NFL – seat prices at the back of the discount rack

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NFL has been off the main headlines recently. Interesting to see that seats for certain games are selling for as little as $3 each. Of course better games starring more popular teams show firmer (albeit deeply discounted) pricing but one can’t help but think this is a continuation of the backlash against the kneeling saga. Regardless of the views of the players, their employers (aka the fans) are evaluating them by their wallets. Seems like the message hasn’t got through. If they wish to continue to kneel deep discounts which incorporate the social cost to the fan have to be provided until the ultimate financial impact to the players is reached.

Stepping out of the echo chamber

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The Huff Post shows what can happen when a journalist steps out of the echo chamber and reflects on the realities. CM has often said that the liberal mainstream media is its own worst enemy creating narratives when there isn’t one with regards to POTUS. He knows how important he is for their ratings yet they end up taking his bait every time. It is not a question of what one thinks of the president or his policies rather the best way to defeat him is to ignore him. Yet if more mainstream media stepped out of the echo chamber and rationally and deeply analyzed what is going on rather than point to proving he paid a lot of tax or having a meltdown on whether he called KJU  “Rocket man” then the people they wish to sway might actually start  listening.

Regardless of one’s view on the matter, the recognition of Jerusalem as the capital of Israel was attacked as the work of an unhinged madman when indeed history proved Bill Clinton, W Bush and Obama all said exactly the same thing. Trump is just actioning  it. Had the mainstream media reported the facts the other presidents showed the same point of view then maybe, just maybe the audience would grow on the merits of balanced journalism. By screaming at the sky and writing the same tired stories that don’t go into any detail is it any wonder even the Huff Post is compelled to write, ‘Sadly, Trump is winning’.

So let’s see whether Huff Post readers pillory Earl Ofari Hutchinson for writing such a piece that doesn’t pander to what they want to hear but challenge their thinking. One would logically think that there is more than enough content to show him up for what they believe him to be even when looked at objectively with context and perspective. CM wrote that his behaviour at the Navaho award ceremony was completely unnecessary. Indeed the Navaho marines present said he’ll be a great president. Regardless, Trump was stupid to attack Elizabeth Warren with a Pocahontas jibe. It lacked class and took away the real meaning of honouring men who not only risked their lives against the enemy but their own side. If these Navaho were at risk of being captured their own soldiers were ordered to kill them.

Which presents an interesting juxtaposition- do the liberals surrender ratings, potential personal remuneration in order to bring him down by starving the very media attention Trump craves or do the remain the very media whores seeking their own fame and glory?

This can’t wait

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John Mauldin has written an informative piece entitled “this can’t wait” which sums up a lot of pieces I’ve written on the sickening state of public pension unfunded liabilities and the debt super cycle that is facing us. While Mauldin is trying to sell his investment services on the back of this, I wasn’t when I wrote mine. Public service announcement? Maybe but the stats of the black holes we face in pensions and central bank QE which has failed to boost money velocity will bite. Hard. There will be no “I told you so” glory because almost everyone will lose big.

Even if people want to criticize me for being a perma-bear there is no harm in being aware of what is likely coming.

Bitcoin Exchange looks to litigation to shut critics up

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As Bitcoin surged through $16,000 it’s largest exchange Bitfinex has declared it will take legal action against critics. Sounds like it is run by millennials to have to threaten those who disagree with them. In the following article Bitfinex attorneys said,

To date, every claim made by these bad actors has been patently false and made simply to agitate the cryptocurrency ecosystem. As a result, Bitfinex has decided to assert all of its legal rights and remedies against this agitator and his associates.

However it seems an independent audit over the USD reserve status of Tether, which Bitfinex is involved with has not been conducted as promised. Seems a pretty binary question. So threatening to sue a blogger before facts have been laid bare does seem rather strange. Indeed wouldn’t an audit put to bed fears of a rigged system?

Indeed if an exchange goes down and people wanted the cash equivalent for their coins then wouldn’t the Ponzi scheme be revealed?

As Bitcoin soared past $16,000 overnight it is hard not to feel bewildered but at least there is comfort in knowing dissenting voices will be sued.

Just as a side note. As a business if I accepted bitcoin from a client for $16,000 equivalent services bill yet all my $$12,000 of outgoings for staff, office space, utilities, mobile phone etc were in dollars what would happen if my bitcoin halved in value? All of a sudden my $4000 profit has turned into $4000 loss. Would businesses want to carry the risks of bitcoin in trade unless the landlord, staff,  utilities and cellphone companies all agreed to accept it as payment? Torn asunder the tax man only accepts dollars as far as I know.

Bitcoin now on prime time Japanese variety TV

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The picture above is of Tetsuro Degawa, a Japanese comedian who does his best to show himself to have little intelligence. On prime time TV tonite he was talking about Bitcoin. The sign to the right partially says “can you understand Bitcoin in 5 minutes?” 

Japanese TV audiences generally gasp at new information so Bitcoin was a subject of great interest. Still one wonders if Degawa is presenting on the crypto currency that we’re one stage away from the taxi driver giving tips.

Today, Bitcoin is trading over $15,000 up another 13% today alone. Apparently Warren Buffett has disclosed Berkshire Hathaway has bought some too.

In 20 years in financial markets I cannot work out how something backed by nothing other than greed in a market that is not regulated and highly vulnerable to cyber terrorism continues to sucker more people in.

Tulip mania may be removed as the bubble yardstick before long. As one of my experienced private wealth managers likes to say, “I have difficulty fathoming the “no euphoria this time” view.”

Yemen – Saleh’s death is the dangerous slice in the Iran & Saudi sandwich

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Even before the Arab Spring, CM (in a previous life) wrote that Yemen was a trouble spot. It’s former President Ali Abdullah Saleh (Sunni) has died of natural causes – he was assassinated in a spate of tribal violence in the capital Sana’a yesterday. No stranger to being an oppressive tyrant during his rule, after being ousted in the Arab Spring he was in recent years working with the Houthi tribe (Shi’ite) to regain power before switching back to a US backed Saudi-friendly deal maker. He proved that power is more important than religious sect. However the Houthi weren’t prepared to suffer a turncoat who betrayed them so Saleh was duly dealt with.

Why is Saleh’s death important? What it now does is give Saudi Arabia more will to take more decisive action against the Iran backed Houthi. It is no surprise that Saudi Arabia has cleaned house with the arrests of  royal family members to tighten the inner circle. It smells like the early stages of broader tit-for-tat skirmishes before all out conflict ensues. Yemen is often argued as a proxy war between the two.

While many are distracted by the US Embassy to Jerusalem as an unnecessary ‘in-the-face” action, it is a very firm line in the sand to where the US cards already lie. No big surprises. For now most Gulf States want Israel on their side to help them defend against and ultimately defeat Iran.

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At the narrow Bab al-Mandeb Strait separating Yemen and Djibouti/Eritrea, cargo ships make their way up the Red Sea to the Suez Canal, could become a major choke point. This year multiple US, Saudi and Emirati warships have been attacked by Houthi rebel forces. In January 2017 a  Saudi al-Madinah frigate was sunk in the strait. An Emirati HSV-2 swift naval craft was also put out of action in late 2015.

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Safe access to the strait is crucial at present because of Egypt’s reliance on imported LNG to maintain stable electricity supply. One LNG tanker heads to Egypt each weeknight through the canal. Just under 10% of global trade goes through it as well. Any blockage or restricted access would force ships to sail the long way around the Horn of Africa adding another 40% to the journey. This would have significant impacts on shipping and trade. Markets aren’t factoring anything at this stage.

The problem with naval conflict is that Yemen is backed by Iran which in turn is one of Russia’s best clients. Iran possesses the SS-N-22 Sunburn missile which is a supersonic anti-ship missile which even the US has no answer for. In recent years this has been upgraded to the Super Sunburn (P-270) which is even more lethal. It is a ramjet which travels at Mach-3 meaning if fired inside a 100km range then the target is likely to be toast (video here). It can be launched from a ship, submarine or land.

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Iran could blame a whole host of tribes (Sunni or Shia) sick of being under the jackboot of effective Saudi control/influence for an attack.

On December 2, Israeli jets bombed an Iranian military weapons base in Syria. Israel has warned Iran it won’t tolerate any military presence on Syrian soil. We shouldn’t forget that China has also deployed its special forces to Syria to help Assad. Clearly the Chinese see a good opportunity to clean up some of the spoils in the region. China is always happy to help out nations that are under sanction. It adds more mess into the geopolitical sphere.

While the GCC has stepped up its air attacks on Yemen post the death of Saleh, he was the only one that has been able to unite the country. Indeed it is possible that the secession of the south becomes an issue. At the time of reunification of North and South Yemen in 1990 many in the south felt their northern neighbors were pillaging too much of their oil reserve wealth. Even their private land was appropriated and spread among the Sana’a elite. Now that Saleh has gone, and Yemen fragmented again, we may see old scores settled. The Southern Movement (loyal to exiled President Hadi) in Yemen wants to take back what was stolen from them. So Saleh’s death may open a vacuum of more instability.

Iran would relish the opportunity of a fractured Yemen to further build its influence. Bab al-Mandeb may become a flashpoint to fight the proxy war. It is extremely messy, creates proper disruption and pushes Saudi Arabia and Iran closer to conflict.

Which ever way you cut it, diplomacy in the Middle East (what little there is) looks set to worsen. In a sense we are dealing with two large clients of Russia (Iran) and America (SA). Now China is siding with Russian interests by using it as a test run of its military muscle. China isn’t committing anything major but it wants to be at the negotiating table when it all goes pear shaped.

It smells very similar to the lead up to the Arab Spring. More turmoil and complacent markets which are not quite absorbing the realities of “local problems” spreading to another neighborhood. Sure we’ve seen many leaders overthrown in Libya, Tunisia, Egypt and so on in the last uprising but the pressure on Saudi is mounting hence the recent crackdown internally.

The other dark horse is Erdogan in Turkey. He is facing a corruption probe over money laundering to help Iran evade sanctions and he seems keen to externalise his problems so he can shut down the local threat. He is threatening to cut off ties with Israel if the US relocates the embassy but for a man with clear ambitions to revive the Ottoman Empire that fell less than 100 years ago that is a mere formality in the future.

The flashpoint remains Yemen. It has the perfect storm of a pawn in a global game of chess. While it whiffs of local tribes seeking revenge there are too many willing to help them achieve their aims which only plays to the broader ructions throughout the rest of the Middle East. Last week Houthi rebels launched a missile attack against the UAE nuclear power plant under construction. Power corrupts. Absolute power corrupts absolutely

Canadian mortgage fraud – Laurentian Abyss(m)al

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Laid up in bed this week with the flu I watched The Hunt for Red October where Sean Connery plays a Russian sub commander with a thick Scottish accent. To rendezvous with the CIA to complete the defection they head to the deep waters of the Laurentian Abyssal, ironically the name of the Canadian bank which has seen the proverbial torpedo hit the propellor.

It seems that Laurentian Bank in Canada has been caught over mortgage fraud, the second lender to do so. Canada’s property prices have trebled since 2000, seeing but a minor blip during GFC. Zerohedge noted,

An audit “identified documentation issues and client misrepresentations” with some mortgages…Laurentian said it will repurchase about C$89 million ($70 million) of those mortgages in the first quarter, or 4.9 percent of such loans sold to the firm….It will buy back an additional C$91 million of mortgages “inadvertently” sold to the firm, also in the first quarter.

The total value of the loans made to the 3rd party was around $1.16bn. Of course the CEO of Laurentian Bank is brushing aside the scale of it.

As we know Home Capital Group, Canada’s largest mortgage lender was busted for mortgage fraud and required a $1.5bn bailout facilitated by the 321,000 Healthcare of Ontario Pension Plan (HOOPP) members. Not to worry those emergency loans are backed by the mortgages!! Naturally “safe as houses”

Perhaps in the immortal words of Red October Captain Ramius, “be careful what you shoot at in here…things inside here don’t react well to bullets

Or perhaps in the words of Canadian born Inspector Frank Drebbin, “nothing to see here!”