Sure, markets are important – and yeah, we had a really good day yesterday.  But this morning we need to look around the “theater of battle” a bit and see what the larger playing field looks like.

One reason our “global aggregated view” of markets seems to work is that we focus at multiple levels. Close-in, far-out, the middle-ground plus we look on temporal grids both ahead and behind for instruction.

Today the markets have little to drive them but we did have another Islamic terror strike in Paris overnight and, on top of that Korea is on a fast simmer.

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“c3i” was the name in the old days.  “Command, Control, Communications (the 3-C part) and intelligence.

More recently, tacticians have added “computers” to make it “c4i” which is ‘exploding’ the definition if you are having a blast with my plastic puns.

The events overnight suggest to us one of the key weaknesses of militant Islamic movements operating in a tech-savvy world.

The militant’s side of things requires a constant brainwashing effort in order to radicalize “converts.”  Doesn’t leave much bandwidth for “other.”

Because the West is doing a passable job on the ECM (electronic countermeasures) side, ISIS doesn’t have free rein on the internet to tell its members when to put things on “the low beam.”  So along comes a shoot-em up in France at precisely the wrong moment.  Huge help for conservatives in the elections.

We believe ISIS also doesn’t make converts learn chess or theory of tactics.

The result is that one of their own goes off with an AK-47 a-blazing on the Champs Elysees overnight just ahead of French Elections.  Can you spell blow-back?

Now to say “told you so” too loudly, but we told subscribers a couple of weeks back that Marine Le Pen could be driven to a conservative presidency in France in the May 7 run-off elections.  Odds on that just got better. That is shaping up as more likely – thanks to the c4i failure of ISIS.

They are literally driving the moderates in France to vote conservative, close the borders, and oh yeah “…deliver us from Europe…”

Much like early experiments in explosives with nitro glycerin, there’s a learning curve when trying to blow up whole cultures, like France.  ISIS’ ability to radicalize is real, but command and control sure look weak…or not working at all.

They may for all practical purposes have just sealed a French border closure and exit from the E.U., much as the Brits are likely to confirm with the BREXIT –driven elections in June.

Once the French leave, all the pressure will remain building in the Schengen border-free area.

Since ISIS c4i problems are a likely weakness, we expect that in the longer span of history, ISIS may be doing a democratic service to free people of Europe.

They’re not only making their movement hated, but their timing and lack of tactics could be a lever driving eventual collapse of the remainder of the European Union.

Couldn’t happen to a nicer bunch of megalomaniacs.

Tactics and Syria

The potential for a U.S. –Russian nuclear escalation continues in Syria.   A note from our military affairs whiz “warhammer” lays out some important background:

“We often hear or read about ‘weapons of mass destruction.’ Most folks instantly associate the term with nuclear weapons. Many others also know that weaponized biological agents also fit into this morose category of weaponry. Fewer realize that the very first WMDs, deployed by both sides in WWI, are more commonly known as chemical weapons. Together, this unholy trio is colloquially known as NBCs (nuke, chem and bio). See: <https://www.britannica.com/technology/weapon-of-mass-destruction>

Chemical weapons work by suffocating the victim by inhibit oxygen uptake by hemoglobin or filling the lungs with mucus, blistering the skin or short-circuiting the nervous system. They, like bio weaponry, do not destroy military equipment or capital structures. Chem weapons simply incapacitate or eliminate the opposition. Now the Organization for the Prohibition of Chemical Weapons has officially confirmed that it has found “incontrovertible” proof of Syria using chemical weapons on its own people.

<http://www.cnn.com/2017/04/20/middleeast/syria-chemical-attack-sarin-opcw/index.html>

Recall that in August, 2012, the former POTUS Barack Obama famously stated: “We have been very clear to the Assad regime, but also to other players on the ground, that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized.” A year later, when pressed about inaction against the Assad regime, Obama back peddled by saying “I didn’t set a red line. The world set a red line.”

This is a prime example of what happens when a world leader violates the Teddy Roosevelt policy to “speak softly and carry a big stick,” which Roosevelt explained as “the exercise of intelligent forethought and of decisive action sufficiently far in advance of any likely crisis.”

Intelligent forethought! Decisive action! These key phrases carry a lot of baggage. Many leaders talk the talk, but the cannot or will not walk the walk. As a result of Obama ‘talking but not walking’ against Assad, more than 80 people were killed in early April and dozens more disabled by the use of sarin gas by the Syrian army.

Why is the ‘red line’ important? Two reasons: (1) rogue nations, such as Iran and N. Korea, are watching the global community’s response to Syria’s aggression very closely, and (2) turning one’s head away from this inconvenient WMD truth literally lets loose the hounds of hell, encouraging psychopathic despots to ruthlessly eliminate their opposition (internal and external) using any and all means available.

Obama, perhaps in part due to his being awarded the Nobel Peace Prize only months into his presidency, adopted a policy of inaction. The wild card confronting Trump is that Putin has already publicly stated the chem attack was staged as a set up to incriminate the Assad regime. Will ‘the Donald’ cross verbal swords (or perhaps ‘real’ ones) with Putin in order to uphold the ‘no WMD use’ policy? Will the media question any legitimate action by Trump, should he decide to act, simply because 89% of them MSM despises the guy and want him to look bad?

The world is watching Trump, America and NATO. The ‘free press’ is an active catalyst in this volatile situation. This could get real ugly, real soon.

Very importantly, I hope you read the report by M.I.T. professor emeritus Theodore Postol of April 11th, which may be found here.

He reviewed the data on the (alleged) Syrian nerve as explosions and found that (and this is wild, so pay attention here…) that…

“…Analysis of the debris as shown in the photographs cited by the White House clearly indicates that the munition was almost certainly placed on the ground with an external detonating explosive on top of it that crushed the container so as to disperse the alleged load of sarin….”

Wait!  Catch that?  Not dropped from a plane, at all.  But, more likely, a container of sarin gas.

Since this is “Tactical Friday” we have to ask “Hmmm…Where would containers of sarin gas come from?

No one knows (for sure) since samples are above our pay grades, but we have some interesting candidates:

  • Could it have come from the Saudis?  Not fans of Syria for damn-sure.
  • Or…Israel?  Syria will no doubt be eyeing Lebanon and the Leviathan gas field…
  • Or…(the wildest of all) Remember during the Iraq war when no WMD’s were found in Iraq that there was a passing quote (might have been from Rumsfeld) that the “…WMD’s could have been buried in Syria..”?

On this last, the NY Sun reported in 2006 along the same lines:

“The man who served as the no. 2 official in Saddam Hussein’s air force says Iraq moved weapons of mass destruction into Syria before the war by loading the weapons into civilian aircraft in which the passenger seats were removed.

The Iraqi general, Georges Sada, makes the charges in a new book, “Saddam’s Secrets,” released this week. He detailed the transfers in an interview yesterday with The New York Sun.”

Who got ‘em?  And with that professor emeritus saying external explosives?  Hmmm…loose gas is always a dangerous thing.  (*I get a gold star for not linking the loose gas concept to upcoming Cinco de Mayo…)

Any of these (‘cept Cinco) would explain the recent “hot trip” of SecState Rex Tillerson to Moscow, and especially that third possibility because chemistries of such agents are unique.  Like fingerprints.

Off in the background, it appears to us as though the world’s super powers, US, China, and Russia at minimum though likely others as well, have a tacit agreement to go into a “hands off mode” when some of their WMDs are lost.

If you didn’t catch it, or don’t know it, one of the likely reasons that the U.S. let the Russians have a relatively free hand in their Afghanistan War may be found in the Cockburn & Cockburn book “One Point Safe” which dealt with the dribbling-out of former Soviet-owned nuclear materials during the collapse and reorganization of Russia.

Think I’m wrong?

“Yes, we are tight with money. There is not enough for the army, and Minatom must solve practical problems jointly. And they do solve them. They remove the weapons from Ukraine. Almost everything has been brought out of Kazakhstan. It has been brought out of Belarus. We can’t beat ourselves on the breast and scratch our heads with ashes — there is a lot of work going on. …”

Yes, right there in a 1995 FrontLine transcript (“Readings” section) from 1995 talks about weapons outside his country.  It’s a piece from an interview with “General Gennady Mikhailovich Yevstafiev heads the Division on Arms Control and Nonproliferation of Nuclear Weapons of the Foreign Counter-intelligence Service (SVR), the successor to the KGB.”

We can also (thanks to his candor) trace back to where we think the agreement between super powers to (pardon my directness) “clean up their own shit” came from:

“The problem itself requires further discussion between the interested sides, especially the “G-8,” nuclear states. A higher level of defense of nuclear materials is needed. But it is not necessary to over-dramatize it and make it into a tragedy. We need to work together. Practically. We have experience in such work. The Czech case, although they tried to turn it against us, demonstrated this. We helped to capture the criminal on the territory of Russia because we warned them in advance.

Undoubtedly, the question of NOYaM will be one of the serious questions at the meeting of the “G-8” on nuclear safety that will take place in Moscow in the spring of 1996. It is one of the elements of the global problem of nuclear safety. We consider that the IAEA should play a very big role both in accounting and in synthesizing and use of positive experience.”

The Russian general also bemoaned the lack of WMD inspection technology in Europe.

More importantly, we see the present focus on sarin (or variants) as more interesting because there are multiple possible sources and detection is more problematic with no neutrons to chase after.

As becomes clear with some digging, there is the “public face of the news” and then there are background and deep briefings.

I’m reminded of the old days of the corporate nuclear trade in the 1980’s when Russia mined yellowcake, it was refined in the US, and kept the nuke power plants going in West Germany.  There’s the public cold war and then there’s how the corporations really run the world.

Oh,  and big frameworks of thought like this one that most people are too busy posting crap on Facebook to worry about.

Still, in the spirit of our Directorate 163 modeling concept, an international agreement to let countries clean up their own messes coupled with an “external explosion” and the Iraq War WMD rumors…well…all makes for interesting speculations, indeed.

But you can’t trade on it, so why bother ?– except as a distraction when the market is slow…trying to figure out where the long knives are going.. and that is tradable.

A Trump Deal

A couple of Americans held for three years in Egypt have been freed.  I won’t point out Obamaites tried and failed to get them out.

But I might mention “Art of the Deal” again…

Influencing the Media Dept.

There’s a marvelous story in the NY Post today about how MSM journos are pissed about CBS’Gayle King spending a week on that super yacht in Tahiti with the Obamas

We note co-host Charlie Rose didn’t seem to get invited.  (Friendship?  Payback?  Or…discrimination? We’ll let you take that watch apart.)

New Lands Rising

Story in  the NY Times about how Singapore is dredging up more land is of interest.

They taking a page from the Chinese “New Islands” playbook, or what?

Daily Data

We don’t expect much out of the market today.  There are too many moving pieces in motion right now to really rocket upward, but in fairness, our Peoplenomics indicators have broken above the trend channel we showed subscribers Wednesday.

Since the weekly close is most meaningful, the daily reading chart tomorrow should give us some confidence.

Meantime, in Europe, the French CAC 40 was only down 7 points.  Germany and England were a smidgeon higher while Japan was up more than 1 percent overnight.

Purchasing Manager’s flash report comes out 15 minutes into the session.  We don’t expect much movement, just a pulse – maybe.

If you’re not a subscriber, see you Monday, otherwise we will pick up tomorrow with “Business Models In Trouble” as we look at how tech an d finance are an unusual investment screen (not to mention career choice filter).

In  the meantime, I’m going to go play with my flame thrower…er…weed burner

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