The Big Picture

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• Do Pharmacists Buy Bayer?
• Quantifying the Effects of U.S. Regime Change
• 10 Tuesday PM Reads
• Degrees of Spending
• Stock Performance During Periods of Rising Rates, October 1993 – June 2013
• 10 Tuesday AM Reads
• Beware those who are never, and can never be wrong.
• Guest Host: Bloomberg TV with Stephanie Ruhle 10am-12pm
• Well Hedged Predictions

Do Pharmacists Buy Bayer? Posted: 30 Jul 2014 02:00 AM PDT

Quantifying the Effects of U.S. Regime Change Posted: 29 Jul 2014 10:30 PM PDT All of the Countries which the U.S. "Regime Changed" – Iraq, Afghanistan and Libya – Have Descended into Brutal Chaos Since 2001, the U.S. has undertaken regime change in Iraq, Afghanistan and Libya. All 3 countries are now in chaos … and extremists are more in control than ever. Iraq In Iraq, hardcore Islamic jihadis known as ISIS have taken over much of the country – shown in red as the new "Islamic State" or self-described caliphate – using captured American weapons: Christians are being rounded up and killed, and Christian leaders in Iraq say the end of Christianity in Iraq is "very near". But as we documented in 2012, Saddam Hussein – for all his faults – was a secular leader who tolerated Christians. Libya Libya has also descended into absolute chaos.   We reported in 2012: Al Qaeda is now largely in control of Libya.  Indeed, Al Qaeda flags were flown over the Benghazi courthouse once Gaddafi was toppled. (This is – again – in contrast to toleration of Christians under Gadaffi.) The Guardian noted in March: According to Amnesty International, the "mounting curbs on freedom of expression are threatening the rights Libyans sought to gain". A repressive Gaddafi-era law has been amended to criminalise any insults to officials or the general national congress (the interim parliament). One journalist, Amara al-Khattabi, was put on trial for alleging corruption among judges. Satellite television stations deemed critical of the authorities have been banned, one station has been attacked with rocket-propelled grenades, and journalists have been assassinated. *** Ever since the fall of [Gadaffi's] dictatorship, there have been stories of black Libyans being treated en masse as Gaddafi loyalists and attacked. In a savage act of collective punishment, 35,000 people were driven out of Tawergha in retaliation for the brutal siege of the anti-Gaddafi stronghold of Misrata. The town was trashed and its inhabitants have been left in what human rights organisations are calling "deplorable conditions" in a Tripoli refugee camp. Such forced removals continue elsewhere. Thousands have been arbitrarily detained without any pretence of due process; and judges, prosecutors, lawyers and witnesses have been attacked or even killed. Libya's first post-Gaddafi prosecutor general, Abdulaziz Al-Hassadi, was assassinated in the town of Derna last month. *** When residents of Benghazi – the heartland of the revolution – protested against militia rule in June last year, 32 people were killed in what became known as "Black Saturday". In another protest in Tripoli last November, 46 died and 500 were injured. Under militia rule, Libya is beginning to disintegrate. Last summer forces under the command of the warlord Ibrahim Jadran took control of eastern oil terminals …. These forces which hijacked a oil tanker this month, prompting threats from Libya's prime minister that it would be bombed until US forces captured it this weekend. Clashes have broken out in Jadran's home town of Ajdabiya. In painful echoes of Iraq's nightmare, a car bomb exploded at a Benghazi military base last week and killed at least eight soldiers, and Libya's main airport was shut on Friday after a bomb exploded on its runway. One of the great perversities of the so-called war on terror is that fundamentalist Islamist forces have flourished as a direct consequence of it. Libya is no exception, even though such movements often have little popular support. The Muslim Brotherhood and other elements are better organised than many of their rivals, helping to remove the prime minister, push through legislation, and establish alliances with opportunistic militias. Ominously, Libya's chaos is spilling across the region. The country is awash with up to 15 million rifles and other weapons, and a report by the UN panel of experts this month found that "Libya has become a primary source of illicit weapons". These arms are fuelling chaos in 14 countries, including Somalia, the Central African Republic, Nigeria and Niger. *** There is a real prospect of the country collapsing into civil war or even breaking up. Unless there are negotiated settlements to its multiple problems, Libya will surely continue its descent into mayhem, and the region could be dragged into the mire with it. No wonder western governments and journalists who hailed the success of this intervention are so silent. But here are the consequences of their war, and they must take responsibility for them. 28-year CIA veteran Paul Pillar – who rose to be one of the agency's top analysts – wrote in May: Just when one might have thought the mess in Libya could not have gotten worse, it has. *** Saudi Arabia and several other Arab states have evacuated their diplomats from Libya, the United States is preparing for possible evacuation of U.S. personnel, and the country appears on the brink of a larger civil war. *** Those in Libya closest to being called secular liberals seem to be associated with military officers of the old regime. *** The intervention already has negatively affected U.S. interests, particularly in providing a disincentive to other regimes to do what Gaddafi did in negotiating an end to involvement in terrorism and an end to production of unconventional weapons. And things have only gotten worse since then. (It should be remembered that the U.S. helped sew the seeds of chaos in several ways.  Not only did we engage in direct military intervention against Gadafi, but also – as confirmed by a group of CIA officers – armed Al Qaeda so that they would help topple Gaddafi.) Afghanistan Opium production is at an all-time high under the American occupation of Afghanistan. And the New York Times reports this week that the Taliban are currently making huge gains in Afghanistan … in some cases expanding even beyond their traditional areas of influence prior to 2001: The Taliban have found success beyond their traditional strongholds in the rural south and are now dominating territory near crucial highways and cities that surround Kabul, the capital, in strategic provinces like Kapisa and Nangarhar. U.S. troops are just now leaving, and so the worst may be still to come.  In addition – as we discuss below – the U.S. previously imposed regime change on Afghanistan … and the results were bad. History Repeats The U.S. carried out regime change in Iran in 1953 … which led to radicalization in the country. Specifically, the CIA admits that the U.S. overthrew the moderate, suit-and-tie-wearing, Democratically-elected prime minister of Iran in 1953. (He was overthrown because he had nationalized Iran's oil, which had previously been controlled by BP and other Western oil companies). As part of that action, the CIA admits that it hired Iranians to pose as Communists and stage bombings in Iran in order to turn the country against its prime minister. If the U.S. hadn't overthrown the moderate Iranian government, the fundamentalist Mullahs would have never taken over. Iran has been known for thousands of years for tolerating Christians and other religious minorities. Hawks in the U.S. government been pushing for another round of regime change in Iran for decades. Hillary Clinton and then-president Jimmy Carter's National Security Adviser have both admitted on the record that the U.S. previously carried out regime change in Afghanistan in the 1970s by backing Bin Laden and the Mujahadin … the precursor to Al Qaeda. And look how that turned out. Syria The U.S. has heavily backed the Islamic rebels in Syria in an attempt to implement regime change in that country.  The result? As shown by the map above, they've taken a third of the country as part of their "caliphate" And the jihadis are now busily crucifying, beheading and slitting the throats of Christians. (Yup, Syria was previously known for tolerating Christians.) Haven't These Wars Made It Safer at Home? But haven't all of these wars made it safer here at home?   Nope … a top Pentagon officials says we're no safer – and perhaps less safe – after 13 years of war. As we've pointed out for almost a decade, security experts – conservative hawks and liberal doves alike – agree that waging war in the Middle East weakens national security and increases terrorism. See this, this, this, this, this, this and this. Regime Support But the U.S. doesn't always back regime change. Sometimes we work to support regimes … … Unfortunately, they tend to be some of the most brutal tyrannies on the planet. Postscript:  We we can probably add Ukraine to the list of regime changed countries falling into chaos and murderous extremism, given that: The U.S. State Department spent more than $5 billion dollars in pushing Ukraine away from Russia The U.S. ambassador to Ukraine (Geoffrey Pyatt) and assistant Secretary of State (Victoria Nuland) were recorded plotting the downfall of the former Ukraine government in a leaked recording Top-level U.S. officials literally handed out cookies to the protesters who overthrew the Ukrainian government The U.S. has been backing – militarily as well as monetarily – the Neo-Nazis who have plunged the country into chaos

10 Tuesday PM Reads Posted: 29 Jul 2014 01:30 PM PDT My afternoon train reads: • Fed’s rate debate looks set to heat up (WSJ) • Rhode Island Denies Newspaper Access to Records of Hedge Fund Investments by Pension System (Pension360) • The Paradox of the Argentine Debt Drama (Bloomberg View) • Choose your parents wisely (Economist) • Million-Dollar U.S. Housing Loans Surge to Record Level (Bloomberg) • Want to Live to 100? 4 Things You Need to Know (Think Advisor) • Zillow to Buy Trulia for $3.5 Billion in All-Stock Deal (DealBook) see also How a Zillow-Trulia Merger Could Finally Change the Business of Real Estate (Businessweek) • American Funds ETF Filing A Very Big Deal (ETF.com) •  The App I Used to Break Into My Neighbor’s Home (Wired) see also Why A Stupid App Like Yo May Have Billion-Dollar Platform Potential (TechCrunch) • Will Netflix Buy the Streaming Rights to Seinfeld? (Businessweek) What are you reading?   Steady Interest Rates, Low Volatility Discourage Investors From Making Bets Source: WSJ

Degrees of Spending Posted: 29 Jul 2014 11:30 AM PDT Click for some interactive internets. Source: Retale

Stock Performance During Periods of Rising Rates, October 1993 – June 2013 Posted: 29 Jul 2014 09:30 AM PDT Source: Societe General, BlackRock

10 Tuesday AM Reads Posted: 29 Jul 2014 06:45 AM PDT My morning train reads (continues here): • The significant problem in small cap (FT Alphaville) • The Gold Standard Was an Accident of History (Macro and Other Market Musings) • U.S. foreign-exchange trading drops nearly 20% (WSJ) • If you want to be rich and powerful, majoring in STEM is a good place to start (Quartz) Continues here

Beware those who are never, and can never be wrong. Posted: 29 Jul 2014 05:30 AM PDT Lately, I have been hear an interesting type of argument. It is a form of debate that is both disingenuous and dishonest. We will call this the "Can’t Lose Argument," or CLA. Worse than confirmation bias, it is a money-losing exercise in narcissism. The CLA goes something like this: A data point will be mentioned, and no matter what the net change in that data — up, down or neutral — it is somehow bad for markets. Stocks, bonds, commodities, real estate, all are fair game for the CLA. Let me share a few examples of it: Earnings CLA: "This quarter, corporate earnings are going to be weak. Perhaps even a negative growth number. That proves a recession is close." The Rational Person, or RP for short, notes that analysts forecast higher profits. CLA: "Well, maybe not negative, but soft — worse than last year in the same quarter." Then earnings exceed forecasts. continues here

Guest Host: Bloomberg TV with Stephanie Ruhle 10am-12pm Posted: 29 Jul 2014 05:00 AM PDT I am guest hosting Market Makers today with the delightful Stephanie Ruhle from 10 am-12 pm. We will be talking Argentina, IPOs, Tech, and lots of other good stuff. Check it out here

Well Hedged Predictions Posted: 29 Jul 2014 03:00 AM PDT click for original cartoon Source: Medium:

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