Archive for July, 2014

US nepotism in Ukraine

Posted: July 22, 2014 in Uncategorized

The son of Joe Biden. Hunter Biden,  has been elected on the board of Burisma Holding, largest Ukrainian private gas company.

And there is another American elected on the board, Christopher Heinz. He works at Seneca’s partner and is the stepson of John Kerry (US Secretary of State).

People was swearing that Democrats were better than the Republicans (remember Dick Cheney and Halliburton).

Wrong again.

It reminds me of the nepotism that brought down the Roman Empire.

The US is really escalating the pressure against Russia, taking the lead as white knight against Putin.

Wait a minute…step back. The air plane was Malaysian. There was not a single US causalities in the crash. The plane was downed in Ukraine, which is part of Europe.

The Dutch, Malaysians or the Australians should be the White Knight.

So why the US is white knight against Russia. It is because of the famous spat in Syria, where the Russians blocked a US intervention after an alleged Syrian gas attack (then confuted).

In any political scenario, the strategy in a similar case is to leave the adversary a venue of honourable retreat.

Instead the US is looking to provoke Russia in a reaction.

I do not think that Russian President Putin will back down (it is not in his character, nor can he show weakness internally).

So I think we are going towards escalation (Russia is already planting sea mine around Crimea), but I do not think it wil be a war -world war two style. The US has great military superiority, but an unwillingness to fight. And Russia knows that in a full military confrontation can just achieve a stalemate (Russia cannot win, but it can inflict enough losses to make the US or Europe tremble just at the idea – there are 7 NATO ships in the Black Sea that would be sunk within minutes).

No the escalation of a war between US and Russia, will be economic (including financial markets) and cyber war. So it does interest anyone, as the front line will be where you live.

So it is important to see if the US leave an honourable retreat to Russia.

PS. Still we do not know what happened. On Russia Today news released quite a few evidence-based data that makes it clear that nobody really knows yet who did what – while the US, as of now, just says trust us we know. 

In Fortaleza, the BRICS (Brasil. Russia, India, China, South Africa) launched the Bew Development Banks (still in US Dollar) as bank to counterbalance the IMF, dominated by the US.

Two days ago, Argentina launched a swap agreement in which practically links its economy to China.

In the Pacific already a lot of transactions are in Yuan.

Russia logically is trying to disengage from the US Dollar.

This is part of the US disengagement. And also the demise of the US Dollars as world currency (already decreased by 50% as transactional currency since 1992).

And it will have more consequences that people thinks. When the British Pound lost its status of currency status, soon afterwards the British Empire collapsed. And it always happened throughout history.

Black Swans flying high

Posted: July 21, 2014 in Uncategorized

A Black Swan, in finance, is a statistical unpredictable event that could effect the market.

The first clear one is Russia. President Putin feels cornered and under pressure from every side. Whatever happened to MH17 you would not want to corner an ex KGB colonel with the 2 world most powerful army. Unless your intention is restarting a Cold War (hint: the US weapon industry would love that, after the US Budget immense tax cuts). Putin could just say I cannot control the rebels but I can send the army in to secure the site (even if the rebel are sponsored by Russia ir does not mean that Russia can control it…the Taliban were mujeddhain trained by the US, Islamic State was initially set up by the Saudis against Syria and then they all went rogue).

The Second possibility is the Islamic State. It is growing constantly ( the media reported that Iraq Army with Iranian support was trying to recapture Tikrit. What they missed is that they got defeated). Saudi Arabia moved 5000 troops towards Iraqi border for protection and put all oil facilities under maximum terrorist alert  over the weekend.

Mh 17 what really happened?

Posted: July 21, 2014 in Uncategorized

The reality of what really happened is that nobody knows. And one should beware of  accusations unless you have a different purpose.

The two most probable (in order of probability) cases are.

The “Russian backed” rebels inadvertently shot it down. They had announced a few days earlier a no fly zone. As a twist if you  check the flightpath of mh 17 (there is the website airwaves.com airline tracking) until the fatal day was always flying much lower trajectories and the communications between Ukrainian air control and mh17 have  been sequestered. So theory 1: rebel shot it down, but Ukrainian authorities put it there.

2. A false  attack so shot down by Ukrainian to put pressure on Russia.

Please before dismissing the second theory please know that the famous Syrian Army gas attack that almost provoked a US retaliation, in the intelligence world, is believed to have been a Saudi false flag attack. And Turkey got caught preparing a false flag attack from Syria

SP 500, behind the scene

Posted: July 18, 2014 in Uncategorized

Market logically crashed after Ukraine. Gold and oil rallied (Israel) .But also there was some other factors behind the scene.

A Bloomberg survey indicated that 47% of respondent saw the market at unsustainable level and 14% already in a bubble.

Fed Philadelphia President Bullard said that the FED could have to withdraw the stimuli earllier due to Labor and inflation implications.

Also some big miss earning estimates from YUM Brands! Mattel and SanDisc SP500 18 July

I kept on repeating for a while …if you put 20 monkeys with sticks in a room …soon or later something will happen.

We have China vs Japan, China vs Philippines and Vietnam (were the first Malaysian plane got shot down), Israel-Gaza, Islamic State vs Middle East (too many to count) and Ukrainian vs Pro Russian Ukraine.

Now sadly another Air Malaysian plane got shot down. And 300 people got lost.

What I do not understand is why they did not close that airspace, specially when 3 days ago an Ukrainian military aircraft got shot down at altitude. Probably too expensive to change route?

In the same day, also, Israel launched a limited ground offensive and even the White House was in lock down for a scare. Worth also mentioning the Islamic State repelled an Iraqi/Iranian offensive against Tikrit and took over another gas/oil field in Syria (not stupid terrorist…they are actually taking over all the water/energy infrastructure.

Fortunately both President Obama and President Putin played very conservative “post event” interviews – maybe they do remember the article attached date 30 June 1914, the day where the heir to the Austrian throne got killed. And sparked World War 1. Thank God for that.Capture  30June14

Contrary to the previous sanctions that were more a media show than real punishing, the new round of sanctions are more punishing.

So this time Putin says while he is still open to dialogue, he also says he will respond.

Putin is a man of his word.

After the Ukrainian shelling of a Russian town killed a man, he said that Russia would respond. And casually a high -flying (so out of the reach of the normal rebel hand held missiles) AN26 military aircraft got shot down.

So let’s wait for his response.

Truths. US is still far away from self -sustaining growth

Truths. Biomed and Social Network securiries (eg Facebook and Linkedin) are way too expensive

Lies: the average SP500 company is not expensive -there is an increased level (highest ever – the second peak has been in 2007) of company buybacks that alter the normal ratios (earning per share) and make it all look “nice and clean”).

The market is trembling and the Fed want to push it higher. The higher it pushes the more risky it becomes*.

Why they push it higher? The Fed tried to spur the economy first lowering the rates to zero so that bank would lend to the business. But the banks would not do it.

The Fed now is pushing the market higher to make feel the “average Joe” rich and positive and go and spend more. From the ground it does not seem to work either.

If the music stop, there is no floor. The issue no one knows when it stops. For now the market looks like “climbing a wall of worries”.

Oil price

Posted: July 11, 2014 in Uncategorized

I just went and look at the data on why the oil price are not moving up like Gold, since the Middle East turbulence.

It seems that the main reason is due to huge profit taking of institutional investors that got the hint of what was happening before the Islamic State attack. The profit taking seems to be abating, so oil is almost ready to spike up again and attack Brent US$118.