March 1, 2013
- Life lessons in publishing business wisdom… and the caveats of idiotic political snafus.
- “The handwriting is on the wall”: Byron King explains the deeper meaning of sequestration…
- Currency war backpedaling… the IMF’s role… one outlier… Kuroda’s itching to spike the punch bowl…
- Glaring revelations from the Manning case… readers weigh in on the drone petition… the “Harlem Shake”?… and more!
“There’s no such thing as bad publicity,” the punk rock icon Sid Vicious channeled Oscar Wilde sometime before drowning in his own heroin-induced vomit. The maxim is at the heart of the publishing business. Case in point, Bloomberg Businessweek:
“Bloomberg Businessweek is taking a beating from critics,” Yahoo News writes, “who say the magazine’s recent cover — featuring a cartoon illustration of what appears to be a black family rolling in cash from a housing rebound — is racist.”
“Flips. No-Look Bids. 300% Returns,” the subhead reads. “What Could Possibly Go Wrong?”
Indeed, what could? This isn’t the first time Businessweek has pushed the envelope with its covers…
The job of a publisher is to get people talking about his publications. One rule of thumb suggests that to do so, you should write about the profane, the taboo, the blasphemous… kudos to the front cover editor of Bloomberg for nailing them all.
Bad press and idiotic snafus are the metier of politics, too. Maxine Waters, (D, CA) announced yesterday that “sequestration” was going to cost the U.S. economy 170 million jobs.
170 million… there are only 135 million jobs in the U.S.
Apparently, the benevolence of the U.S. government provides jobs in Canada, Mexico and China, too. At least in Maxine Waters’ fetid mind it does.
Oy.
Our research crew here in the Baltimore HQ reminded us of the time Hank Johnson (D, GA) worried that the deployment of a few thousand new U.S. military troops and their families to Guam would capsize the island.
As our managing editor Chris Mayer is fond of pointing out in his serial presentation in Vancouver: “You can’t make this stuff up.”
“I’ve been writing favorably about housing since January 2011,” Chris Mayer wrote here in The 5 on Sept. 17, 2012 . “Since then, I’ve spoken with a number of professional investors buying houses and renting them. I’ve reported on these conversations to my readers and told them how to participate in the funds.
“All of this work has led me to believe more strongly than ever: Now is the best time — a once-in-a-generation opportunity, really — to buy and rent a home.”
However, caution is in order. This week’s Bloomberg Businessweek cover is as good an indicator as any: The low-hanging fruit is likely gone. “All this buying is tightening up the market,” Chris reiterates a concern he wrote to readers late last month, “and the discounts are quickly going away.”
[Ed Note. If you’re interested in learning Chris’ latest strategy for playing the tightening housing market, please subscribe to Capital & Crisis — easily the most finely written newsletter in the industry.]
“We thought for sure the shrill cries of ‘Sequestration Hell, Fire and Brimstone,'” writes the Laissez Faire Club’s Doug Hill this morning “were going to get Congress to hit the panic button and reach a deal. As such, they didn’t.”
Go figure.
“While sequestration takes effect,” Mr. Hill continues, “we’ll leave you with this one thought: Even though $85 billion is getting ‘cut’ from the federal budget… the government is still going to spend $15 billion more than they did last year.”
Only in D.C. does this logic exist: If a man is planning on gaining 15 pounds… then only gains 5, he declares to the world he “lost” 10. And worse, it was the hardest 10 pounds ever.
“According to the shrieking politicos,” our Byron King comments is a similar vein, “and their Potemkin-media enablers, this is the day that the wheels will fall off things all across the fields of our republic. We’re due for long lines at airports, bad meat in supermarkets, closed national parks. That, and more. Unless, of course, Congress votes for higher taxes. But only on ‘the rich.’ And on oil companies.
“The deeper meaning of sequestration is that it illustrates how the fiscal vise is finally closing on Uncle Sam. Of course, there are no true ‘cuts’ to the ever-growing budget. It’s just that the rate of spending growth is slowing, if even for only a brief moment, until Congress and President Obama agree to spend more, if not to tax more.
“Still, the handwriting is on the wall.”
“The money isn’t there for the national government to do business as usual, and blow money in the classical, old ways,” Byron continues, helping us to pivot to a new project we have under way in the backroom. “Down at the Pentagon, they know this. The planners and program managers know that they had better come up with new ways of doing old things. Or they’ll accomplish far less, and fail… if not lose wars.
“We have to think past that. We have to ponder how the U.S. military, the Department of Energy, Homeland Security, law enforcement and more will do business in the years to come… without the budgets that they’ve grown used to having.
“In that sense, sequestration is doing us all a favor. Without the funds for more of the same legacy systems, we need to come up with new ways of accomplishing tasks. That means new technology. That means new ways of applying that tech. It means new ways of defending against tech that’s coming at us from other parts — from people and groups that wish us ill.”
[Ed note. With our new Military-Tech Alert, we’ll be as far ahead of those new developments and following the tech as it gets applied in the civilian economy… and breaks new opportunities for investment wide open.
If you’re an Agora Financial Reserve member, stay tuned next week. We’ll officially unveil the first “beta issue” of Military-Tech Alert. Byron’s already on the trail of a company pioneering “the next version of microprocessor technology, and destined — by the laws of physics — to control computing for the next generation or two.” Watch this space.]
Stocks are taking a step back this morning.
As we write, the Dow has slid down 20 points, to 14,054. Nasdaq is down a thread, 2 points, to 3,160. And the S&P is down a paltry point, to 1,514.
205TIME — Meanwhile, precious metals are slightly up. The Midas metal is up $4.40, to $1,584. And silver is up 15 cents, to $28.76.
The USD index is up, trading at 82.29. And the euro fell as low as $1.2965, down from late Thursday’s $1.3063.
“I am for a less-strong euro,” French industry minister Arnaud Montebourg told The Wall Street Journal this week, revealing a minor tactical stratagem on France’s behalf in the global war of the currencies.
“The euro is too strong,” Montebourg further confessed at a press conference in Paris, “and doesn’t correspond to economic fundamentals. [The ECB] should prepare to confront a new currency war in which the weakening of currencies becomes a political tool.”
Speaking on the euro’s recent downturn, he said, “I am very happy, [the decline should] continue.” We’re assuming he didn’t make it to the G-20 meeting earlier this month.
“Many hope that the International Monetary Fund,” Benn Steil writes, commenting himself on the currency wars, “can be the catalyst for a new cooperative monetary architecture.” Steil is the director of international economics at the Council on Foreign Relations (CFR) and participates in the Empire Salon we have been known to frequent down in the belly of the beast (Washington, D.C.)
“Yet history suggests that this won’t occur until the U.S. and China come to the conclusion that the consequences of muddling on, without the prospect of correcting the endemic imbalances between them, are too great…
“Trade tensions may grow much worse — as they did in the 1930s, during the last great international currency war.
“China’s recent bilateral agreements with Japan, Brazil, Russia and Turkey to pursue trade without dollars could be a worrisome harbinger, insofar as each would be more likely to undertake global trade discrimination in order to balance its bilateral trade than to stockpile other currencies.
“The U.S. had sought to eliminate this damaging stratagem permanently at Bretton Woods; it may soon re-emerge.”
Meanwhile, “the best performing currency year to date,” Zero Hedge’s “Tyler Durden” writes, “has no home country, no central banker and no physical scrip; it is the online-only ‘Bitcoin’ and… it is becoming more mainstream.”
It’s up 130% year to date on the dollar.
The upsurge is attributed to “rising demand from a wide variety of adherents,” to which the international holding company ConvergEx’s Nick Colas notes, “includes libertarian activists, small businesses, online drug dealers and gambling sites.”
Hmnn…
“What we have,” Zero Hedge writes, “is a stateless currency, with essentially no government oversight, run by a bunch of nerds cracking puzzles, with an anonymous architect who (by the by) hasn’t been heard from in over a year.”
Hmmmn.
Bitcoin is still on a tear. Up almost $1 today.
For their part, “currency traders shorting the yen,” Dan Amoss writes in a similar vein, “are celebrating the nomination of Haruhiko Kuroda as the next governor of the Bank of Japan (BOJ).
“If confirmed by parliament, Kuroda would take office on March 19. He’s itching to shift yen printing policies into high gear as soon as the April 4 BOJ policy meeting. There is ‘really substantial room’ for more easing, he said in a Feb. 11 interview, implying that the BOJ didn’t go far enough in its January policy decision.”
“The punch bowl needs this much more alcohol.”
“The party has just started. Give us more alcohol and get us excited — he will do that,” said Masaaki Kanno, chief Japan economist at JPMorgan.
In 2002, Kuroda advocated the BOJ adopt an official 3% inflation target.
“From 1999-2003,” Dan writes, “Kuroda worked in the finance ministry, where he was in charge of foreign exchange operations. He oversaw interventions in the currency market, where the yen was sold in foreign exchange markets to prevent it from strengthening.”
[Ed. Note: “If you’re a non-Japanese investor looking to profit from this move,” Dan writes in today’s 5 PRO, “you need to invest in a way that minimizes your exposure to the yen’s exchange rate.” As a PRO reader, you’ll learn an easy way to do just that. If on the other hand, you haven’t yet taken the next step, you can sign up for The 5 Min. Forecast PRO right now, here.]
“Bradley Manning has revealed,” The Guardian’s New York correspondent Ed Pilkington writes, “to his court-martial at Fort Meade, Md., that he tried to leak U.S. state secrets to The Washington Post, New York Times and Politico before he turned in frustration to the new anti-secrecy website WikiLeaks.”
According to Manning, he contacted The Washington Post and asked if they were interested in information that would be “enormously important to the American people.”
Like many other mainstream avenues, Manning said, he spoke to a reporter that, he said, “didn’t seem to take me seriously.”
- How many 5-worthy stories did his whistle-blowing reveal? A casual search of our archives reveals…
- Confirmation from within Saudi Aramco that Saudi Arabia’s oil reserves are overstated
- The Mexican government’s purchase of U.S. weapons that end up in the hands of drug gangs
- The backroom dealing between Washington and Madrid that screwed over Odyssey Marine.
- Alarm by U.S. diplomats at Chinese media claims that the U.S. and Europe suppress the gold price
- The only economic indicators Chinese leaders watch when making policy.
None of these leaks put anyone in danger, but they were entertaining, weren’t they?
For his efforts, Manning is likely to win a relaxing vacation in federal prison… a lengthy one. Up to 20 years — or more — if he’s convicted later this year on the charges to which he didn’t cop a plea yesterday.
“Having signed your anti-drone petition,” another one writes, “I am now probably on the ‘kingdom’s’ watch list. Guess I should be looking for one of those assault rifles to shoot the d—-d things down with if the petition fails. I doubt if ‘Uncle Joe’s’ double barrel would do the trick.
“I enjoy your 5 Min. Forecast. You’re *almost* as cynical as I am.”
The 5: Heh.
“I don’t want the present administration,” writes another explaining why they won’t sign it, “to put the IRS/FBI/CIA onto me. I have enough problems as it is. If I give them my real opinion, I will be put on an ‘enemies of the state’ list, and that will be that.
“I prefer to remain unnoticed, by and large.”
The 5: As would we all. Fair enough, if you’re not going to sign the petition, here’s another way to help:
You may be aware of the goofy Internet dance craze called the “Harlem Shake”?
For reasons unknown to anyone on the planet, it has gone viral. So much so, when the charting company Billboard released their ranking system on YouTube last Wednesday, “Harlem Shake” immediately popped to No. 1.
Well… we want in. And we want your help.
Our creative team is making a version of the dance we’re affectionately calling: the “D.C. Shake (-Down).”
“Obama starts dancing,” goes the pitch reel, “Then, when the music kicks in and all the other characters appear…Obama will start pickpocketing people. Bernanke will be dropping bills outta helicopter.
Helicopter Ben makes his debut in D.C. Shake (-Down)
“Greenspan will be blowing bubbles. Bush dances with some huge-a** missile with ‘WMD’ written on the side. John Kerry will be piloting a drone. Maybe Bill and Hillary Clinton can join in…
“We need 20 or so total.
“So here’s your chance: Who would you like to see appear? What would you like them to do? The floor is yours!” Email us all your suggestions to 5minforecast@agorafinancial.com.
Ah. Fridays can be so much fun.
Enjoy your weekend,
Addison Wiggin,
The 5 Min. Forecast
P.S. Byron has already unloaded some doozies on us with his new fixation for military tech. He’s regaled us with the real reason France invaded Mali mid-Jan. The embassy attack you haven’t heard about. We’ve all heard of
Benghazi, but unless you’re one of Byron’s inside contacts, I bet you’ve never heard about this attack. That’s just it, if the mainstream media doesn’t want you to hear about it they simply don’t publish it. With Byron’s Military-Tech you’ll have open access what’s really happening.
— For instance, the real reason France invaded Mali. France’s recent invasion in Mali may have made a few headlines, but were the French really there on a goodwill mission against the Taliban? The answer was a little foggy, UNTIL, a recent conversation I had with Byron. First off, did you hear about a missing weapons stash from Libya? Indeed, a hefty stash of weapons that could lead to more than a little warmongering is traveling around North Africa. What’s vital to France in North Africa? Bordering Mali and Libya is Niger, home to nearly 20% of France’s yearly uranium supply. Much more than a coincidence, eh?
– Or how about this one from the technology front… Who would’ve thought that a failed solar company could be our nation’s next big
defense contractor. In a twist of technology fate, a failed solar company has come up with what could be a secret weapon for the U.S.
Navy. Once installed, this new-age technology could protect anything from aircraft carriers to destroyers in the Persian gulf.
Below in a 5 Overtime Briefing, Mr. King gives us a taste of what awaits us in the Mil-Tech Alert.
The Minefield of New Technology
One day in 1916, in the waters off Pillau, Lithuania, a Russian naval vessel sailed a precise course laying a minefield. Out of the mist, a heavily armored German cruiser appeared and began firing at the Russians.
The German ship had several batteries of 120 millimeter guns, versus the Russian minelayer, with its few guns of a mere 45 millimeters. Ton for ton, the Germans had the larger ship, with more powerful engines. Gun for gun, it wasn’t even close. The Germans outmatched the Russians in every category of hardware. This engagement had all the hallmarks of a slaughter. The Russians prepared to meet their maker.
Still, the captain of the Russian ship didn’t give up. He ordered the helmsman to steer toward shore, right through the minefield that his vessel had just laid. The German cruiser gave chase. What happened next?
Imagine the sense of foreboding amongst the Russians, sailing through their own minefield. Many Russian sailors were literally on their knees, praying. And then… as the Russians made their final peace with God, the German cruiser hit one of the mines.
Instantly, a wall of water arose next to the German hull. Within a second or two, a powder magazine exploded deep within the guts of the German vessel, erupting upward in a volcano of smoke and flying steel. The German cruiser split in two, and quickly began its final slide to the bottom of the Baltic Sea.
An Old Sea Story Makes the Point
It’s a colorful old sea story – beautifully portrayed and immortalized in the fabulous Russian film Admiral, in 2008. But what does it have to do with you?
Well, this story about the Russian minelayer and the German cruiser illustrates how revolutions in military technology occur. Back then, the Russian mines — contact mines, to be precise — were a relatively new form of technology. Tactically, hardly anyone understood their use and employment. At the operational or strategic level, no one could say what effect minefields might have on the larger outcome of conflicts. The Germans had to learn their lesson the hard way.
Within a year, and after the U.S. entered the Great War, the Allies were laying immense minefields across the North Sea, to bottle up the German fleet. Many historians look back at the “North Sea Barrage” as a key element that controlled the outcome of World War I.
The story of the Russian-German engagement illustrates how novel ways of thinking, and new devices and technology, can defeat even the best of legacy hardware. If you enjoy staying up at night, worrying, this story illustrates how the first engagement of the “next” war might come as a complete surprise to one side or the other. (And I hope that it’s not our side!)
New Ideas and Technology
Of course, this is Agora Financial — and not The History Channel. So the old story about the Russian minelayer illustrates another key point, as well.
Basically, the strategic plan is to invest ahead of all manner of developments, in energy, minerals and certainly in the technology that people use to fight over such things. That is, you can invest in military and technology ideas for things yet to come, versus legacy concepts that have run their course… until they hit their own version of that Russian minefield.
That’s the idea behind my new Military-Tech Alert. And perhaps there’s no better time to launch this new newsletter than now.