Putin Spanks Obama in New Russian Propaganda Art Gallery

Vladimir “Putin is a gift to
caricaturists,”
said
Barry Blitt, a New Yorker artist, when he
designed a Sochi Olympic-themed cover earlier this year, featuring
the Russian leader in frilly ice skating attire. The caricature
artists of Russia take a very different approach. On Friday a
gallery titled “No Filters” with the work of about 100
cartoonists opened
in Moscow, and just about all their images show Putin favorably: as
a strongman, a political chess master, and a fighter against
fascists and terrorists. In one conspicuously large work, Putin is
spanking President Barack Obama, who has the body of schoolboy.

“Targeted sanctions,” the caption on that caricature reads – a
jab at America’s economic strategy against Russia’s war of
aggression in Ukraine. Another image shows Putin tugging on Obama’s
ear,
scolding
him not to “touch” Ukraine again. A third shows Obama
and Ukraine’s president, both dressed as peasant girls working the
fields, cowering from Putin who sits atop a tank and asks,
“Hey girls, have you seen any fascists here?”

There is some truth to the first image, at least.
Putin has run circles around the U.S. when it comes to the war in
Ukraine. The Obama administration has called for an end to Russian
aggression since Putin invaded Crimea. The U.S. has tried to put
pressure on Russia by initiating first targeted sanctions and then
broad ones. That began in March, and yet Russia’s military
incursion persists to this day, and has grown worse. Obama gave his
own policies credit as being “the
only reason
” a ceasefire was agreed upon in September – some of
the bloodiest fighting started shortly thereafter. And, in spite of
strong rhetoric one week, like the U.S. “will not accept Russia’s
occupation and illegal annexation of Crimea or any part of
Ukraine,” Obama allegedly privately
admitted
around the same time that Crimea was “gone” for
good.

Obama’s shortcomings aside, Putin is not the savvy strongman his
propagandists present him as. Russia’s currency continues to

hit record lows
, and the nation’s economy is at recession
levels. And the annexation of Crimea leaves Russia with a
10,000-square mile welfare money pit.

That Putin is fighting against fascism is laughable.
The “Young Guards,” the youth-wing of his political party, set up
the gallery to display the
work of “patriotically oriented artists” who want to “restore in
the minds of citizens respect and pride in their country.”

A poll last month showed about half of Russia believes Putin has
a
cult of personality
. Another poll shows about half of Russia
fears
Soviet-style mass repression
 will return in their
lifetime. Reason has talked to several Russian
libertarians about Putin’s domestic
crackdown
 on political
opposition
 and the press. 

On Friday, I reported on the return of Cold War-type action,
like Russia
flying nuclear-equipped bombers over Europe

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N.C. Media Yanks Story Suggesting Sen. Hagan’s Family Cashed In on Stimulus

Somebody hired Olivia Pope.We’ve noted previously that
Democratic North Carolina Sen. Kay Hagan has a
tough race
for re-election against a Republican
challenger
and a potential
Libertarian Party spoiler
named Sean Haugh. The National
Journal
has a
lengthy look
at how the race has played out so far.

She also has a bit of a scandal that didn’t appear to be gaining
much national traction, but some very unusual self-censorship by a
top television station and a top newspaper in North Carolina may
change the situation.

To summarize: Kay Hagan’s family—her husband, son, and
son-in-law—is accused of receiving more than $250,000 in stimulus
funds from 2009 to renovate buildings owned by their companies.
This would present a potential conflict of interest and could
potentially be a violation of state and federal law. Carolina
Journal
has a
story here
stating that North Carolina’s Department of
Environment and Natural Resources has recommended that an auditor
review the grant (solar company subsidies are the source of the
grant, for anybody wondering why that particular agency is
involved). The Carolina Journal has embedded PDFs of the
reports for review.

Over the weekend it appeared the major media outlets were
picking up on the controversy right before the election. Stories
appeared on the websites for the Charlotte Observer and
Charlotte-based  CBS affiliate WBTV. WBTV apparently provided
the story to both outlets. The story was just a reporting of the
contents of the same documents the Carolina Journal got
its hands on. It doesn’t actually accuse Kagan or her family
directly of wrong-doing; rather, the report calls for “further
legal review” out of concern that there may have been
wrong-doing.

But today both stories are gone, scrubbed from the sites, and
some are calling foul. The Observer tweeted this morning that
WBTV had provided the story and asked for it to be yanked and the
Observer complied. WBTV has not tweeted any sort
of explanation as to why it yanked the story as yet. And so the
media in North Carolina is being accused of aiding and abetting
Hagan in a tight race.

Nothing can be deleted from the Internet, so The
Federalist
pulled up the cache of the story and has it

posted here
. A read-through of it can confirm what I described
a couple of paragraphs ago. The story is simply describing the
contents of a report from the state’s Department of Environment and
Natural Resources. There could potentially be a logical reason for
yanking the story if it turned out the documents themselves were
counterfeit, but that itself would be extremely newsworthy.
Instead, there’s just silence so far.

In the absence of an official explanation, the disappearance of
the stories is itself trending as news. Just doing a
Google news search
of Hagan (just her name with no other key
words) brought up a collection of stories from political sites
wondering why the Observer and WBTV deleted the
coverage.

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Here Are The Best And Worst Performing Assets In The Most Volatile Month In Years

To think it was just over two weeks ago, when the Russell was in a bear market, and the S&P was on the verge of not only closing red for the year, but entering its first correction in years. Then James Bullard soothed all the selling algos that in a worse case scenario the Fed will rush to bail all the BTFDers out yet again, and the rest is history.

What ensued was an October, which as DB’s Jim Reid notes,  proved to a wild ride for markets with mixed performances across various asset classes. Indeed on volatility alone October actually saw the widest intra-month range for the S&P 500 since October 2011. The S&P 500 finished the month at an all-time new high of 2018 after having dipped to an intraday low of 1821 around mid-month giving rise to high-low range of almost 198pts. Whilst Stoxx600 had a negative performance in August the intra-month range of 41pts was the widest since August 2011. The ‘flash rally’ in Treasuries around mid-month also produced the most volatile month for the asset class since the taper-tantrum last year. The 10yr note experienced a intra-month range of 64bps which was just shy of the 67bps range we saw in June 2013.

Some other observations:

Volatility aside October was pretty much a month of two halves with the turn arriving at around the mid-way mark. Generally both equities and fixed income did well with the latter retracing some of the gains as the bid for safety assets moderated. Soft commodities (Corn and Wheat) aside, equities took up half of the top 10 best performers in October. The Russian MICEX, the Hang Seng, the S&P 500, Shanghai Composite and the Nikkei were up +5.7%, +4.8%, +2.4%, +2.4% and +1.5%, respectively on a total return basis. The Hang Seng reversed most of the protest-led losses in September whilst the Nikkei received a treat on the very last day of October following the BoJ’s surprise move to add more stimulus. On a total return basis US HY credit (+1.5%) was one of the better performers in October although it did also benefit from a solid performance in rates. Treasuries were up as much as +2.3% in mid-October before giving back some of those gains to close 1.1% up on the month. Staying in fixed income core rates markets were also stronger in October with Bunds and Gilts adding +0.6% and +1.4%, respectively. The European peripheral complex was weaker though. Italian bonds and equities were down -0.4% and -5.3% in October. Spanish and Portuguese equity markets were also down -2.8% and -8.3%, respectively. But the worst performer in October goes to Greek equities with the Athex index losing nearly 14% after having lost nearly 9% in September. In fact Greek equities are now the worst performing YTD asset class in our sample, now down 21% in local currency terms and 28% in USD terms. Elsewhere the EM complex also had a good October with the MSCI EM equities index and EM bonds up 1.2% and 1.6% respectively.

 

Before we wrap up, October was also the month where Oil officially dipped into bear market territory after a monthly decline of 12% in WTI and 10% in Brent. The Dollar strength probably didn’t help although in reality the decline was also driven by concerns around aggregate demand. The Dollar gained 1.1% against major currency pairs to mark its fourth consecutive monthly gain whilst the JPY has depreciated to a 2007 low. Our usual performance table and charts included in the PDF. It has all the YTD performance charts and data included.

And here are the charts showing the best and worst performing assets for October…

 

and for YTD, both in local currency….

 

and in USD.

Note that while some of the best performing YTD assets in local currencies, such as BTPs and Spanish bonds roared in EUR terms, they are increasingly subdued when redenominated in USD, suggesting that the S&P’s gain is nothing more than a voluntary submission to being beggared by its neighbors. It remains to be seen just how much longer the US can sustain being the world’s whipping currency, and surging day after day.




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It’s 2007 All Over… Except the Fed is Effectively Out of Ammo

The markets erupted last week to new highs on the Bank of Japan’s announcement that it would increase its massive QE program.

 

The Yen collapsed on the news and is now on the cusp of breaking a multi-decade support line:

 

 

While US stocks eked out a new high:

 

 

This move is very reminiscent of the 2007 top. At that time we had a top, followed by a quick correction and then a final blow off to eke out new record highs:

 

 

It is not merely the market that is mirroring the 2007 top.

 

1.     Corporate debt is back to 2007 PEAK levels.

2.     Stock buybacks are back to 2007 PEAK levels.

3.     Investor bullishness is back to 2007 PEAK levels.

4.     Margin debt (money borrowed to buy stocks) is at 2007 PEAK levels.

5.     The leveraged loan market is flashing major warnings.

6.     Corporate insiders are dumping shares at a pace not seen since the TECH BUBBLE TOP

7.     Numerous investment legends have warned of a coming crash.

8.     Investor complacency is at a record LOW.

9.     The Fed has confirmed QE is ending this week, so the juice is cut off for now.

 

The Fed has succeeded in recreating the same environment that existed in 2007. Once again we have rampant risk taking, excessive leverage, and a stock market bubble.

 

The only difference is that WHEN (it’s no longer a question of IF), stocks collapse this time around, the Fed has already spent just about ALL of its ammunition.

 

·      Interest rates are at ZERO, so the Fed cannot cut rates.

·      The Fed has spent nearly $4 trillion in QE, so announcing a new QE program won’t accomplish much.

 

This leaves other minor policy changes, verbal interventions, and of course, the nuclear option of outright buying stocks. The Fed has been effectively doing this via QE for four years by giving money to Wall Street to buy stocks, but the Fed could always opt to do what the Bank of Japan does and simply buy stocks itself.

 

However, it’s not clear what any of this would accomplish. Stocks might move higher, but the accompanying economic woes wouldn’t go over well, especially given that the Fed is already in the political hot seat due to its total lack of oversight and its cozy relationship with the Big Banks.

 

Given that the Bank of Japan’s latest increase in QE was in fact made by a VERY divided board (the vote was 5-4 in favor of the increase), we can assume that the Fed would face similar pushback both internally and externally (particularly if the GOP takes the Senate).

 

In simple terms… we’re back in 2007, but the Fed will have very real limitations to what it can do when this bubble pops. And it will pop in the not so distant future.

 

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ISM Manufacturing Surges To 3 Year Highs; Ignores PMI, Construction Spending Plunge

US manufacturing both declined (PMI) and rose (ISM) in October as the divergence  between the two soft-survey-based data streams is as ridiculous as it was in the second half of last year. ISM printed a cycle high 59.0 (highest since March 2011) smashing the 56.1 expectations (the biggest beat since July 2013). While the headline print was exuberant, New orders fell, as did new export orders. Construction spending fell for the 2nd month in a row, dropping 0.4% against expectations of a 0.7% rise.

 

Doesn’t seem like the US decoupling is taking hold domestically… 4th miss in a row for Construction spending and 2nd monthly drop.

  • *CONSTRUCTION SPENDING IN U.S. DECLINES TO WEAKEST SINCE MARCH
  • *U.S. SEPT. PUBLIC CONSTRUCTION SPENDING FALLS 1.3% FROM AUGUST
  • *U.S. SEPT. PRIVATE NON-RESIDENTIAL CONSTRUCTION FALLS 0.6%


ISM beat by the most since July 2013 to cycle highs…

 

Makes sense…

 

It appears the ISM needs a better seasonal adjustment.

And speaking of seaosnal adjustments, because a “soft-data” survey apparently needs to be seasonally adjusted, here is what the all importnat New Orders ISM would look like with and without seasonal adjustments:

 

Yup: the unadjusted New Orders print is back at February 2014 levels.

Clearly what US manufacturing needs is yet another, a third, “impartial” survey of US manufacturing to serve as a tiebreaker to farcical states, such as now, when Markit says worse, ISM says better, and the “self-reported”, cherrypicked, seasonally-adjusted respondents say the following:

  • “Holiday orders are exceeding seasonal forecasts. Customers are demanding additional quantities above prior orders. Fuel costs and other positive signals appear to be creating demand above normal.” (Food, Beverage & Tobacco Products)
  • “Weakness in commodity prices very positive on our business.” (Fabricated Metal Products)
  • “We continue to see strong demand across multiple sectors.” (Transportation Equipment)
  • “Business steady and strong.” (Furniture & Related Products)
  • “Another strong month in terms of business growth.” (Computer & Electronic Products)
  • “Most business segments are seeing an upward trend in orders — mostly from existing customers, but also some new customers. Transportation continues to be a major issue.” (Chemical Products)
  • “Conditions are still basically flat.” (Printing & Related Support Activities)
  • “Production is oversupplying demand, and prices have softened.” (Wood Products)
  • “Outer body material changes in the auto industry means new equipment and manufacturing growth.” (Machinery)
  • “Business conditions are good; sales and production volumes are generally increasing.” (Miscellaneous Manufacturing)




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The Case Against the Midterms is the Case for the Midterms

Writing in The New York
Times
, on the eve of what many expect to be a punishing
midterm loss for Democrats (the timing is surely coincidental),
public policy professor David Schanzer of Duke University and Jay
Sullivan, a junior at the same school,
argue that America’s midterm elections should be
cancelled

Here is the core of their reasoning:

But the two-year cycle isn’t just unnecessary; it’s harmful to
American politics.

The main impact of the midterm election in the modern era has
been to weaken the president, the only government official (other
than the powerless vice president) elected by the entire nation.
Since the end of World War II, the president’s party has on average
lost 25 seats in the House and about 4 in the Senate as a result of
the midterms. This is a bipartisan phenomenon — Democratic
presidents have lost an average of 31 House seats and between 4 to
5 Senate seats in midterms; Republican presidents have lost 20 and
3 seats, respectively.

The realities of the modern election cycle are that we spend
almost two years selecting a president with a well-developed
agenda, but then, less than two years after the inauguration, the
midterm election cripples that same president’s ability to advance
that agenda.

Basically, their complaint is that the midterms reinforce the
notion that the president’s agenda is not the only one that
matters, allow the public a chance to express their opinion about
that agenda by voting at the midpoint of a presidential term, and
that Congress has significant power to shape, slow, or even block
that agenda through the legislative process (and might even respond
with an agenda or agendas of its own).

This strikes me as a better case for the midterms than one
against it. 

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‘Go Ahead and Call the Cops. They Can’t Unrape You’—Cops

If you need something a little stronger than
coffee to perk you up this Monday morning, perhaps disgust and
outrage will do the trick? Because I think I have just the thing
for that. Introducing…
two Austin police officers who
not only think mocking rape and
robbery victims is hilarious but were too stupid not to record
themselves during the conversation. 

In the video, the two unseen Austin cops—later revealed as
Officers Michael Castillo and Mark Lytle—start out discussing how
crime better watch out when they’re riding together. “Shit would
get real for the bad guys,” says one of the officers. “The world
would be at peace for a week.”

The other officer counters that peace would probably be likely
“because we’d turn a blind eye towards everything.” It
continues:

Officer 1: I want to report a robbery! You probably deserved
it.
(something unintelligible about finding a rape victim)
Officer 1: Look at that girl over there.
(one of them blows a whistle at her)
Officer 2: Go ahead and call the cops. They can’t unrape you.
(laughter)
Officer 1: Yeah, exactly. … You did turn your camera off,
didn’t you?
Officer 2: They can’t unrape you!

The Austin Police Department
confirmed to local station KXAN
that the video is authentic and
said an internal investigation is underway. “The investigation will
include a comprehensive audit of the involved officers’ contacts
with victims of sexual assault to ensure the actions taken during
the contacts meet the expectations of the Department, the public
and most importantly, the victims,” it said in a statement.

Austin lawyer Drew Gibbs, who first posted the video to YouTube,
told KXAN the video was obtained as part of his firm’s
investigation into an auto crash. “The comments on the video struck
me as inappropriate and I chose to allow the court of public
opinion to decide if they agreed,” said Gibbs.

“Arguably even more inappropriate than the rape joke made by the
police officer was the other officer’s initial reaction, which was
to hope that the video camera was not rolling. … I would hope
that when a police officer observes another officer acting
inappropriately, or worse, illegally, that their initial reaction
would be to correct that behavior and prevent its
reoccurrence.”

Watch the whole thing: 

A spokesman for the Austin Police Association said “we all would
be embarrassed if everything we said was made public” and that the
statements the officers made on camera do not “reflect those
officers work ethic”.

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Student Suspended for Slicing Apple During Healthy Snacks Presentation

AppleDa’von Shaw, a Bedford, Ohio high school student,
brought apples and craisins to school for a “healthy eating”
presentation he was giving to his speech class. He took out a knife
to slice an apple, and I’m sure you can all guess
what happened next
:

“When I took out the knife the teacher then told me that I
couldn’t use it, so I didn’t hesitate I just gave it to her,” said
Da’von.

He continued with his other classes, but late in the day was
suspended for five days. The suspension letter charged him with
having a weapon at school. 

His mother Shakila Wilson is angry, saying, “I can take off my
belt and use that as a weapon. Pens and pencils can be used as a
weapon. You can’t take a person with no intentions to harm and put
them as a criminal because that’s what you normally do.” 

She feels the punishment is too much, didn’t take the
circumstances into account and worries about her son missing
classes and assignments.


At least he wasn’t actually executed by the Bedford High School zero
tolerance squad. But he was given a five-day
suspension for bringing a “weapon” to school. Questioned by a
reporter at 19 Action
News
, the superintendent suggested that Da’von’s punishment
could actually have been much worse: an entire year’s suspension. I
guess the school was being incredibly lenient when it decided not
to put Da’von’s life on hold for a year over nothing.

A while back, when we first started hearing about these zero tolerance follies,
I might have sputtered something like, “What are we teaching kids
when a school refuses to make any distinction between actual danger
and normal life?” But now I realize: We are teaching kids
precisely what they need to learn in a
hyper-terrified society. They need to understand that society today
refuses to distinguish between an infinitesimal risk and a huge
one. Zero tolerance is perfect training.

free-range-kidsSome day, if he
doesn’t do something crazy like bring a nailclipper to school,
Da’von will graduate. Eventually, he will matriculate into American
adulthood, where, if he wants an easy time of it, he will
not roll his eyes when a TSA agent confiscates his
3.5 oz tube of Pepsodent, and not slam the door when a cop
comes to investigate him for letting his son play at the park,
unsupervised.

In other words: To get along as he goes along, Da’Von will be
expected—required!—to accept safety hysteria as a way of life. As a
high school student who sliced an apple without considering the
enormous threat this posed to his fellow students, he failed. But
after five days at home to reflect on what he did, perhaps he will
be ready to become a good, quaking, danger-hallucinating
American. 

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GM Channel Stuffing Surges Most Since November 2013

Moments ago, GM was pleased to report that its dealers delivered 226,819 vehicles in the United States in October leading to “the company’s best October sales in seven years.” GM added that Chevrolet sales were up year over year on the strength of the Silverado, Cruze, Traverse and Equinox, and “Buick had its best October in more than a decade.” Alas, Cadillac did not, October sales tumbled -8.0%, and are down -4.6% on a YTD Y/Y basis. Bottom line: total GM sales increased a tiny 0.2%, well below the 3.1% expected.

But it could have been much worse if GM had not resorted to its favorite sales “boosting” gimmick: channel stuffing. Indeed, as GM reported, in October, total units at dealer lots, rose to 792,489, or a whopping 94 days supply, up from 753, 928 (81 days) in September, and up a whopping 8.9% from the 728K in October of last year, when, again, sales were only 0.2% lower. This was the biggest one month jump in “dealer stuffed” vehicles since November of 2013.

Expect to see much more channel stuffing into year end, as the subprime-funded purchasing tide crashes, now that regulators and authorities are aggressively looking into a surge in subprime loans to fund auto purchases.




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