“F-CSI”  Financial Crime Scene Investigations

Many actives scenes this morning, starting  overseas where a top Iranian general has been killed in a surgical strike on the airport in Baghdad, Iraq.

Yep.  Off-sides and planning additional attacks on the U.S. interests (and embassies) in the Middle East, the NY Times report on the drone attack is pretty clear.

While we expect a lot of Trump-haters to “go nuts” (they don’t have far to go…) this is a pretty well-executed, surgical take-down of someone who we understand (from reports) was in Iraq inciting more violence.

Market Reaction

The Dow futures, earlier, were down 400 points.  Clearly, the market is thinking the Iranians are serious about reprisals.

Iran’s state propaganda machine (English version) is already expectation-setting about what will happen next:

The Iranians are using this take-out as a reason to ramp-up the rest of the radicalized Islamic world.  Example?  “Protests held in Pakistan to condemn assassination of General Soleimani.

Set Piece Analysis

The U.S. is not ready for the Global War, more likely in the 2025-2027 period than present.  The skirmishing with Iran may serve to reinforce U.S. readiness.  Or, not.

That’s because money for the U.S. military must come from the House of Representatives.  And we remember who they just impeached.

On the other hand, an  embassy is, in diplomatic parlance, to be treated as “embassy [country] home soil.”  American’s are generally clear that an attack on an American embassy is tantamount to a  direct attack on America.

Iran will no doubt consider how to deliver some PR/propaganda now that will make headlines and make it  seem as though this drone strike and dead general event is not a major loss.

We expect (by day end) for television US shills (OK commentators is more polite)  to be bashing Trump for his move.

Yet, while “carrying the water” for Iran, the American left-run media will attempt to spin events into more Trump-hate.  Don’t be expected is terms like “ He’s a murderer” are heard.

Oh my, look surprised!  It’s starting already: “Democrats question legality of drone strike that killed Qassem Soleimani.”

Next, we predict democrats will “re-impeach” since they’ve thrown in on Tehran’s side, ever since Obama sent how much was it in “spoils of war” to Tehran?

Remember Feb. 19, 2019 when Trump Tweeted:

Never gotten over the fact that Obama was able to send $1.7 Billion Dollars in CASH to Iran and nobody in Congress, the FBI or Justice called for an investigation!

Lefty’s arose in unison back then to say it was money owed to Iran which had been paid by the former Shah.  Another example of how the left-wing insurgency spreads half-truths, of course.

The left-sympathetic media never tires, though, of trotting out Ex-Obama intel types to make dire forecasts of an anti-presidential nature.  Democrats don’t seem to have good memories – like  Iran’s threats to wipe Israel off the map, and so on….

Let’s also get straight on Obama sending Iran money, just so we’re clear.

Say a guy owns a house and pays you $100 bucks in advance for some upgrades to the roof.  The owner dies before you get the repairs are done.  New owners move in and kill relatives of the previous owner, right?

Democrats would argue you have to fix the roof anyway.  Republicans would say no, spoils of war (or real estate, if we need a distinction!).  And what about those killed by the new home owners, that’s gotta count, too.  They’ve been threatening our friends…

Obama (the most successful street organizer in history) not only paid back the “roofing” money, but “tacked-on interest to the $100-bucks.”  Which is why Tehran loves democrats.

Now do you see why the democrats are whining on  cue today?

This will provide additional cover for the democrats to move ahead with their strategy – delaying the Trump Trial in the Senate – in order to optimize timing so the socialist insurgency in American can keep conservatives tied-up in Washington (for the trial) while home states of Senators may notice a lack of GOP campaigning.

The India-Pakistan Angle is Concerning

We are  at the timeline when India-Pakistan could blow-up (literally) as a regional nuclear conflict.  Best estimates, if it comes to pass, that 100-million could die.

With Iran now fomenting demonstrations in Pakistan, that may be seen as a destablizer in a region where extremist elements are kicking powder kegs on a daily basis.

The  Times of India, for example, reports a “Terror alert: US asks its airlines to exercise caution in and over Pakistan airspace.

Obviously, a shoot-down by Pakistan of any aircraft could be read as supportive of Iran, but if an  Indian airliner were to be involved, Iran may be thinking about lighting up that war.

As you will recall, Muslims in India have been protesting the new Citizen Ship Law, essential a path for non-citizens (except Muslims) to apply for Indian citizenship.  Talk about pissing-off Muslims…

India, is sticking by its position, however, as we see in “Raise Voice Against Pakistan,” PM Modi Tells Citizenship Law Protesters.”  Yet, while India’s PM is saying this, the protests (by Muslims) against the new laws in India have turned bloody, says  The Economist.

The F-CSI Part

The  financial crime scene investigation is only in the furthest background of most people’s thinking when videos (like this morning’s) are rolling out.

Yet, the realities are as follows:

  • The U.S. stock market was up 330 points Thursday, so a pullback of 300 points is not a huge event.  In fact, it might be seen as a “buy the dips.”
  • $51.15 billion in Fed repo’s today.
  • Gold and oil were both up significantly on the news of tensions rising, which is to be expected.
  • Bitcoin has dropped into the $7,300 range and has not bettered early December highs.

An interesting question is whether the U.S. has financial surveillance on Iran and its financial proxies?  We don’t know, but if Iran’s going to pull up a “punishment” that could set up a market decline.

And in the world of financial engineering, states like Iran could drive events in a manner where “knowing what’s coming” could yield handsome returns by shorting ahead of whatever’s coming next.

Money Supply Madness?

You know there are three critical money metrics to be aware of:  The 3-month sliding window of the H.6 moneystocks measure.  The more recent H.6 data, and how much the Repo-Depot (the NY Fred Trading Desk) is tossing out in short-term leadning against otherwise illiquid assets*.

(* If you have a pile of home loans, for example, that will pay off over 30-years, borrowing at present low rates to get ready crash iss one option financial institutions have.  It’s still “good assets” on the Fed’;s books, but it increases systemic liquidity.  Such that if the market pulls back dramatically during the session today, there’s money to buy the dip in here.  $51.15 billion in today.)

So, from the Money supply:  To the end of October (table 1, H.5 money stocks here) the M1-annualized print festival was growing at a 12.5% annualized rate.  However, the print-rate through Dece.ber 23 (H.6, table 2 summary) is down to 10.6%.  Not a decline,  Looks to more like a bit less “rocket fuel.”

The F-CSI Summary:

Were I writing this as a  CSI episode, it would include dialog like this:

“We have a victim over here (the global economy).  Minor injuries, should recover.

We have other victims, too:  (Iraq, Pakistan) and we don’t know how they’ll do.  Let’s get ’em to the hospital and have ’em checked out.”

The USA?  A minor scratch is all it looks like.  For now, anyway.”

Buried in the Noise

Life goes on.  Chill.  At least until the big flash-bangs, right?

From our “Things are looking Up” file: Quadrantid meteor shower, first of the new year, peaks this weekend.

Recession coming to Asia first? Hong Kong Retail Sales Post Another Double-Digit Drop As Recession Worsens.  Still, our bet is on Macron blowing up the EU by sticking more debt to Germany…

Assuming you know Russia’s interest in Ukraine are a) warm water port and b) the Dnieper Donets petroleum basin, continue dot connecting with Kyiv Post: Moscow Says it Issued Nearly 200,000 Russian Passports in Ukraine’s Donbass.

Chill Friday:  One of my kids called this morning to anxiously tell me they were filling their cars with gas over Middle East jitters.

YHGTBSM!” exclaimed dad, quaffing a handful of blood pressure pills.  “Oil people play news like a fiddle.  Never buy gas going into the weekend unless nukes have gone off.  Never, never, never!.  The best day of the week to buy gas is?”  Mondays says  Gas Buddy.

Remember, you can only spend it once.  How good are you at judging scampering sheep?

Write when you get rich,