The Last Time This Few Americans Thought Stocks Would Drop, They Crashed

According to the latest Conference Board survey, 80% of Americans surveyed believe that stock prices will not be lower in the next 12 months. The last time the nation was so convinced of the market’s ‘permanently high plateau’ was in the fall of 2007, as the S&P topped…

Only 20% of Americans believe stocks will fall in the next 12 months – that is the lowest number since mid-2017

What happened next was not pretty (oh and in 1999/2000…)

And don’t forget that speculators have never been more net long Dow futures


Still it’s probably nothing. If biblical floods and threats of nuclear armageddon can’t take stocks down, what will?


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UAE criticises “colonial” role of Iran, Turkey in Syria

The United Arab Emirates urged Iran and Turkey on Monday to end what it called their “colonial” actions in Syria, signalling unease about diminishing Gulf Arab influence in the war. Allied to regional powerhouse Saudi Arabia, the UAE opposes Syrian President Bashar al-Assad and his backer Iran and is wary of Turkey, a friend of Islamist forces the UAE opposes throughout the Arab world. UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan urged “the exit of those parties trying to reduce the sovereignty of the Syrian state, and I speak here frankly and clearly about Iran and Turkey.” He was speaking at a news conference with Russian counterpart Sergei Lavrov, whose country helps Assad militarily. “If Iran and Turkey continue the same historical, colonial and […]

Anti-terror drive top priority: Macron

Tue, 2017-08-29 14:31

PARIS: Fighting terrorism is France’s top foreign policy priority, President Emmanuel Macron said Tuesday, vowing to make his country a leading power in an unstable, increasingly polarized world.
“Providing security for our citizens means that the fight against Islamist terrorism is our first priority,” Macron told some 200 French diplomats gathered in Paris.
“There’s no place for naivete, nor for fear of Islam that confuses Islamism and Islamic,” he said, adding that assuring the security of the French was the “raison d’etre” of the country’s diplomacy.
Since early 2015, France has suffered a series of terror attacks that have claimed more than 230 lives, making it the country worst affected in western Europe.
Macron, who took power in May on a promise to boost France’s international standing, said he would work with the various powerbrokers in the Middle East — including Iran and Saudi Arabia — to try eradicate the terrorist threat.
“Some have chosen (their camp). It’s a mistake. The strength of our diplomacy is to speak to all sides,” he said.
France will host a conference on cutting off sources of funding for terror groups like Islamic State in early 2018, he added.
The 39-year-old leader also insisted there was no alternative to the 2015 nuclear deal with Iran, which has been fiercely opposed by US President Donald Trump.
“There is no alternative to the non-proliferation agenda. It enables a constructive and demanding relationship with Iran,” he said.
Faced with dismal approval ratings less than four months into his term, Macron was looking to burnish his foreign policy credentials with the speech, which is a fixture on France’s political calendar.
He won kudos for making a bold start on the international stage, hosting both Trump and Russian President Vladimir Putin within his first weeks in office.
He raised human rights with Putin and spoke out against Trump’s decision to withdraw the US from the Paris accord on fighting climate change before later rolling out the red carpet to the Republican leader.
On Tuesday Macron announced that Paris will host a summit to review progress on the 2015 accord on December 12.
France’s youngest-ever president has also irked some European partners, notably Poland, which he accused of “going against European interests in many areas”.
Warsaw has rejected tough proposals to overhaul a controversial EU rule on cheap labour.
On Tuesday, Macron singled out Venezuela for particular criticism, accusing President Nicolas Maduro of creating a “dictatorship” that was battling to survive in the face of deadly street protests.
“A dictatorship is trying to survive at an unprecedented humanitarian cost, even though the resources of the country remain significant,” he said, echoing the tough US position on Venezuela.
Last week the White House piled financial pressure on Caracas, restricting access to vital US capital markets and pledging to “deny the Maduro dictatorship a critical source of financing to maintain its illegitimate rule.”
Tuesday’s speech came a day after Macron hosted a mini-summit with African and European leaders on the migrant crisis.
The leaders backed proposals to screen asylum seekers in Chad and Niger as a way to prevent thousands from taking perilous journeys across the Mediterranean.
Macron said Tuesday he would soon travel to Burkina Faso to continue building a new relationship with Africa, “a continent of the future” which “we cannot abandon.”

Main category: 
Amnesty says France using terrorism powers to curb peaceful protests
Fears shroud French presidential election after Paris attack

Economists Are The New Astrologers

Authored by Andrew Syrios via The Mises Institute,

When Christopher Nolan was promoting his previous film Interstellar, he made the casual observation that “Take a field like economics for example. [Unlike physics] you have real material things and it can’t predict anything. It’s always wrong.” There is a lot more truth in that statement than most academic economists would like to admit.

Alan Jay Levinovitz recently put forth the provocative argument that economics is “The New Astrology.” He notes that “surveys indicate that economists see their discipline as ‘the most scientific of the social sciences.’” But unfortunately “real-world history tells a different story, of mathematical models masquerading as science and a public eager to buy them, mistaking elegant equations for empirical accuracy.”

Indeed, Levinovitz goes on to observe that,

The failure of the field to predict the 2008 crisis has also been well-documented. In 2003, for example, only five years before the Great Recession, the Nobel Laureate Robert E Lucas Jr told the American Economic Association that ‘macroeconomics … has succeeded: its central problem of depression prevention has been solved’.


Short-term predictions fair little better — in April 2014, for instance, a survey of 67 economists yielded 100 per cent consensus: interest rates would rise over the next six months. Instead, they fell. A lot.

There are, of course, many other examples of the failure of mathematical models in economics. The model Christina Romer put together during the height of the Great Recession concluded that unemployment could go as high as 8.8 percent without the economic stimulus bill. With the stimulus, unemployment went over 10 percent. The spectacular failure of Long Term Capital Management, which was built solely upon investing on mathematical models, is another great example. Indeed, Daniel Kahneman found the “correlations was .01” when asked to evaluate the investment outcomes of 28 different advisors. Warren Buffet is currently crushing the hedge fund Protégé Partners in their ten year, one million dollar bet. (Buffett picked an index fund that invests in the S&P 500.) Finance and economics are linked at the hip in this overconfident, mathematical malaise it would seem.

Returning to Levinovitz, the problem as he sees it is that these highly complicated models built with mystifying and ingenious mathematical equations are completely useless if they are erected upon false assumptions. You may have built the most luxurious mansion imaginable, but if you built it on a hill of sand it might as well be a house of cards.

Think of the Ptolemaic model of the universe that put the Earth at the very center. The Ancient Greeks would notice that the stars would move across the sky, then stop, then go backward, then start moving forward again. To resolve this conundrum, Claudius Ptolemaeus put together an ingenious model of “circles within circles.” Each star not only orbited around the Earth along a given trajectory, but also maintained a secondary orbit around a point moving along the first orbit to make it appear from the Earth that the star would sometimes move backward.

The geocentric model of the universe was a stupendous mathematical achievement, but alas, it was all for naught given the assumptions it was built on were completely false.

Levinovitz uses the example of astrology, noting that,

As an extreme example, take the extraordinary success of Evangeline Adams, a turn-of-the-20th-century astrologer whose clients included the president of Prudential Insurance, two presidents of the New York Stock Exchange, the steel magnate Charles M Schwab, and the banker J P Morgan. To understand why titans of finance would consult Adams about the market, it is essential to recall that astrology used to be a technical discipline, requiring reams of astronomical data and mastery of specialised mathematical formulas. “An astrologer” is, in fact, the Oxford English Dictionary’s second definition of “mathematician.” For centuries, mapping stars was the job of mathematicians, a job motivated and funded by the widespread belief that star-maps were good guides to earthly affairs. The best astrology required the best astronomy, and the best astronomy was done by mathematicians — exactly the kind of person whose authority might appeal to bankers and financiers.

When Adams was eventually arrested in 1914 for laws that forbade astrology, “it was her mathematics that eventually exonerated her.” And this is by no means just a Western phenomenon. Another example the author references is the similarly mathematically impressive work done regarding Li in Ancient China. Li was also a mathematical model of the stars and for whatever reason, thought to be “essential to good governance.”

Obviously it wasn’t, but the Chinese spent “astronomical sums refining mathematical models of the stars.” As we do with much that passes for economics today.

Interestingly enough, Levinovitz quotes several famous Keynesian and neo-classical economists, including Paul Romer, who criticized the “Mathiness in the Theory of Economic Growth” and the man who’s always right (except when he isn’t) Paul Krugman. In this instance, though, Krugman is mostly correct observing that “As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth.”

But this reliance on math to hide the underlying flaws in an economic theory sounds like it falls perfectly in line with “The Pretense of Knowledge” that Friedrich Hayek warned about all those years ago.

Since then, many economists believed they had made economics into a scientific discipline based on modeling and empirical testing. They assured us that by using copious amounts of data and fine-tuned mathematical models they could centrally plan an economy, eliminate the business cycle and increase economic growth and prosperity. And they were wrong.

Surprisingly, Levinovitz does not use the word “econometrics” because that’s the first thing that came to my mind while reading his essay. The econometric approach may be the best example of the mathematical arrogance Levinovitz describes. The flaws in its internal reasoning become obvious, however, as you peel away the math, as Robert Murphy shows,

The econometric approach to stock price movements is analogous to a meteorologist who looks for correlations between various measurements of atmospheric conditions. For example, he might find that the temperature on any given day is a very good predictor of the temperature on the following day. But no meteorologist would believe that the reading on the thermometer one day somehow caused the reading the next day; he knows that the correlation is due to the fact that the true causal factors — such as the angle of the earth relative to its orbital plane around the sun — do not change much from one day to the next.


Unfortunately, this distinction between causation and correlation is not stressed in econometrics. Indeed, for economists truly committed to the positive method, there can be no such distinction. Although the econometric pioneers may understand why certain assumptions are made and can offer a priori justifications such as “rational expectations” for the details of a particular model, the students of such pioneers are often caught up in the mathematical technicalities and lose sight of the true causes of economic phenomena.

But more fundamentally, as Austrian economist Frank Shostak notes, “In the natural sciences, a laboratory experiment can isolate various elements and their movements. There is no equivalent in the discipline of economics. The employment of econometrics and econometric model-building is an attempt to produce a laboratory where controlled experiments can be conducted.”

The result is that economic forecasts are usually just wrong.

Levinovitz believes there is a conflict of interest at the heart of academic economics. He approvingly quotes one economist saying “The interest of the profession is in pursuing its analysis in a language that’s inaccessible to laypeople and even some economists. What we’ve done is monopolise this kind of expertise.” And furthermore, “…that gives us power.”

But it’s more than even just that. It’s not just that economists fails to make accurate predictions or that hedge funds fail to beat the market. If economics is unable to provide bureaucrats with the ability to effectively guide and control an economy, the best alternative would be to turn it back over the market. It’s not just that “mathiness” gives economists “power.” In many ways, it’s the façade that justifies a large number of them having jobs in the first place.

It appears that Levinovitz hasn’t quite grasped the full consequences of the argument he has espoused; namely that because economics models are mostly useless and cannot predict the future with any sort of certainty, then centrally directing an economy would be effectively like flying blind. The failure of economic models to pan out is simply more proof of the pretense of knowledge. And it’s not more knowledge that we need, it’s more humility. The humility to know that “wise” bureaucrats are not the best at directing a market — market participants themselves are.


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Russia says massive Zapad 2017 drills ‘purely defensive’

Tue, 2017-08-29 15:15

MOSCOW: Russia has dismissed Western concerns over its upcoming military exercises with Belarus, calling them “purely defensive” and not directed against any specific enemy.
“The Zapad 2017 exercises have an anti-terrorism focus as well as a purely defensive character,” Deputy Defense Minister Alexander Fomin said at a press briefing.
He slammed international media for “disseminating myths about the so-called ‘Russian threat’” in coverage of the planned drills along NATO’s eastern flank.
“Some even say that the Zapad 2017 exercises are a launching point for ‘invasion or ‘occupation’ of Lithuania, Poland, or Ukraine,” Fomin added.
NATO Secretary-General Jens Stoltenberg in July said that he had “every reason to believe” the drills will have “substantially more troops participating than the officially reported numbers.”
Transparency and predictability
On Friday, Stoltenberg urged the Kremlin to ensure transparency and predictability during the exercises, warning that NATO “would be watching very closely.”
The exercises next month in western Russia, Belarus, and the western Russian exclave of Kaliningrad, have deeply worried neighboring NATO allies, with Lithuania claiming that as many as 100,000 troops could attend.
Fomin said that “about 12,700” troops will be participating in the exercises, including 7,200 from Belarus and 5,500 from Russia. About 3,000 will be in Belarus during the exercises, he said.
“Despite the fact that the main part (of the drills) are to be held on Belarusian territory, the scenario assumes an artificial enemy, which has nothing to do with any specific region,” he added.
In the two-stage event from Sept. 14 to Sept. 20, the armed forces of Russia and Belarus will first “isolate areas where illegal armed groups and the enemy’s sabotage-reconnaissance groups are active,” he said.
In the second stage they will practice “military action while repelling aggression against the union state (Russia and Belarus).”
The war games’ scenario is that “extremist groups” have infiltrated Russia and Belarus and are planning “acts of terrorism” while receiving “outside support” from the air and sea.
“We believe that the situation in the drills’ scenario could come up in any part of the world,” Fomin said.

Main category: 
Russia launches massive military drills in Arctic
Russia flexes military might with naval exercises in Mediterranean

“As If It Never Happened” – Stocks, Bonds, Dollar & Gold Erase Almost All Sign Of Korea’s Missile Madness

Don’t worry America – biblical floods and a world on the verge of global thermonuclear war are no reason to be fearful…

As soon as the US equity market opened, the panic protection team went into action. Gold and Bonds have erased all their gains as the dollar and stock recover all their overnight losses…


Amid a massive burst of helpful buying mid-morning in the S&P futures…

— pippocamminadritto (@guado77) August 29, 2017

And as Nanex’s Eric Scott Hunsader notes, “this never happens”…

Yes — that NEVER HAPPENS (where a spike after open comes close to the activity level set by the open)

— Eric Scott Hunsader (@nanexllc) August 29, 2017

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Oil Prices Set To Rise as Supply-Demand Gap Closes Up

Oil prices are poised to climb over the coming weeks as supply and demand approach parity, according to analysts who spoke to CNBC as the remnants of Hurricane Harvey continues to ravage Houston, the energy capital of the United States. A rise in oil demand for 2017 made large strides in closing the gap between available crude and the number of willing buyers, sources said. “[Oil prices] should be going up because inventories have been drawing at a phenomenal pace over the past few weeks and months,” Amrita Sen of Energy Aspects said. Both West…