August 8, 2013
- The surveillance state’s version of Tinker to Evers to Chance: NSA to DEA to IRS
- How Congress almost protected you from the NSA… and what you’ll have to do now instead
- Stocks retreat from record levels: Time to sell, says Chris Mayer — with a handful of notable exceptions
- Sequester-proof: Byron King identifies a defense-sector buy, ticker symbol and all
- Oil by rail… “inflation by portion”… attempts to score cheap partisan points in the health care debate… and more!
Aw, nuts. Obama’s gone and cancelled his meeting next month with Russia’s president, Vladimir Putin.
Not much of a surprise, considering how swell their last meeting went in June…
Unlike his predecessor, Obama appears unable to peer into Putin’s soul…
A White House statement cited “not enough recent progress in our bilateral agenda with Russia.”
Then, as an afterthought, it added, “Russia’s disappointing decision to grant Edward Snowden temporary asylum was also a factor that we considered in assessing the current state of our bilateral relationship.”
In a development that should surprise no one, the snooping Snowden revealed is not limited to the National Security Agency. Indeed, a line can be traced from the NSA… through the Drug Enforcement Agency… to the IRS.
Reuters reported this week that once the NSA culls the data it vacuums up, it then turns over “tips” to the DEA.
Under the “information sharing” rules that took effect after Sept. 11, the NSA is allowed to hand over information to domestic law enforcement agencies that have nothing to do with terrorism or national security investigations. One of those agencies is a division of the DEA known as the Special Operations Division, or SOD.
What’s more, the SOD routinely lies about the source of its tips. “For example,” explains Hanni Fakhoury at the Electronic Frontier Foundation, “a law enforcement agent could receive a tip from SOD — which SOD, in turn, got from the NSA — to look for a specific car at a certain place. But instead of relying solely on that tip, the agent would be instructed to find his or her own reason to stop and search the car.
“Agents are directed to keep SOD under wraps and not mention it in ‘investigative reports, affidavits, discussions with prosecutors and courtroom testimony,’ according to Reuters.”
It’s hard to exercise your right to challenge the evidence against you in a court of law… when you don’t know what the evidence is.
In a follow-up story this morning, Reuters says the IRS got intelligence tips from SOD… and was likewise told to cover up the source of that information.
“It’s becoming clear,” security expert Bruce Schneier writes, “that we can’t trust anything anyone official says about these programs.”
For instance, the intel — leaked by the NSA last Friday — that prompted the closing of U.S. embassies across the Middle East and northern Africa.
“If we did not have these programs,” said NSA defender Sen. Saxby Chambliss (R-Ga.), “then we simply wouldn’t be able to listen in on the bad guys.”
“The implication [the NSA] wants you to draw here,” writes Andrew Napolitano in his latest syndicated column, “is that because it caught al-Qaida operatives talking in code in Yemen about deadly deeds they plan to perpetrate in the Arabian Peninsula, somehow the NSA’s spying on 300 million innocent Americans is constitutional, lawful, effective and, therefore, worth the loss of freedom.”
Even a large swath of Congress no longer buys the official line.
In late July, Tea Party Rep. Justin Amash teamed up with liberal icon and fellow Michigander John Conyers on an amendment de-funding the NSA’s bulk collection of Americans’ phone records.
The amendment went down to defeat, but by only 12 votes: It lost 217-205. United on the other side, in favor of the surveillance state, were Michele Bachmann and Nancy Pelosi.
Well, it was a noble effort. But clearly, you can’t rely on politicians to protect your liberties. No, if you want to shield yourself from the NSA, you’re going to have to take matters into your own hands.
Which is exactly what you can do with the help of a special report commissioned by the Laissez Faire Club. Among the things you’ll learn…
- How to browse anywhere online safely… visiting the pages you want, reading and looking at whatever you like, without anybody cracking into your “history”
- How to keep all your passwords and search words safe from hackers… and how to stay safe from snooping “malware” or “keystroke loggers” that try to record what you type
- How to automatically encrypt all your texts and calls… conceal your GPS location from peeping eyes… and hide your mobile browsing history automatically.
The longer you wait to act, the more of your data become fair game for the feds. Why let them have their way when you can take a few simple steps to protect yourself now?
A lazy summer day for stocks: The Dow is down fractionally at 15,453. The S&P is up fractionally at 1,693.
That’s on top of a day yesterday that settled “indecisive and mixed,” wrote Options Hotline editor Steve Sarnoff after the close — “action typical of that often seen during turning periods.
“The developments of potentially negative divergences and questionable market breadth, along with signs of increasing institutional selling, have prices poised to correct lower. But we shall see if central bank money pumping mitigates any decline and if buyers can muster another move up.”
“The downside from here is much greater than any potential upside,” Chris Mayer warns of the current market.
He spoke yesterday with Fox Business’ Stuart Varney. “The big elephant in the room here is the whole idea that the Fed, we know, is holding interest rates low, and that’s propping up the market artificially.”
“In my Capital & Crisis newsletter, we’re down to nine stocks… and we usually hold between 20-25. So I think, anecdotally, that tells you what I think about the market right now.”
As you can imagine, those are nine high-conviction names. In fact, Chris thinks you could buy five of them now… hold them for the next 10 years… and multiply your wealth 20-fold. “It’s a strategy that works in any market conditions. It works with any amount of money, too. Large or small, it doesn’t matter. You could get started with $100, $1,000… or $1 million.”
But however much you have, get started.
Precious metals traders have their rally caps on. Shortly before 10 a.m. EDT, gold raced past $1,300. As we write, the bid is $1,313.
Silver’s up nearly 4%, blowing past $20 to $20.35.
Base metals are catching a bid too. Copper, which was testing $3 a pound only a week ago, is up to $3.24.
No joy in the oil patch, though: A barrel of West Texas Intermediate fetches $102.72 — the lowest since mid-June.
“It’s ‘risk on’ at the Pentagon,” our military-tech strategist Byron King declares.
For example, Deputy Secretary of Defense Ashton Carter recently said this of the somewhat panicky $500 billion defense budget cut over the next 10 years: “It takes time to downsize forces, to cut employees, to close bases, to reap savings from reforms.
“If sequestration-level cuts must be implemented in the meantime,” he continued, “drastic measures that are not strategically or managerially sound are the result.”
All considered, says Byron, “It’s the wrong time to be investing in defense plays, right?
“Well, maybe not.”
Enter Raytheon.
“There’s one large defense company,” Byron goes on, “whose CEO is actually optimistic. When the optimistic CEO is the guy who runs defense giant Raytheon (RTN: NYSE), maybe we ought to listen.”
Recently, Raytheon’s CEO, William Swanson, announced that Raytheon’s technology offers a “never-ending opportunity” for business growth.
“The back story, Byron writes, “is that Raytheon is about to book billions of dollars’ worth of U.S. and foreign government orders for one of its core defense products in the near term and, apparently, well into the future.”
Raytheon’s flagship product, the “Patriot,” is a collection of radars, guidance computers and missiles designed to shoot down aircraft and intercept missiles.
The origins of the Patriot system go back to the Cold War, when NATO had to defend against Soviet air and missile attacks. Fortunately, they never had to test how well it works. In 1991, though, during the first Gulf War, the U.S. army shot down Iraqi Scud missiles aimed at Tel Aviv.
“Two decades later,” says Byron, “Patriot is still out there, and upgraded in many ways.” And its customer base reaches all across the world of U.S. allies: the Netherlands, Germany, Greece, Spain, Israel, Saudi Arabia, Japan, South Korea, Kuwait, Taiwan and now the UAE.
“Poland and India have expressed interest in buying Patriot systems as well,” says Byron. “In addition to the initial sale, these kinds of hardware orders generate future downstream revenue for deals involving training, maintenance, spares, repairs and other services.
“Thus,” Byron concludes, “in a world of grim numbers for U.S. defense spending, Raytheon offers hope for sustained sales and earnings based on global export markets.
“In a defense spending desert, Raytheon offers an oasis.”
[Ed. Note: Raytheon is one of the first recommendations in Byron’s newest research service, Military-Tech Alert. It’s already turning out to be a good call: “Indeed, Raytheon’s share price is up over 12% since I first discussed the company at the end of May.” We’re only a few short days away from an official launch of Military-Tech Alert. Stay tuned…]
“There is evidence of that which you speak of,” a reader writes after our account this week of oil moving by rail.
“It’s next to the Valero refinery in Benicia, Calif., just off San Francisco Bay on the Sacramento River. There are four refineries within 2 or 3 miles of here. The permit to do so is still before the city, I am told, but the Union Pacific RR has much heavy equipment and track builders laying additional tracks already. Looks like a shoo-in!”
“I agree with yesterday’s regular,” writes another regular, “and what I like to call ‘inflation by portion.’
“So many products are of a reduced size either in weight or volume nowadays. I had my cereal boxes lined up side by side like library books, and it dawned on me the other morning even with my Costco-sized boxes of the same exact product, bought months apart, that the new box was about an inch less thick. Then I looked at the ounces in each, and it is trimmed by about 10 ounces. That’s two bowls of cereal a box. Add that up over the year and, well, you do the math.
“This regular also mentioned milk. Now listen to this. The Canadians come in droves into Bellingham in Washington state, and literally have a run on any new shipments of milk to that Costco. It was chaos as the Canadians pushed and shoved and walked off with grocery carts full of milk. I was informed as I watched this carnage one day that in Canada, the milk isn’t subsidized by the government, like our dairy farmers are, so a gallon of milk is about $6 a gallon! You can’t say it’s the currency exchange anymore, as the Canadian dollar trades at or even with the U.S. dollar.
“Now think about this: Our dairy farmers get government subsidies for milk. Yes, I know there are many other items that farmers are subsidized for. So who pays for this, in reality? Doesn’t take a rocket scientist…”
“The medical costs you quoted yesterday,“ a reader carps, “preceded and have nothing to do with Obamacare. Let the lousy Republicans try to win honestly. Please let them do so without your dishonest help.
“Of course, I don’t expect you to print my message,” he dares us. “You find the truth to be inconvenient.”
The 5: Huh?! Where did we assert Obamacare was to blame for, say, $18,329 baby deliveries?
What we said was that Obamacare would make matters worse. The evidence is overwhelming.
“I think we can attribute at least some of the rise in medical costs in the USA,” writes another reader, “to the rise in medical malpractice lawsuits and the costs of liability insurance. You cannot compare 1952 with 2013 without a mention of how the medical field has changed.”
The 5: No doubt that’s a factor. Too often, however, so-called experts — usually “lousy Republicans” of the sort our Obamacare cheerleader above speaks of — scream about lawsuits to distract the gullible from the “extraction” we described yesterday. (Our fearless leader, Addison Wiggin, describes the process in depth, here.)
We have no partisan dog in the health care fight. We’re just looking out for you.
Best regards,
Dave Gonigam
The 5 Min. Forecast
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