TIDBITS

The game of beggar-thy-neighbor continues.

South Korea joined the fray Thursday in what caught some off guard, when the Bank of Korea cut it's base rate 25 basis points to a record low of 1.75 percent. It was the bank's first cut in nearly six months.

Of course deflation took the blame at least in part coupled with a weaker than hoped for economic picture. Korea joined a growing list of central banks ponying up to the gaming table. On Wednesday the Bank of Thailand cut rates, supposedly catching investors off stride.

Others cutting rates of late include India, China, Singapore, Indonesia and Australia. Everyone knows about Europe and Japan among others. The move by Korea pushed the KOSPI up nearly 0.5 percent while also helping other Asian markets. Much of this cutting comes at a time when the U.S. Federal Reserve Bank , according the the WSJ, is considering now a June rate hike.
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In Euroland the euro continued it's swan dive, settling at a 12-year low of $107, on its apparent route to parity with the greenback. The euro began this year at $1.20 amid much of the hue and cry for the ECB to do something by rolling out its version of U.S.-style QE which began earlier this week.

But the yield-hungry crowd, to some alarm, seems to be rushing for higher returns on their holdings, putting further downward pressure on the euro. Some analysts are calling for parity by the end of this year while others think it will land at $0.85 in 2017.
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Maybe what investors really need is to take a couple of deep breaths and a shot of powdered alcohol, the latest and most recent approval thanks to the Alcohol and Tobacco Tax and Trade Bureau. It's called Palcohol.

We don't know how much of a pal it will turn out to be, but we'd sure like to know the name of the bureaucrat who came up with the monicker.

The product, appropriately name "Palcohol", is alcohol in another form-powder in this case. Thinking out of the box, or rather out of the bottle, researchers were able to turn their favorite cocktails into powder form. Just add water, shake and sip. After all, the best drinks are shaken, not stirred.

Since last year's revocation in its first attempt at pushing the product through the bureau, Palcohol has worked out many of its earlier issues. Spokesperson for the bureau, Tom Hogue, says that all of its previous issues have been resolved to the point that now four varieties of Palcohol have now been approved. But the brand can't celebrate just yet. Just because it has made it through the bureau's guidelines doesn't mean it will be hitting shelves that soon.

While the product may be available for sale as this summer, many state legislators are pushing against the sale of powdered alcohol for fear of its potential implications. Even Colorado state legislators, who recently legalized the sale and use of marijuana, have expressed concern about the potential ease of access to minors, and the opportunity of concealing the potent substance. But the while the bureau has said that they are approving the product for sale, based on their own guidelines, they are by no means making the final call. That is up to each of the individual states and whether or not the company would like to fight their claims.

Hogue explains that the bureau's evaluation is based on whether or not the product matches its label, not "its potential for abuse.
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In other interest-rate related news governments and corporations are selling long-dated bonds like there is no tomorrow. As the Financial Times noted, "The rapid growth in multi-decade debt comes as borrowers seize opportunities to lock into interest rates that have been pushed down, even into negative territory, by central bank action and faltering economic outlooks."

There are some red flag terms in here that any savvy investor should be aware of like "lock in" and "central bank actions" and "faltering economic outlook." This is an opportunity if one isn't careful to get screwed twice without benefit of clergy or the KY jelly.

Central banks and central bankers are the culprits for all three of those things. The Times quoted one investment wag, noting that such borrowings might not be repaid in the lifetime of finance ministers and corporate treasurers, "It makes sense."

And that it does if you're the seller. If you're the buyer, however, you need to look up the definition of coney-catching.
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NO SURPRISE HERE

Surprises come and go.

But there's two things today that shouldn't surprise you: Wall Street profits are down but Wall Street bonuses are up--three percent. And the other half of our great two party system, the Democrats, are in denial about Hilliary Clinton's long, considerable and contemptible baggage.

Both should be mixed into a cocktail along with a pinch of the evening news and knocked down nightly to bolster your confidence in what many call the system.

Hilliary's pathetic history speaks for itself for those who don't suffer from political and historical dyslexia. But Wall Street--isn't that the group the Fed recently bailed out--who among us would of thought they'd be so brazen so soon with taxpayer money? Surely, not you nor I.

Even General Motors showed more respect for taxpayer dollars notwithstanding those faulty ignition problems that somehow didn't get a timely recall.

If leopards never discard their spots, Wall Street never tempers its greed.  

Now we have Goldman Sachs, another major Wall Street firm pulling their version of  Captain Louis Renault in the movie classic, "Casablanca":  "I’m shocked, shocked to find that gambling is going on here!”

Change gambling to greed, they both start with G, and you have a great picture of Goldman Sachs's recent claim: "Goldman  No. 2 'freaked out' by tanking bond yields," as reported by MarketWatch, http://www.marketwatch.com/story/goldmans-president-is-freaked-out-by-tanking-european-bond-yields-2015-03-11?dist=afterbell

Goldman Sachs’s second-in-command, Gary Cohn is freaked out about the pervading trend of negative interest sweeping across Europe. 
 
Cohn told CNBC’s “Squawk Alley” on Wednesday that negative rates, in which investors effectively pay government bond issuers for holding their debt, “freaks him out.” 

Cohn’s frank response is saying something, coming from the towering, 6’4’’ president and chief operating officer of the world’s most prominent investment bank, which is known as a bond trading powerhouse.

The Goldman honcho noted that negative yields make it hard in the insurance, asset management and pension businesses to generate a return. Those institutional investors represent a good chunk of Goldman’s clientele. 

The last paragraph really says it all. This is a not so subtle message to Goldman's many close friends at central banks everywhere, it's the other, little guy's ox that should be getting gored not ours. 

Call it a great big, financial "Whoa!" Time to take another look at this madness. It's a spin on the old three Fs--friends, family and fools. We don't mind them taking there low-yield lumps, but not us.

We're Wall Street investment bankers.

Now about those Wall Street bonuses, we think you already know the facts.

DRINK CAREFULLY

 There is the well-known story about the frog and boiling water.

The frog gets put in tepid water and the heat slowly increased to the boiling point, but the frog never notices the change and doesn't jump out before it's too late. Some might say the tale is just a metaphor for subtlety.

Subtle changes like those flapping butterfly wings create big effects. There's another term that likewise begins with the letter "s" that's undergoing big changes today under what is becoming less and less subtle--sovereignty. In this case the rapidly growing loss of it.

Globalization is a term that 's been pushed by MSM. It's described as a modern day panacea for the globe's ills. But folks are starting to realize globalization is the antonym of sovereignty. Hardly what's it's been cracked up to be.

If you think otherwise, you have not been following the eurozone mess. Or for that matter other areas of the world where folks are becoming increasingly upset about the obliteration of local control and customs.

Walmart is the huge conglomerate people love to hate. If you look around today conglomerates, like robots, are taking over. In the U.S. corporate big boys like Walgreen's, CVS and RiteAid have all but captured the pharmacy business.Local mom and poppers followed the Edsel down the Oblivion Freeway. 

And much the same is happening all around us. What once was subtle is now--or it should be--blatantly overt, an outright assault on choice. And that's just another way of saying globalization is hardly your friend if you revere freedom of choice.

Some people we fear still believe milk is the only thing that's getting homogenized. Local not central is synonymous with sovereignty. Local not central is synonymous with choice. Like the best laid plans of mice and men, good intentions often beget not so good results.

What part of Washington or Brussels or Beijing or Moscow is local? The Greeks along with several of their peripheral EU members, notwithstanding their pathetic historical lack of fiscal probity, get it.

So here's a couple of questions for you, one about semantics, the other about money printing.

Are the words manipulate and titrate really fungible? The first, manipulate, denotes something unfavorable while the second, titrate, something acceptable.

And which is it that central bankers around the globe do--titrate or manipulate? If you sup regularly at the MSM trough you get the picture. You also get at which trough you're expected to slake your thirst.

But like that grade school warning about approaching railroad crossings most of us grew up with, stop, look and listen.

And drink carefully.

WITHOUT FEAR

Why do people doubt science? Because it 's been a false God, held up to be the savior of all saviors in the modern world not to be questioned and, in many ways, like the religion it warred with centuries ago that wasn't supposed to be questioned either.

In some ways scientific zealots have replaced their old religious foes.

Yet science can be--and is manipulated--by many. Hardly a month goes past that some scientific data, it turns out, is proved to have been manipulated.

Is this more a statement about humans rather than science? We don't think so. Science often turns out to be incorrect. A few decades ago science labeled cholesterol a villain. That proved wrong with time. Science despite its reverence for truth and law changes.

In the early days of the cholesterol frenzy eggs were the villain of choice. Later it became red meat. Now it's something else.

Science despite what its believers claim is subject to the same human frailties like greed and pride as any other discipline. Big pharmaceuticals is a classic example. Anyone who believes it takes three oral hypoglycemic medicines to control non-insulin diabetes is smoking the good stuff regularly on the way to their ATM.

A full 30% of the current flu vaccine making the rounds doesn't work. Why? Because the viruses are like you and me; they want to survive. But unlike you and me they're much better at mutating. 

Bacteria and viruses just bring the point home. So-called super bugs are testimony to man's folly of putting all their scientific eggs in one basket.

Screwing around with Mother Nature is never free. And that brings us to the latest popular frenzy pushed by the so-called scientific elite and MSM, climate change. Is the climate changing? Of course. Is it changing for the reasons these groups claim? Our response, not so fast.

Part of all frenzies is to force everyone on board, dissenters beware. A lot of the climate-change crowd come from the left--a fact, not a partisan statement. Dissenters absent the requisite doctorate get marginalized as ill-informed, non-experts.

So here's reminder for those on the left from one of their all-time idolized political icons, John F. Kennedy after his Bay of Pigs debacle, "How could I have been so stupid?"warning to "never trust the experts." 

Economists are supposed to be experts given all the time most spend in their econometric cellars. The air down there can get pretty thin. Maybe that's an excuse.

One answer can be gleaned from previous forecasts. Back in 1995, economist and Financial Times columnist John Kay examined the record of 34 British forecasters from 1987 to 1994, and he concluded that they were birds of a feather. They tended to make similar forecasts, and then the economy disobligingly did something else, with economic growth usually falling outside the range of all 34 forecasters.

http://www.slate.com/articles/arts/the_undercover_economist/2008/08/the_wisdom_of_crowds.html 

The Queen of England famously asked why economists failed to foresee the financial crisis in 2008. "Why did nobody notice it?" was her question when she visited the London School of Economics that year

Economists' failure to accurately predict the economy's course isn't limited to the financial crisis and the Great Recession that followed. Macroeconomic computer models also aren't very useful for predicting how variables such as GDP, employment, interest rates and inflation will evolve over time. 
http://www.cbsnews.com/news/why-are-economic-forecasts-wrong-so-often/

Economics is often described as the ‘dismal science’. Unlike other traditional sciences, economics rarely provides a simple solution to present day issues. Furthermore economists have a poor record of predicting the future. Even notable economists such as Joe Stiglitz agree that economists only get it right at best around 3 or 4 times out of ten. However it should be acknowledged that economic forecasting is a difficult art at best – human behavior is forever changing and the economy is a complex mechanism with many working parts. Nevertheless I thought it would be entertaining to highlight some of the most wildly inaccurate forecasts in recent times. Here are some of the best… https://shaundacosta.wordpress.com/2013/06/30/when-economists-get-it-wrong-the-worst-economic-predictions-of-all-time

So how does this fit with Chairwoman Yellen's recent revelation that from here on out it all depends on the data? That should strike a cord of confidence in you as you drift off to sleep every night.

Predicting the courses of diseases or disease outbreaks isn't any better. And that includes those experts in epidemiology.

THE EBOLA epidemic that took off last year in three west African countries—Guinea, Liberia and Sierra Leone—is finally fading. The last three weeks have each seen around 120 new cases, the lowest level since July 2014. In total, around 22,000 people are thought to have been infected, and 9,000 to have died. But predictions last year were much higher, including a worst-case scenario by America’s Centres for Disease Control and Prevention (CDC) of 1.4m cases, reported and unreported, by January 20th. How are such predictions made, and how can they go wrong?

Disease predictions come from mathematical models that group the population at risk of a disease into categories and describe how people move between them. Both the categories and the flows depend on the disease. With Ebola, there is a long lag between infection and the first symptoms, during which it is not contagious. And recovered sufferers are immune. So an Ebola model will group the “susceptible” (who have not yet had the disease), “exposed” (infected but not yet showing signs of the disease), “infectious” (ill and contagious) and “removed” (no longer infectious because they have recovered or died). Estimates for the sizes of these groups and how people move between them—including how many people catch the disease from each infectious person, how long people remain infectious and how likely they are to die—are used to build a computer model showing how the spread of the disease is likely to unfold. The CDC’s Ebola model also sub-divided infectious people into three smaller groups: isolated in hospital, partially isolated at home or elsewhere in the community, and unisolated. And its highest predictions were swollen by the assumption that for every reported case, 1.5 more went unreported.

http://www.economist.com/blogs/economist-explains/2015/02/economist-explains-3

But let's now leave out the current tribe of revered MSM favorites, central bankers.

Four months ago, when unemployment stood at 7.8%, the Bank of England issued forward guidance on interest rates. Threadneedle Street said it would not even start to muse about an increase in interest rates until the jobless rate hit 7%. According to the Bank, this was likely to be in early 2016.
 
Happily, the Old Lady's forecasts have proved spectacularly wrong. The recovery in the economy since the spring has proved to be jobs rich, with the latest report from the Office for National Statistics (ONS) showing that employment was up by 250,000 in the three months to October. Unemployment fell by almost 100,000 over the same period and the average jobless rate for the three months from August to October dropped to 7.4%.

The chart below is from the Washington Post, hardly a right wing publication. It's a scribe owned outright by a well-known lefty named Warren Buffet.



We could go on, but we won't. The purpose is a quote from an article from today's "Daily Bell," about the generically modified grains Monsanto produces: "Monsanto Laments Dwindling Faith in Science."

The Bell is a libertarian site and the Post a liberal one as is Slate and CBS.

On Twitter recently, someone asked the question "Why do people doubt science?" Accompanying the tweet was a link to an article in National Geographic that implied people who are suspicious of vaccines, genetically modified organisms (GMOs), climate change, fluoridated water and various other phenomena are confused, adhere to conspiracy theories, are motivated by ideology or are misinformed as a result of access to the 'University of Google.' ... Who tweeted the question and posted the link? None other than Robert T Fraley, Monsanto's Vice President and Chief Technology Officer. 
  
Our experience in science might not invalidate yours. But in no way does yours invalidate ours.

If you allow MSM and its scientific cohorts to silence you on these issues with their marginalizing tactics, you'll be doing a grave disservice to yourself and your loved ones. 

This is about much more than truth. It's about your legal right to openly dissent without fear of any private or government retribution.

LOSS OF LOCAL

A friend toils on the workman’s compensation side of medicine. He’s been doing it for nearly three decades.

For the unfamiliar WC is all about work-related injuries. When people are injured on the job their employer usually pays for work-related medical care. And a claim gets filed with the state and insurers.

Each state has its own regulations and each state is different. But it’s big business that involves essentially the public trough, a place where many sup, perhaps not the least of whom are PI or personal injury attorneys.

You might remember the name of John Edwards, the former Democrat candidate for president a few elections back. That's what he did, personal injury, where he made his millions. 

You might also recall he was the guy who got his paramour pregnant, cheating on his wife while she was dying of cancer, the sort of guy you want to find yourself sitting next to in your pew next time you venture to church. Excellent presidential timber.

Drive into or out of just about any airport in America and you’ll see the billboards. On the rare chance you miss them there, check out late night infomercials and talk radio. Vultures can smell decay. 

My friend though he owns three clinics is a mom-and-popper in a declining mon-and-popper industry that’s being swallowed whole by big conglomerates. Just like Costco and Walmart in retail to farming and pharmacies like CVS and Walgreens to you name it, the genie is out of the neighborhood bottle.

And if you're an animal lover it's happening in the veterinarian world also. Like most things in life there's good and bad here. Loss of choice or some might say freedom is one bad aspect.

Price monopoly is another. The good part? Maybe you spend a few minutes less than you would waiting in an emergency room. These conglomerates are profit driven, run by bean counters.

This is not to suggest that profit is a nasty word, just to point out despite much of Hollywood's misguided themes, greed is alive and well in more places than Wall Street.

It’s a big, cold, indifferent business despite the marketing. Vultures can also smell money. But we’ll leave that for another time.

There's another point here, about the loss of local. Local, whether you realized it or not, is about sovereignty, choice and globalization. Local and globalization are antonyms. Remember that the next time you head to the polls.  

Besides worker-related injuries most of these clinics do other tasks like pre-employment physical exams and drug screens and even urgent care to a degree. In some ways they are far more sensitive to changes in the economic landscape than all the economists with all their econometric minutiae together.

Pre-employment physicals have to do with jobs. And the number fluctuates not only with the seasons but the times. Even drugs screens are a decent economic indicator. A positive test usually results in a non-hire, especially in harder times like the low point of the recession.

But before the recession when the economy was percolating things were so tight employers were hiring applicants with positive tests. They needed bodies. In short, it’s a cycle. 

The other neat feature is one gets to talk to lots of business owners, large and small. It’s an informal survey, a snapshot, but it’s much closer to where the surf and the sand unite than econometric models.

During good times work-related injuries usually increase. And foot traffic, not unlike, say, retail, tends to decrease during slower periods. It probably makes too much common sense for the cognoscenti.

And besides it’s much more difficult for them and MSM to manipulate.

REPRESSION ON THE RISE

 
Some Americans would have trouble locating Venezuela on the map let alone spelling it.

There might not be trouble in paradise yet, but if the country with one of the largest oil reserves in the world and an OPEC member pictured your idea of paradise, then there's trouble, serious trouble.

Suppression of dissent, not too different from what's going on in China, represents serious trouble. Last week Venezuelan police jailed Caracas Mayor Antonio Ledezma. Ledezma's alleged crime, plotting with again the alleged help of U.S. aid to dismantle Venezuelan President Nicolas Maduro's presidency.

Jailing opposition leaders seems to be a registered patent for the Maduro administration as Ledezma in not the first to be carted off to the clinker. In the meantime, the bolivar sank from 50 to 170 to the U.S. dollar. That's a big devaluation.

As the country struggles with a collapsing economy and falling support for the incumbent administration, Maduro has increased repressive measures against his dissenters bringing criticism from outside the country. 

Repression of dissenters appears to be on the rise. And it's not just rising in what many view as third world nations.

DOLLAR PAIN

Pain by any other name is pain.

And there's been enough lately to go around on the earnings front for U.S. multinationals like Coca Cola and Mondelez. 

Hewlett-Packard is the latest to queue to the complaint window. 

The perp, as they say in television crime shows, is the rallying dollar.

Unfavorable foreign currency exchange rates were blamed for part of the company's disappointing earnings as approximately 65% of earnings come from outside the U.S. 

Toss in beggar-thy-neighbor currency devaluations and you have the ingredients for more pain. The long U.S. dollar trade some believe is getting long in the tooth and looks a bit overcrowded. 

According to one report, it is now three standard deviations from its 10-year average.

Any disappointment in the consumer price index could cause some scrambling. Meanwhile, HPQ's stock took a bit hit after announcing its recent earnings expectation for the year.

At this stage unexpected events could inflict even more pain.