Hasta La Gadget!

F is for Failure. 

It’s also for Finance Ministers and F is also the grade they got at this weekend’s G7 meeting after failing to accomplish anything to calm the markets.  As you can see from the Nikkei chart, Japan’s markets opened down a quick 2% before recovering half as it gyrated wildly into the close after testing 16,666, which is how the Banksters signal their minions that the fix is in and they have control.

For those of us not looking for Satanic messages from the trading floor, 16,500 is a strong (40% of the run) retrace from the bottom we called at 15,900 back on May 4th (good for a $5,000 per contract gain) to the top we called at 16,900 on May 11th (good for a $2,000 per contract gain) so you’re welcome for those!  Remember – I can only tell you what the markets are going to do and how to make money trading them – the rest is up to you…

16,700 is the 20% (weak) retrace and, per our 5% Rule™, so upside resistance there is a bad sign and, if we bounce between there and 16,500, we’re likely consolidating for a move down, which is likely if Japan fails to get permission to further devalue the Yen by the end of the G7 Bosses Meeting on Friday.  So we can look forward to another week of rumors and innuendo but the fun won’t end there as OPEC then has their meeting on June 2nd.  Have I mentioned how much I like CASH!!! lately?

The lack of consensus over which policy levers to pull comes as Japanese Prime Minister Shinzo Abe prepares his heavily indebted nation for what may be another dose of spending to help the struggling economy. Ideally, he’d like the blessing of his G7 peers before doing so, but expectations are low that national leaders can go one step further on any economic accord when they meet in Japan later this week.

“Globally coordinated stimulus and cooperative exchange-rate management look a distant prospect amid deep G-7 divisions,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “Japan’s desire to attain acquiescence for intervention to prevent Yen strength ‎is running into resistance from trading partners worried about their own competitiveness amid sluggish growth.”

As a group, the G7 agreed not to target currencies to stoke growth and warned of the negative consequences from disorderly moves in exchange rates.  The currency rift also undermines a theory that policy makers used a Shanghai gathering of the larger Group of 20 economies in February to agree on a secret pact to weaken the dollar, similar to the 1985 Plaza Accord.

This is far from the end of it as, just this morning, Japan’s April Trade Data showed exports falling a shocking 10.1%, accelerating March’s 6.8% decline as the Yen gained 4% over that two-month period.  On a year/year basis, Japan’s exports are now down 23% and they are buying 10% less as well – this is the World’s 3rd largest economy falling apart right in front of us, folks.  Have I mentioned how much I like CASH!!! lately?

As nicely explained by Harvard’s Martin Fedlstein (one of the few Economists who isn’t a moron), Japan’s rising level of National Debt absorbs funds that would otherwise be available to finance productivity-enhancing business investment.  Businesses now fear that the increasing deficits will lead to higher taxes, further discouraging investment.  When interest rates rise, as surely they must, the cost of servicing the debt will require higher taxes, hurting economic incentives and weakening economic activity and the persistence of large deficits reduces the room that governments have to increase spending when there is an economic downturn.

Japan is already past saving with almost 250% of their GDP in debt and 40% of their annual tax receipts now going to debt service and they are STILL running a 10% annual deficit (here’s me discussing it on TV earlier this month).  Imagine what happens to them if interest rates double!  Of course, interest rates are currently negative so, if Japan can move fast enough and refinance that debt into negative rates – their debt will ADD money to their economy for a few years (until the notes mature) and THEN it will all explode in their faces.  Either way, they are f**ked – and I don’t mean that they are going to stop using chop sticks and switch to European eating utensils!

You KNOW this is unsustainable, you KNOW this is going to end badly so please do not act surprised when there’s a tipping point at which the broad market finally becomes aware of this and the whole global ball of debt begins to unravel, let by the Japanese Government and Chinese businesses – who are in even worse shape than Japan is.  

We talked about China last week and, according to the Financial Times this weekend, the Chinese Government has been bailout out businesses at an alarming rate and doing it in an even more alarming way – by forcing banks to forgive debts in exchange for company stock.  In just two months of this program, $220Bn of debt has been converted to stock – in companies that couldn’t afford to pay their debts! – and now that stock is carried on the balance sheets of the banks as if they had any real value.  

This accomplishes several things:  It takes the bad debts off the banks books, it  takes the debt obligation off the companies’ books, it makes it look like banks actually WANT to own shares of Chinese companies because, 3 months from now, when you are looking at the list of major shareholders of Chinese companies, you’ll be impressed to see that several banks are major shareholders.  Admit it, that’s what will happen as you’ll have forgotten this article by then.  

This years Debt to Equity program is replacing last year’s $612Bn Debt to Bond program because companies haven’t been able to pay the interest on the bonds either – this should fix everything!  As noted by Zero Hedge: “Coercing banks to become stakeholders in companies that could not pay back loans will further weigh down profits this year. Instead of underpinning stability at banks, the efforts undermine it.”  The good news for China is that by swapping one bad asset into another, it may have confused the market long enough to buy a few quarters of time.    

As I noted on Friday, maybe we’ll muddle through and the markets won’t correct over the summer but I see no reason for them to rally back over 2,100 on the S&P, up less than 2.5% from here, while there is just as much chance of a 10% of worse correction for these and many other reason so, unless you are very, very comfortable with your hedging strategies – I would strongly suggest having a lot of CASH!!! in your portfolio – just in case things do hit the fan harder than we think they will.

I know it’s a holiday weekend but watch out for Friday as we get our Q1 GDP (0.7% expected) and then Yellen speaks at 10:30 so don’t plan on leaving too early if you have a lot at risk!  Yellen with be the 7th Fed speaker of the week as they attempt to clean up the mixed message that traders took from last week’s minutes so we’ll see how they do propping up the markets but so far, so lame as we had Bullard and Williams go already and nothing but gyrations around the flat-line into the morning open and ahead of our PMI Report.

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Our next president must be someone who understands the science of climate change and can build a clean energy future.

Photos courtesy of Andrew Dallos, Bernie 2016, and Gage Skidmore.

The burning of Fort McMurray in the Canadian province of Alberta is a terrifying glimpse of what a climate crisis looks like. While scientists are cautious about attributing any one event to global warming, the months without rain followed by unusually high temperatures are exactly the sort of conditions associated with a warming planet–and they set the conditions for big fires.

The dangers of runaway climate change make this U.S. presidential race pivotal. Our next president must be someone who understands the science, can build support for a clean energy future, and is independent enough from the fossil fuel industry and its investors to make the right choices.

The dangers of runaway climate change make this U.S. presidential race pivotal.

The presumptive Republican nominee, Donald Trump, is unqualified. He is a climate denier. In an interview with The Washington Post editorial board, he dismissed the conclusion of 97 percent of climate scientists, saying, “I think there’s a change in weather. I am not a great believer in man-made climate change.” And in a 2014 tweet, he said: “This very expensive GLOBAL WARMING bullshit has got to stop.” He supports building the Keystone XL pipeline, claiming on Fox News, “It’s not an environmental problem at all, in any way, shape, or form.”

A Trump presidency would be a climate disaster.

On the Democratic side, both Clinton and Sanders acknowledge the urgency of the climate crisis, and they are both rated “villains” by the Koch-backed American Energy Alliance.

But who is independent enough to lead a transition that can work–one that will distribute the benefits broadly, especially to those who are suffering in today’s economy? Which candidate could rally the nation behind policies that would have real impact on the crisis?

The answer: Bernie Sanders.

Hillary Clinton’s approach is much like Obama’s “all of the above” strategy. She supports solar, energy efficiency, a continuation of fracking (with some regulations), and reliance on natural gas. She also supports research leading to the development of additional nuclear power, and carbon capture and sequestration–which coal advocates hope will revive that collapsing industry. And she promotes a carbon-emissions trading scheme with Canada and Mexico, reminiscent of NAFTA, which would be subject to profiteering and abuse.

Clinton voted to open the Gulf of Mexico to offshore drilling in 2006. But more recently, she expressed opposition to drilling in the Arctic and skepticism about offshore drilling more generally.

Which candidate could rally the nation behind policies that would have real impact on the crisis?

Her record of ambivalence (or, less kindly, flip-flopping) and her continued endorsement of natural gas and fracking are not reassuring. Clinton’s statements on the climate crisis indicate she will act, but the giant contributions to her campaign, super PAC, and the Clinton Foundation suggest that the action will be skewed to favor Wall Street and big corporations.

In contrast, Bernie Sanders’ record has been unambiguous, and his legislation well-conceived. He has a long record of commitment to economic underdogs, and a willingness to stand up to corporate interests, so his climate approach would benefit wide swaths of the country.

In 2013, he and Sen. Barbara Boxer (D-Calif.), introduced a bill to tax carbon, rebate 60 percent of the revenue to families and use the rest for renewable energy, energy conservation, and to help fossil-fuel-dependent communities transition to a new economic foundation.

He introduced the “Keep it in the Ground” Act in November 2015, which would have banned all fossil fuel extraction on public lands, and offshore drilling in the Arctic and Atlantic oceans. And he has consistently opposed the Keystone XL pipeline and fracking.

The transition to a clean energy economy must reduce greenhouse gas emissions, and employ those who lose jobs in the obsolete fossil fuel industry, as well as those who have never had a shot at the American dream. That is not only the fairer way to go, but it is also the only way to build the sustained support needed to make the shift.

Trump’s climate denial makes him unqualified to lead the country. Clinton’s ambivalence and close ties to Wall Street and big corporations make her a less than optimal choice. Of the three, only Sanders has shown he will be consistent and decisive when taking on the crisis, and that his solutions will benefit all Americans.

Sarah van Gelder wrote this column for YES! Magazine. Sarah is co-founder and editor at large of YES! Follow her on Twitter @sarahvangelder.

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There is no shortage of advice for up and coming filmmakers. The question for any new film producer is: which advice to follow?

The answer? All of it. The often quoted advertising guru, John Wanamaker, said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” This advice is applicable for almost any adventure.

When building a structure for producing a film can be a conundrum for even the most seasoned film maker.

As a small budget is an issue, it can take some finesse in sorting it out. Too often there may be just enough money for the “must haves,” but not a lot left over for the “would like to haves.”

Where to begin

It is important to step back and look at the overall design of the project. Separate out what you need for the best possible outcome. From there you can build on the various departments and see how many hats one can wear.

The following are eight tips are among the many for putting together a great film on a low budget:

1. What is the story? Many films begin with a random thought or scribbled note or cocktail napkin. Without it, nothing matters. Even a $50 million dollar film suffers due to lack of a strong narrative. Wiz bang technology is a poor substitute for a flat script. The production value does not negate the importance of the story which should be the primary focus. JMC Academy advises filmmakers to write a script that can be realistically made on a budget. Too much ambition could sink an otherwise well crafted project.

2. Production skills. Poor production will sink the film if it looks amateurish. You don’t need top of the line equipment to produce a quality project. The test of your skill will be in the making of a low budget film that doesn’t look it was shot on a shoestring. The advances in film technology can make all the difference.

Skills in mastering the production value are key. Working with a small budget today doesn’t mean you can’t get any professional visuals. Take advantage of new digital technologies that are cost effective. It is now possible for films makers to shoot and edit a film using the latest in digital equipment for a low cost.

3. Location. Locations can cost a lot of your budget, but it doesn’t have to.

• You have the vision of what you want your film to express. Take your time to find just the right location. There may be some trials in terms of getting permission for some public places or interior of a business.

• Mark out as few locations as you need to make your film interesting.

• Try shooting during the day when a store or office is open instead of paying to keep it open for your shoot. Be sure you don’t cause any problems or interfere with operations.

• Take advantage of city shots to add dimension to the film.

4. Equipment. Get a hold of the best equipment you can afford. Buy if necessary, borrowing is better or rent if you need to. Be sure you have a steady hand. It’s best if you put a camera on a dolly or a steady cam. Try doing overhead shots. It can mask that you don’t have a crane.

5. Lighting & Sound. Nothing screams louder of a poorly produced indie film than bad audio and lighting. Unfortunately, too many film makers on a low budget sacrifice light and sound for other elements. Background noise and poorly lit scenes take away of the all-important story lines.

6. Casting. Don’t be shy about asking actors to climb on board with your “lower” budget film. You might be surprised that they see your film as a way to break out for some skills they want to master. If you don’t have the connections to the big names, don’t sacrifice the film for less-than-famous actors. Set up a casting call and spend a few days auditioning actors that are willing to work within your budget or for free.

7. Budget Reality Check: Be sure everyone on the team is aware of the budget. Are they willing to double up at the motel? Can they afford to work for less? Nothing is more uncomfortable than a crew member who didn’t factor in the time and fee adequately. It only takes one person to cast a pall on the film because they didn’t realize the impact on their time commitment and the finances.

8. Designing the Shot. How you design your shots is not a budget issue, but an artistic one that will make a major difference in the quality of the film. It’s something you learned in film school, but may not think about in the adrenaline rush of producing your own project: The Fibonacci rule of thirds. These rules and an artistic eye make the difference in a well-crafted film and one that appears slapped together without thought to the balance of a scene.

When the pieces and parts have been collected, think big. Don’t let your low budget film dictate how you see the project. Low budget doesn’t have to mean low quality or diminished investment.

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KABUL/HANOI (Reuters) – Senior Afghan Taliban figures were meeting on Monday to agree on a successor to Mullah Akhtar Mansour, the leader of the militant movement who U.S. President Barack Obama confirmed had been killed in an American air strike at the weekend.

The Taliban have so far made no official statement on the fate of Mansour, who assumed the leadership only last year.

But senior members have confirmed that their main shura, or leadership council, has been meeting to discuss the succession in a bid to prevent factional splits from fragmenting the movement.

Obama, on a three-day visit to Vietnam, reiterated support for the Western-backed government in Kabul and Afghan security forces, and called on the Taliban to join stalled peace talks.

The president authorized the drone strike that killed Mansour in a remote region just on the Pakistani side of the border with Afghanistan on Saturday, and Afghan authorities have said the mission was successful.

But U.S. officials held back from confirming that the Taliban leader had been killed in the attack until intelligence had been fully assessed.

Pakistani authorities have said the drone strike was a violation of the country’s sovereignty, but reaction from Islamabad has otherwise been relatively muted and a number of questions remain over what exactly happened.

A Pakistani passport in the name of Wali Muhammad, which Pakistani authorities said contained a visa for Iran, was recovered near the scene of the attack and is believed to have belonged to Mansour.

But it is unclear what he may have been doing in Iran and why he was apparently traveling in Pakistan without a security detail.

A spokesman for the Iranian foreign ministry was quoted on state media denying that such an individual had crossed the border from Iran to Pakistan at the time in question.

“MILESTONE”

Calling the death “an important milestone”, Obama said Mansour had rejected peace talks and had “continued to plot against and unleash attacks on American and Coalition forces”.

“The Taliban should seize the opportunity to pursue the only real path for ending this long conflict – joining the Afghan government in a reconciliation process that leads to lasting peace and stability,” he said.

However, he stressed that the operation against Mansour did not represent a shift in U.S. strategy in Afghanistan or a return to active engagement in fighting, following the end of the international coalition’s main combat mission in 2014.

The U.S. currently has 9,800 troops in Afghanistan, divided between a NATO-led mission to train and advise local forces and a separate counterterrorism mission fighting militant groups such as Islamic State and al Qaeda.

A decision is expected later this year on whether to stick with a timetable that would see the number of troops cut to 5,500 by the start of 2017.

CAN TALIBAN UNITE?

The Taliban, which have previously rejected ouvertures to join talks with President Ashraf Ghani’s government, have been pushing Afghan security forces hard since the launch of their spring offensive in April, but the attack on Mansour is likely to disrupt operations, at least temporarily.

Although some individual Taliban members have been quoted in media reports saying that Mansour was killed, the group’s leadership, keenly aware of the need to limit splits, has not issued its own confirmation.

“The leadership is being very careful because one wrong step could divide the group into many parties like former mujahideen,” one Taliban official from the eastern province of Nangarhar said, referring to guerrilla leaders who fought the Soviets in the 1980s before splitting into warring factions.

Serious divisions emerged last year when it was confirmed that Mullah Mohammad Omar, the group’s founder, had been dead for two years, leaving his deputy Mansour in effective charge of the movement and open to accusations he deceived his commanders.

One senior member of the shura, which is based in the western Pakistani city of Quetta, said that the choice for the next leader appeared to be shaping around Mansour’s deputy, Sirajuddin Haqqani, or a member of the family of Mullah Omar, such as his son, Mullah Mohammad Yaqoob.

Haqqani, leader of an affiliated network blamed for a series of high-profile suicide attacks in Kabul, had the backing of Pakistan, while Yaqoob had support among members of the Afghan Taliban, the shura member said.

“We prefer someone from Omar’s family to put an end to all internal problems,” he said.

(Additional reporting by Samihullah Paiwand in Gardez, Jibran Ahmad in Peshawar, Rafiq Shezar in Jalalabad, Drazen Jorgic in Islamabad, Gul Yousafzai in Quetta and Syed Rasa Hassan in Karachi, Babak Dehghanpisheh in Beirut; writing by James Mackenzie; Editing by Mike Collett-White)

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All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved. Sun Tzu

Why is this index important?

It allows individuals to gain insights into how the global markets are performing. As the world is now one big interconnected bazaar of sorts, it pays to see how the rest of the world is faring before you commit new money to the markets.
The BBC Global 30 Index combines the economic information of 30 of the world’s largest companies. If it is faring badly, then it’s a signal that the global economy is not healthy and vice versa. Let’s start off by looking at the 1-year chart as this gives us an idea of what to expect in the short term.

The one year chart illustrates that all is well on the surface and that the process of flooding the markets with hot money, in general, is working rather well. Yes, logic dictates that the markets should not be faring well as many economic indicators are suggesting otherwise. Two leading economic indicators such as the Baltic Dry Index and Copper are both stating the global economy is far from healthy. The Baltic Dry index is trading well off its all-time highs; in fact, it is trading very close to its all-time lows. The Baltic Dry index is used to provide insights into future economic activity; if the index is trending upwards, it means that global trade is rising and vice versa. As the prices are updated daily, one can measure on a real-time basis what is going on with the global economy. Currently, it indicates that the global economy is far from healthy. Copper works in a similar way. It tends to start trending upwards before the economy and the markets and vice versa. Has it been in a downtrend for years? Why are these two important leading economy indicators providing the wrong data? They are not providing the wrong data, but this article illustrates in detail as why these two time-tested indicators are no longer of use. In essence, hot money is what is fuelling this market, and that is why after almost nine years this is still the most hated bull in history.

How do things look going forward?

The index could drop all the way down to 7200, and the short-term outlook would remain bullish. We are fully aware that this economic recovery is illusory, but complaining and whining about this does not provide one with any extra insights into the markets. We need to focus on what is going on and how the masses interpret that data. The truth is irrelevant if only you are aware of it; if the masses think otherwise, what appears as the truth to you could, in fact, be viewed as a lie by the crowd. The truth can set you free, but in most cases it can be detrimental to your health and wealth; at least as far as the markets are concerned.

The longer term chart illustrates that this index is consolidating. As long as it does not close below 6600 on a monthly basis, the outlook will remain bullish. One could even argue that is its building a base from which it could easily springboard to and past 8400. Ideally, the current pullback will end in the 7100-7200 ranges, with a possible overshoot to the 6900 ranges. This index is informing us that even though everything out there is twisted and manipulated the financial markets are behaving as if everything is fine and dandy. The same theme applies here, the stronger the pull back, the better the buying opportunity

Game Plan

The overall trend in the BBC Global Index, as well as the Dow industrials, is up, and so we will repeat what we have been stating for quite some time now; the stronger the correction, the better the buying opportunity. The markets are trading in the overbought ranges, so it goes without saying that traders need to be both prudent and patient. Prudence dictates that investors should wait for the markets to let out some steam before committing new capital. Volatility is the name of the game and here to stay. From Aug of 2015 to the month of May, the Dow has traversed over 7000 points. It is just a matter of time before the markets let out some steam and as usual, the naysayers will come screaming out of the woodwork stating the end is nigh, just as they did in Aug of 205, Jan 2016 and on countless occasions before that. Despite the severe beatings they have taken over the years, they will still muster the courage to chant the same old song as stupidity seems to be in a perpetual bull market.
Take time to deliberate; but when the time for action arrives, stop thinking and go in.
Andrew Jackson

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