically involved
organization, access to Siedsma’s metadata provides a window into
what Siedsma and his co-workers are doing that would be of interest
to those in government who may see the group as adversaries.
Researchers discovered an active e-mail thread with the subject
title “Van Delden must go,” referring to the head of the chairman
of a Dutch intelligence supervisory body. They can see which
members of parliament the Siedsma has contacted to discuss issues
related to international trade agreements. They can see that he is
likely a supporter of the Dutch “green left” party on the basis of
him receiving e-mails from them at a private address, not as part
of his political work. They could see which journalists he has been
corresponding with via e-mail. All of this information has all
sorts of potential to be abused politically.

And, they figured out how to hack his other accounts to get even
more information about him:

The analysts from the Belgian iMinds compared Ton’s data with a
file containing leaked passwords. In early November, Adobe (the
company behind the Acrobat PDF reader, Photoshop and Flash Player)
announced that a file containing 150 million user names and
passwords had been hacked. While the passwords were encrypted, the
password hints were not. The analysts could see that some users had
the same password as Ton, and their password hints were known to be
‘punk metal’, ‘astrolux’ and ‘another day in paradise’. ‘This
quickly led us to Ton Siedsma’s favourite band, Strung Out, and the
password “strungout”,’ the analysts write.

With this password, they were able to access Ton’s Twitter,
Google and Amazon accounts. The analysts provided a screenshot of
the direct messages on Twitter which are normally protected,
meaning that they could see with whom Ton communicated in
confidence. They also showed a few settings of his Google account.
And they could order items using Ton’s Amazon account – something
which they didn’t actually do. The analysts simply wanted to show
how easy it is to access highly sensitive data with just a little
information.

Read the Dutch report
here.

(Hat tip to
TechDirt)

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Is Risk-On About To Switch To Risk-Off?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Cranking markets full of financial cocaine so they never correct simply sets up the crash-and-burn destruction of the addict.

Human memory being what it is, almost three years of risk-on euphoria has created the illusion that risk-on is The New Normal that will continue on for years to come. Perhaps, but there are converging signals that suggest the risk-on trade is about to reverse polarity to risk-off. These include:

1. Junk bonds. Two charts below (one from Lance Roberts and the second from Chris Kimble) suggest the risk-on extremes have reached the point of reversal.
 
2. Soaring U.S. dollar. Without going into detail, it's increasingly clear that the soaring USD is destabilizing the global foreign exchange (FX) markets. FX has been the source of many of the risk-on carry trades that have been driplines of financial cocaine for global stock markets.
 
3. Reversal of the Federal Reserve's quantitative easing (QE) programs.Though the stock market has roundly ignored the withdrawal of $600 billion of free money for financiers stock market stimulus all year, the October end of the QE asset buying program now looms large. 
 
The Fed has already trimmed its asset-buying binge from $85 billion/month ($1 trillion/year) to $25 billion/month. Risk-on proponents claim that this reduction has been replaced by Bank of Japan and European Central Bank QE programs, but this belief fails to take into account the diminishing returns on BOJ and ECB stimulus.
 
THose spigots have been open for so long that adding more monetary stimulus no longer moves the needle positively. Rather, the extreme measures push the global fianncial system into increasingly risky territory.
 
4. Geopolitical spillover. One key element of the risk-on trade is the magical-thinking belief that the U.S. stock market is completely decoupled from geopolitical dynamics. In other words, Japan and Europe can sink into recession, China's growth can slow, the Mideast can be destabilized by multiple open conflicts and none of these issues will ever matter, as long as "the Fed has our backs," "corporate profits keep rising," etc.
 
Geopolitics matter even if only because global dynamics cause global players to switch from risk-on to risk-off as markets destabilize and carry trades dry up. Highly leveraged traders must delever, and that selling on the margins tends to topple dominoes that lead straight to the core.
 
The market for high-yield bonds is a well-known canary in the risk-on coalmine.These two charts should give anyone pause–the canary is stiff and cold but has been propped up in its cage by risk-on cultists fearful of any intrusion of reality:
 
The VIX, a measure of volatility, has been suppressed by risk-on euphoria for so long, 13 looks high. Market participants seem to have forgotten that the VIX can go to 30, never mind 13:
 
I've marked up a daily chart of the SPX (S&P 500) to show the megaphone topping pattern has broken lower, and the key support of the 20-day moving average (1992) and the previous high (1991) has been broken.
 
The last time SPX broke below the 20-day MA, the market swooned in what now looks like a warning shot that the risk-on trade was at risk of reversing to risk-off.
 
The weekly chart of SPX shows how long the risk-on trade has run. Markets typically touch their 50-week moving averages occasionally, just as a statistical mean reversion dynamic. The SPX hasn't kissed its 50-week MA since late 2012, and hasn't visited its 200-week moving average since 2011.
 

Even the most avid Bulls should grasp that market corrections of 10% to 20% are statistical features of all markets. Cranking markets full of financial cocaine so they never correct simply sets up the crash-and-burn destruction of the addict.

 




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What It Looks Like When The Second Auto Subprime Bubble Pops

A month ago, when we commented on the most recent surge in US manufacturing production, when it jumped by 0.7% offsetting a tumble in utilities and mining output and leading to a 0.4% jump in overall Industrial Production (since revised to only 0.2%), we observed that this was entirely due to the second, and more nuanced, coming of the cash for clunkers bubble, as the explosion in subprime loans pushed production of Motor Vehciles and Parts to the highest since 2009’s disastrous CARS, aka Cash for Clunkers, program.

This is what the latest subprime bubble looked like a month ago when translated in terms of actual car manufacturing:

A month later, one can kiss the US subprime-driven “manufacturing renaissance” goodbye. The reason, as we reported moments ago, Industrial Production dropped 0.1%, driven by a -0.4% contraction in manufacturing, the worst print since the “harsh winter collapse” of January 2014.

The answer to the key question, what drove the tumble, is simple: what goes up has come down, in this case production of Motor Vehciles and Part, after posting its best number in 5 years, just posted… it worst monthly drop in five years, or since May 2009 to be precise.

As the chart below shows, following July’s month’s 9.3% surge in production of motor vehicles and parts, August has come and wiped out all the gains, with a 7.6% plunge, the bigest collapse since May 2009.

So has the second subprime auto debt bubble burst yet? One month may be too soon to make a formal determination, but now that the sentiment surveys have no choice but to follow the hard data in crashing next month, watch as suddenly sentiment goes from euphoria to depression as Americans appear to have gotten their fill of subprime-funded clunkers.




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