All posts by admin46x

If The Greek Elections Were Held Today


Last week’s largely symbolic vote in which the Greek bailout-addicted parliament passed, by the tiniest of margins, the latest request for just one more monetary fix promising that this time it will, pinky swear, get its house in order (and maybe even collect some taxes, because all those previous promises were just rehearsals) succeeded in one thing: the coalition government from this summer’s elections, crumbling well ahead of time. Which means the time for yet another parliamentary vote is fast approaching. So if a vote were held today, who would be the most represented parties in the Greek parliament? The answer, according to the latest KAPA poll, is the following:

  • Syriza – anti-bailout, anti-austerity party, one which is convinced Greece has all the leverage in European negotiations, and one which is usually best associated with the Grexit: 23.1%, up from 20.7%
  • New Democracy – current ruling party: 20.6%, down from 23.6%
  • Golden Dawn – aka “neo-nazis”: 10.4%, from 7.5% in June
  • PASOK – socialists; former leaders: 7.5%
  • Independent Greeks: 6.4%
  • Communists: 5.7%
  • Democratics Left: 4.6%

In other words, at this rate, when the next Greek early election takes places in a few months, the winner will almost certainly be the party that will make Germany’s covert goal – to get Greece out of the Eurozone – a Greek decision, thereby washing Merkel’s hands, while leading to scenes such as the following at every local beer hall…

Source: Reuters and Bloomberg

Barclays' Barry Knapp Batters Bullish Believers


Barclays’ Barry Knapp has joined the growing crowd of ‘sub-1400 year-end S&P 500 target’ realists among sell-side equity strategists. With Morgan Stanley’s Adam Parker at 1167 and Goldman’s David Kostin at 1250, Knapp just reduced his target to 1325 as he notes “the election scenario that unfolded was the one with the most risk, the status quo outcome.” In a brief but densely packed interview on Bloomberg TV (the likes of which we suspect we will not see on CNBC), Knapp summarizes his non-rose-colored-glasses view: “In the longer term, while U.S. growth … remains constrained by policy uncertainty and balance sheet deleveraging. Financial repression has limited the Fed’s effectiveness… We believe a period of significant equity market valuation improvement can’t begin until the Fed initiates the exit strategy process, which is unlikely to occur until Federal government debt sustainability is addressed.” From lame-duck impotence to tax-selling pressures, Knapp nails our new reality and explains, as we have been saying, that the only solution lies in a market-forced move: “We suspect, absent a market correction large enough to force compromise, the two sides will not agree on the starting point for tax rates.”

Knapp nails it a number of times including his dismissal of ‘survey’s versus market positioning – just as we have been arguing – and as he concludes: people may have been expecting this outcome but they certainly weren’t positioned for it.

Within the equity market in the near-term we believe there will be nowhere to hide. Stocks with high dividend yields are likely to come under pressure as President Obama and Harry Reid renew their push to raise taxes on upper income filers taking the 15% dividend tax rate up as well. While some of the recent domestic consumer related data has improved, the market is not discounting the risk of a tax hike and economically sensitive sectors seem likely to take a hit as well.

Must watch:

 

Via Barclays:

In the longer term, while U.S. growth has proven resilient to confidence shocks, it remains constrained by policy uncertainty and balance sheet deleveraging. Financial repression has limited the Fed’s effectiveness, rendering it counterproductive as inflation volatility rises and multiples fall. We believe a period of significant equity market valuation improvement can’t begin until the Fed initiates the exit strategy process, which is unlikely to occur until Federal government debt sustainability is addressed.

 

The election scenario that unfolded was the one with the most risk, the status quo outcome. Thus, while some observers might argue that there will be no “lame duck” session of Congress, since the major players will all keep their jobs in the 113th Congress, there also seems to be little basis to believe that a grand compromise is in the offing. We see little reason to increase the probability of avoiding the tax cliff or brinksmanship over the debt ceiling, or to expect pro-growth tax and entitlement reform in 2013.

 

Although we’re less confident in a positive turn in the data than we were in 2010 or 2011, we are confident the portfolio balance channel will remain heavily utilized by the Fed. If stocks with bond-like characteristics – defensives, high dividend payers and the largest cap – get hit on the risk of higher dividend tax rates, we would add exposure. Given risks around the tax cliff we would avoid economically sensitive sectors unless they cheapen considerably.

 

Status quo it is.

 

Following the launch of QE3 (QE Forever) we wrote that for equities to extend the monetary policy easing anticipatory rally either the economic or public policy outlook would need to improve. We believe a long-term period of sustainable equity market multiple expansion requires monetary policy normalization, which is unlikely until key public policy concerns – tax and debt sustainability via entitlement reform – are settled. The 2010 midterm election provided a short period of improved investor sentiment around those issues however, in our view; the 2012 election has had the opposite effect. We believe that for these crucial fiscal issues to be addressed, in a perhaps even more polarized political environment, the market will probably need to play a central role. With that in mind we cut our 2012 price target for the S&P 500 on Wednesday back toward a level we consider fundamental fair value

So, while some might argue there is no ‘lame duck’ session of Congress, since the major players all will serve in the 113th Congress, it also appears that there is little basis to believe a grand compromise is in the offing. With a polarized federal government we see little reason to increase the probability of avoiding the tax cliff, brinksmanship over the debt ceiling that has already been reached or enacting pro-growth tax and entitlement reform in 2013, by what appears to be the equivalent of a fragile coalition government.

Two more charts of interest…

Business confidence has again dropped, diverging sharply from consumer confidence, leading to a sharp contraction in capital spending… We have seen this before!!

 

and the market is entirely not positioned for the kind of political uncertainty that is currently ahead of us…

 

so what’s an investor to do…

In the near-term, we suggest generally cutting risk.

 

 

We would not be tempted to add risk to economically sensitive sectors, particularly not the QE2 roadmap such as the commodity plays (metals and mining, energy) or weak dollar beneficiaries (industrials, technology), unless they cheapen considerably.

An abundance of hope (green lower panel) in strategist’s forecasts for S&P 500 performance… but 2012 appears to have reverted them to reality a little – though dispersion is extremely high.

 

Meanwhile, year-end 2012 forecasts (that’s less than 2 months away) are topped by Jonathan Golub at 1525 for UBS, Credit Suisse’s Andrew Garthwaite at 1500 , Weeden’s Chris Harvey at 1492, and HSBC’s Garry Evans at 1490

 

Source: Bloomberg and Barclays

Spain's "Terrible And Inhumane" Situation Prompts End To Evictions


With Spanish unemployment at record levels over 26% (and youth unemployment over 50%), even the bailout-avoiding prime minister is now recognizing the “terrible things and inhumane situations” that many real people are dealing with. To wit, a 53-year-old woman died after she threw herself from a window of her apartment when representatives of Spanish bank La Caixa arrived with locksmiths to evict her yesterday morning. The suicide (following another last month in Granada) has prompted Rajoy to temporarily halt evictions of the most vulnerable families as the government devises measures to help people stay in their homes. And yet, we are told again and again by Juncker, Barroso, van Rompuy et. al that the corner has been turned… we suspect not!

 

Via Bloomberg:

Spanish Prime Minister Mariano Rajoy will temporarily halt evictions of the most vulnerable families as the government devises measures to help people stay in their homes after a woman killed herself in Baracaldo.

 

The Spanish people are experiencing “terrible things and inhumane situations,” the premier said at an election rally in Lerida, Catalonia last night. The government “will defend the most vulnerable families affected by the evictions and act with seriousness, sensitivity and great humanity,” he said.

 

Amaya Egana Chopitea, 53, threw herself from the window of her apartment when representatives of Spanish bank La Caixa arrived with locksmiths to evict her yesterday morning, El Mundo reported. Egana and her husband’s mortgage debt of 164,000 euros ($208,640) rose to 213,000 euros because of charges and interest payments, while their home had been auctioned for 190,000 euros, the newspaper said.

 

Rajoy is searching for a formula that can help families that have fallen behind on mortgage payments without increasing the strain on lenders trying to clean up about 180 billion euros of bad real estate assets, the legacy of a 10-year building boom. Banco Popular Espanol SA (POP) today offered shareholders the chance to buy new stock at a 32 percent discount as it tries to plug a 3.2 billion-euro capital deficit.

 

Record Unemployment

 

The banking sector’s problems are already complicating Rajoy’s efforts to narrow Spain’s budget deficit and get the economy moving again. Unemployment reached a record 26 percent in September and the European Commission last week said Rajoy is set to miss his budget goals for the next three years.

 

The premier yesterday said he wants to agree on a plan with the opposition Socialist Party that will encourage banks to renegotiate loans and find ways for families to stay in their homes, according to the e-mailed text of his remarks.

 

“It’s a difficult issue but I hope that soon we will be able to give the Spanish people some good news,” he said.

 

Egana, a former city councilor, worked as a human resources director for the public bus company in the northern region of Vizcaya and her husband, Jose Manuel Asensio, had recently found work after a period of unemployment, El Mundo said. Asensio didn’t know the family was due to be evicted, the newspaper said.

 

A spokesman for La Caixa, who asked not to be identified in line with company policy, declined to comment on the eviction.

 

A man in the southern city of Granada killed himself last month as he faced the loss of his home, according to press reports.

Why Did CIA Director Petraeus Suddenly Resign … And Why Was the U.S. Ambassador to Libya Murdered?


The Deeper Questions Behind the Ambassador’s Murder … and the CIA Boss’ Sudden Resignation

While the GOP is attacking (and Dems defending) the Obama administration in connection with the murder of the U.S. ambassador to Libya, there is a deeper story.

Sure, it is stunning that the State Department never requested backup or that people such as Lieutenant Colonel Anthony Shaffer allege that President Obama personally watched in real time the attacks as they occurred via video feeds from drones flying over the Benghazi consulate.

But these claims only can be assessed – and the whole confusing mess only makes sense – if the deeper underlying story is first exposed.

Many Syrian Terrorists Come from Libya

The U.S. supported opposition which overthrew Libya’s Gadaffi was largely comprised of Al Qaeda terrorists.

According to a 2007 report by West Point’s Combating Terrorism Center’s center, the Libyan city of Benghazi was one of Al Qaeda’s main headquarters – and bases for sending Al Qaeda fighters into Iraq – prior to the overthrow of Gaddafi:
WestPoint 1 LibyaAQvsAS Why Did CIA Director Petraeus Suddenly Resign ... And Why Was the U.S. Ambassador to Libya Murdered?
Al Qaeda is now largely in control of Libya.  Indeed, Al Qaeda flags were flown over the Benghazi courthouse once Gaddafi was toppled.

(Incidentally, Gaddafi was on the verge of invading Benghazi in 2011, 4 years after the West Point report cited Benghazi as a hotbed of Al Qaeda terrorists. Gaddafi claimed – rightly it turns out – that Benghazi was an Al Qaeda stronghold and a main source of the Libyan rebellion.  But NATO planes stopped him, and protected Benghazi.)

CNN, the Telegraph,  the Washington Times, and many other mainstream sources confirm that Al Qaeda terrorists from Libya have since flooded into Syria to fight the Assad regime.

Mainstream sources also confirm that the Syrian opposition is largely comprised of Al Qaeda terrorists.  See this, this, this, this, this, this, this, this, this and this.

The U.S. has been arming the Syrian opposition since 2006. The post-Gaddafi Libyan government is also itself a top funder and arms supplier of the Syrian opposition.

The Real Story At Benghazi

This brings us to the murder of ambassador Stevens and the sudden resignation of CIA boss David Petraeus.

The Wall Street Journal, Telegraph and other sources confirm that the US consulate in Benghazi was mainly being used for a secret CIA operation.

They say that the State Department presence in Benghazi “provided diplomatic cover” for the previously hidden CIA mission.

Reuters notes that the CIA mission involved finding and repurchasing heavy weaponry looted from Libyan government arsenals.

Business Insider reports that Stevens may have been linked with Syrian terrorists:

There’s growing evidence that U.S. agents—particularly murdered ambassador Chris Stevens—were at least aware of heavy weapons moving from Libya to jihadist Syrian rebels.

 

In March 2011 Stevens became the official U.S. liaison to the al-Qaeda-linked Libyan opposition, working directly with Abdelhakim Belhadj of the Libyan Islamic Fighting Group—a group that has now disbanded, with some fighters reportedly participating in the attack that took Stevens’ life.

 

In November 2011 The Telegraph reported that Belhadj, acting as head of the Tripoli Military Council, “met with Free Syrian Army [FSA] leaders in Istanbul and on the border with Turkey” in an effort by the new Libyan government to provide money and weapons to the growing insurgency in Syria.

 

Last month The Times of London reported that a Libyan ship “carrying the largest consignment of weapons for Syria … has docked in Turkey.” The shipment reportedly weighed 400 tons and included SA-7 surface-to-air anti-craft missiles and rocket-propelled grenades.

 

***

 

Reuters reports that Syrian rebels have been using those heavy weapons to shoot down Syrian helicopters and fighter jets.

 

The ship’s captain was ”a Libyan from Benghazi and the head of an organization called the Libyan National Council for Relief and Support,” which was presumably established by the new government.

 

That means that Ambassador Stevens had only one person—Belhadj—between himself and the Benghazi man who brought heavy weapons to Syria.

 

Furthermore, we know that jihadists are the best fighters in the Syrian opposition, but where did they come from?

 

Last week The Telegraph reported that a FSA commander called them “Libyans” when he explained that the FSA doesn’t “want these extremist people here.”

 

And if the new Libyan government was sending seasoned Islamic fighters and 400 tons of heavy weapons to Syria through a port in southern Turkey—a deal brokered by Stevens’ primary Libyan contact during the Libyan revolution—then the governments of Turkey and the U.S. surely knew about it.

 

Furthermore there was a CIA post in Benghazi, located 1.2 miles from the U.S. consulate, used as “a base for, among other things, collecting information on the proliferation of weaponry looted from Libyan government arsenals, including surface-to-air missiles” … and that its security features “were more advanced than those at rented villa where Stevens died.”

And we know that the CIA has been funneling weapons to the rebels in southern Turkey. The question is whether the CIA has been involved in handing out the heavy weapons from Libya.

In other words, ambassador Stevens may have been a key player in deploying Libyan terrorists and arms to fight the Syrian government.

Other sources also claim that the U.S. consulate in Benghazi was mainly being used as a CIA operation to ship fighters and arms to Syria.

Many have speculated that – if normal security measures weren’t taken to protect the Benghazi consulate or to rescue ambassador Stevens – it was  because the CIA was trying to keep an extremely low profile to protect its cover of being a normal State Department operation.

Why Did CIA Chief David Petraeus Suddenly Resign?

CIA boss David Petraeus suddenly resigned, admitting to an affair.  This could be the real explanation, given that affairs of high-level intelligence chiefs could compromise national security.

But the timing of Petraeus’ resignation becomes more interesting once one learns that that he was scheduled to testify under oath next week before power House and Senate committees regarding the Benghazi consulate.

Many speculate that it wasn’t an affair – but the desire to avoid testifying on Benghazi – which was the real reason for Petraeus’ sudden resignation.

The Big Picture

Whatever the scope of the CIA’s operation in Benghazi – and whatever the real reason for the resignation of the CIA chief – the key is our historical and ongoing foreign policy.

For decades, the U.S. has backed terrorists for geopolitical ends.

The U.S. government has been consistently planning regime change in Syria and Libya for 20 years, and dreamed of regime change – using false flag terror – for 50 years.

Obama has simply re-packaged Bush and the Neocons’ “war on terror” as a series of humanitarian wars.

And the U.S. and its allies will do anything to topple Iran … and is systematically attempting to pull the legs out from Iran’s allies as a way to isolate and weaken that country.

Americans should ask ourselves if that’s what we want …

"The Worm Turns" As Chevron 'Infected' By Stuxnet Collateral Damage


“I don’t think the US government even realized how far it had spread” is how the collateral damage from the Iran-attacking Stuxnet computer virus is described by Chevron. The sleep San-Ramon-based oil giant admitted this week that from 2010 on “we’re finding it in our systems and so are other companies… so now we have to deal with it.” It would seem that little consideration for just how viral this cyber warfare tactic has become and this news (reported by Russia Today) is the first time a US company has come clean about the accidental infection. Discovered in 2010, the Stuxnet worm was reported with all but certainty to be the creation of the United States, perhaps with the assistance of Israel, to set back Iran’s nuclear enrichment program as a preemptive measure against an eventual war. In a June 2012 article published by The New York Times, government agents with direct knowledge of Stuxnet claimed that first President George W. Bush, then Barack Obama, oversaw the deployment of the worm as part of a well-crafted cyberassault on Iran. On the record, the federal government maintains ignorance on the subject of Stuxnet, but perhaps Chevron sums up the impact of Stuxnet best (given the escalating Iranian enrichment program): “I think the downside of what they did is going to be far worse than what they actually accomplished.”

 

Via Russia Today:

America’s cyberwar is already seeing collateral damage, and it’s hitting the country’s own billion-dollar companies. Oil giants Chevron say the Stuxnet computer virus made by the US to target Iran infected their systems as well.

 

California-based Chevron, a Fortune 500 company that’s among the biggest corporations in the world, admits this week that they discovered the Stuxnet worm on their systems back in 2010. Up until now, Chevron managed to make their finding a well-kept secret, and their disclosure published by the Wall Street Journal on Thursday marks the first time a US company has come clean about being infected by the virus intended for Iran’s nuclear enrichment program. Mark Koelmel of the company’s earth sciences department says that they are likely to not be the last, though.

 

“We’re finding it in our systems and so are other companies,” says Koelmel. “So now we have to deal with this.”

 

Koelmel claims that the virus did not have any adverse effects on his company, which generated a quarter of a trillion dollars in revenue during 2011. As soon as Chevron identified the infection, it was taken care of immediately, he says. Other accidental targets might not be so lucky though, and the computer worm’s complex coding means it might be a while before anyone else becomes aware of the damage.

 

“I don’t think the US government even realized how far it had spread,” Koelmel adds.

 

Discovered in 2010, the Stuxnet worm was reported with all but certainty to be the creation of the United States, perhaps with the assistance of Israel, to set back Iran’s nuclear enrichment program as a preemptive measure against an eventual war. Only as recently as this June, however, American officials with direct knowledge of the worm went public with Uncle Sam’s involvement.

 

In a June 2012 article published by The New York Times, government agents with direct knowledge of Stuxnet claimed that first President George W. Bush, then Barack Obama, oversaw the deployment of the worm as part of a well-crafted cyberassault on Iran. Coupled with another malicious program named Flame and perhaps many more, Stuxnet was waged against Iran as part of an initiative given the codename “Olympic Games.” Rather than solely stealing intelligence through use of computer coding, the endeavor was believed to be the first cyberattack that intended to cause actual hard damage.

 

“Previous cyberattacks had effects limited to other computers,” Michael Hayden, the former chief of the CIA, explained to the Times earlier this year. “This is the first attack of a major nature in which a cyberattack was used to effect physical destruction.”

 

On the record, the federal government maintains ignorance on the subject of Stuxnet. With American companies perhaps soon coming out of the woodwork to discuss how they were hit, though, the White House may have to finally admit that they’ve had direct involvement.

 

After the Times published their expose in June, Senator Dianne Feinstein, chairwoman of Intelligence Committee, called for an investigation to track down how the media was first made aware of America’s involvement in Olympic Games.

 

I am deeply disturbed by the continuing leaks of classified information to the media, most recently regarding alleged cyber efforts targeting Iran’s nuclear program,” Feinstein said through a statement at the time. “I made it clear that disclosures of this type endanger American lives and undermine America’s national security.”

 

When Feinstein spoke to DC’s The Hill newspaper, she said, “the leak about the attack on Iran’s nuclear program could ‘to some extent’ provide justification for copycat attacks against the United States.” According to the chairwoman, “This is like an avalanche. It is very detrimental and, candidly, I found it very concerning. There’s no question that this kind of thing hurts our country.”

 

Just last month, a shadowy Iranian-based hacking group called The Qassam Cyber Fighters took credit for launching a cyberattack on the servers of Capital One Financial Corp. and BB&T Corp., two of the biggest names in the American banking industry. Days earlier, Google informed some of its American users that they may be targeted in a state-sponsored cyberattack from abroad, and computer experts insist that these assaults will only intensify over time.

 

“We absolutely have seen more activity from the Middle East, and in particular Iran has been increasingly active as they build up their cyber capabilities,” CrowdStrike Security President George Kurtz told the Times.

 

Speaking of the accidental impact Stuxnet could soon have in the US, Chevron’s Koelmel tells the Journal, “I think the downside of what they did is going to be far worse than what they actually accomplished.”