Thursday, January 29, 2015

Dodd ,'Fwank' and Greenspan The Real Culprits. GW Warned But Press and Media Could Not Allow The Truth! V15, Not A Liquid!

Lynn and Number one Daughter, Debra with
former neighbors now at Landings                            Number one daughter and yours truly

Number one daughter with husband
The article I recently posted  by Gary Shilling reiterates some of the things I have been writing about when it comes to the fact The Fed is in a box and deflation is gathering momentum.

I suspect Dodd Frank will cause another recession because of strictures on bank liquidity and lending ability.

Sen. Dodd was very liberal  who, like Obama, blamed everything and everyone else when, in fact, his own hand print helped caused our deepest recent housing recession.

As for Barney "Fwank," he too was an extreme liberal and did not understand supply and demand and probably never read Adam Smith. Like Obama, they were extreme ideologues and time will prove they were mostly wrong. But the connection to truth is something our equally liberal press and media folks suppress because were they to allow truth to be known it would hurt their political puppets.

When Congress dropped the rules against banks getting into investment banking, which was instituted after the '29 Depression (Glass–Steagall Legislation ), banks began to indulge in leverage. When  'alien' Democrats, from left wing outer space,  forced banks to make housing loans to those who could not afford to pay the mortgage, the housing depression's keel was being laid. When Greenspan forced the Fed to be accommodative that added the 'juice.'

Of course GW is blamed for everything that happened but , if truth means anything since it seldom is highlighted by our left wing press and media folks, he warned of what happened but he could not control Congress.  The 'Demwits' were in charge!

And so it goes!
Hezbollah war looming so Iran can deflect more attention from itself when their thumb is behind these terrorist renegades and reliably knowing  the press and media will blame Israel for retaliation?

Interesting how America's bombing raids against ISIL and the civilian casualties caused is never reported?

And now we have Obama embracing the defining language of Islamists who claim they are not terrorists, simply freedom fighters. This has been Obama's intention all along and he began laying the foundation for same when he eliminated all references to terrorism in government documents and instructions etc.

Obama now claims he did so under the umbrella of not wanting to inflame all of Islam. Hell, Islamists are always inflamed over something.  It is part of their tribal  DNA and pique over Colonialism.(See 1 below.)

China is preparing to control more of the world eventually; Russia is currently trying to rebuild its empire but it is  Islamists who are beheading , bombing and mutilating on an hourly basis.  Meanwhile, Obama's policies are designed to force America's withdrawal because we have 'sinned' thereby, creating a vacuum which is being filled by those pesky Islamist 'freedom fighters' and Israel is the cause because they are unwilling to allow themselves to be annihilated!

Yeah, I know.  Call me a racist!
As I have been revealing - there is a concerted effort on the part of Obama and his Western allies, to beat Bibi!

You will see and hear little about V 15, from our traditional news and media dolts! (See 2 below.)

Ten Lessons Learned by Hezbollah From Israel’s Summer War in Gaza

January 28, 2015 7:12 pm
Two IDF soldiers were killed and seven others wounded jeep in a Hezbollah rocket attack on a jeep on the Lebanon border. Photo: Ch.2 screenshot.

Two IDF soldiers were killed and seven others wounded in a Hezbollah rocket attack on a jeep on the Lebanon border. Photo: Ch.2 screenshot.

It seems like an eternity ago that fighting raged in Gaza between Israel and Hamas, dubbed by the IDF as Operation Protective Edge. Nonstop coverage of that conflict clogged the airwaves for weeks, only to be drowned out by new headlines: ISIS. Ebola. Ferguson. But with activities now heating up between Israel and Hezbollah on the Lebanese, Syrian and Israeli borders, it is worth exploring what lessons Hezbollah took away from this past summer’s conflict, and what one might find as a result, both on and off the battlefield with Israel.
Highlighted by recent skirmishes on the Israeli-Lebanese and Israeli-Syrian borders, tensions between Israel and Hezbollah are high, and the possibility of a more sustained outbreak of violence, intentional or not, is becoming increasingly likely.

Below is a list of the top ten lessons Hezbollah likely learned from Operation Protective Edge, as well as what can be expected from them as a result, in a future conflict with Israel. Hezbollah is now significantly more battle hardened as its fighters have been engaged in deadly fighting in Syria for years. Pre-occupied with fighting in Syria, Lebanon and Iraq, it is not interested in another conflict with Israel at the moment. Yet it is willing to open another front with Israel if it deems such a move necessary to improve its deterrence, rally its base, or otherwise defend its core interests. Expect the next round of fighting between Israel and Hezbollah to be much bloodier, with more unintended consequences than previous conflicts with the Jewish state.

Lesson 1 – Casualties: Civilian casualties, both Arab and Jewish, worked in Hamas’s favor. Palestinian casualties drew international condemnation and pressure on Israel, led to significant criticism and accusations of human rights abuses from much of the international community and even some left-wing supporters of Israel, and continues to threaten the Jewish State with the potential involvement of the International Criminal Court. Israeli casualties, while limited, highlighted the well-known sensitivity of the Israeli people, and showed the vulnerability of both Israeli civilians and soldiers – even as Israel bombarded the Gaza Strip with an intense air campaign and limited ground operation.

Hezbollah Takeaway for a Future War: Expect Hezbollah to more intentionally draw Lebanese casualties – especially Christian, Sunni and Druze – in an effort to pressure Israel while simultaneously re-casting itself as protector of all Lebanese. They will also seek to draw UNIFIL casualties to bring further pressure onto Israel, and of course, will underreport any casualties its fighters incur.

Lesson 2 – Reliance on Fellow Arabs for Support: Arab neighbors do not mind seeing their fellow Arabs bleed if it serves their interests. Unlike in 2010 and 2012 where the Arab League and individual states placed tremendous pressure on Israel and its allies to end the fighting before achieving visible benefits, in the latest round this past summer they were more than happy to let Hamas pay for their ties to the Muslim Brotherhood… even if this meant Palestinian civilians suffered too.

Hezbollah Takeaway for a Future War: With Shiite-Sunni conflicts raging in Syria, Yemen, Iraq, and elsewhere throughout the Middle East, and worsening relations between Iran and the Arab world, Hezbollah should not expect the kind of support it received from the Arab street in 2006. It will need to plan accordingly.

Lesson 3 – Tunnels: Hezbollah can actually teach Hamas a thing or two about tunnels (and they have). Nothing affected the Israeli psyche as much as the threat of Hamas fighters crawling out of tunnels in people’s backyards and attacking them when and where they least expected it. Hamas’ numerous, infamous tunnels helped define last summer’s war.

Hezbollah Takeaway for a Future War: Expect Hezbollah to take a more pronounced use of tunnels in any future conflict with Israel. Israeli forces are actively seeking out these tunnels but they can be difficult to destroy. Israel also is still developing its policy and forces to more effectively combat the tunnel threat.

Lesson 4 – United Nations: Hamas scored great propaganda points by launching strikes from UN facilities that drew an Israeli response. Those responses led to international condemnation on Israel for targeting “neutral” UN facilities, and is a continued example by critics of Israel of the Jewish State’s disregard for human rights.

Hezbollah Takeaway for a Future War: Expect Hezbollah to fire from a larger number of civilian and UN facilities than it has done in the past. Hezbollah has witnessed firsthand how effective this tactic can be. In Operation Grapes of Wrath in 1996, Israel shelled a UN compound at Qana, killing 106 civilians, and leading to intense pressure to end the military campaign.

Lesson 5 – Iron Dome: Israel’s Iron Dome anti-missile shield has been applauded for its significant success in targeting and destroying rockets that are being fired on Israeli civilian, military and government sites. It remains a symbol of Israeli ingenuity and ability to limit the effects of war, and was a thorn in the side of Palestinian forces.

Hezbollah Takeaway for a Future War: Expect Hezbollah to combat the Iron Dome in two ways: the first will be by the sheer number of rocket salvos Hezbollah will fire at any given time. Secondly, Hezbollah may try to attack some of the Iron Dome installations themselves that are positioned in the north of the country. If successful, the attack would be a major blow for Israel and significant boost for Hezbollah supporters who will point to it as evidence of a victory. Hezbollah is keen to deliver surprises to Israel.

Lesson 6 – Ben Gurion Airport: In the summer of 2014, Hamas successfully shut down international air traffic into Israel when one rocket landed close to Israel’s Ben Gurion International Airport. This resulted in thousands of Israelis being stranded around the world and caused great insult to the Israeli government.

Hezbollah Takeaway for a Future War: Expect Hezbollah to fire numerous salvoes at Israel’s airports and other critical infrastructure from the onset of any future war. It will seek to shut down all of Israel’s airports and cause as many symbolic victories as possible.

Lesson 7 – Propaganda: Hamas did a remarkable job at manipulating the international and local media to deliver the storyline it wished to portray. It recorded and televised numerous successful attacks on Israeli forces that it conducted, while keeping reporting of Hamas forces operating from hospitals and other “neutral” sites to a 

Hezbollah Takeaway for a Future War: Expect Hezbollah to employ its own propaganda machine in full force in any future conflict. Its al Manar television station will ensure reporters sympathetic to Hezbollah gain firsthand footage and knowledge of any successful attacks on Israeli forces. Its control over neighborhoods in Beirut and southern Lebanon will also ensure that reporters tell the stories it wishes to portray.

Lesson 8 – Kidnappings: Hamas successfully captured the remains of two IDF soldiers killed in combat in the Gaza Strip. It previously held IDF soldier Gilad Shalit captive and successfully traded him for the release of over 1000 Palestinians and others convicted of terrorism that were held by Israel.

Hezbollah Takeaway for a Future War: Expect Hezbollah to make every effort to capture and kidnap Israeli soldiers (and even possibly civilians) in any future war. The kidnapping of an Israeli soldier would be an immediate sign of victory for Hezbollah, as it would allow the group to point to a concrete “win” in the capture of an Israeli soldier, allow it to negotiate the release of Islamists held by Israel, and raise its stature as Israel will be forced to conduct prisoner negotiations as is normally conducted between two states.

Lesson 9 – Tel Aviv: Israel has always prided itself on its ability to keep life as normal as possible even in the face of continued conflict. Indeed, its economy continued to grow despite conflicts on its borders and in neighboring lands. When Hamas successfully fired upon Tel Aviv and Jerusalem it ensured that all of Israel was affected by the war.

Hezbollah Takeaway for a Future War: Expect Hezbollah to target Tel Aviv and Jerusalem as well as all of Israel’s major population centers. In its last war with Israel in 2006, it was unable to successfully fire upon Tel Aviv. This time around, nobody is expecting Hezbollah to have that limitation. Tel Aviv, Jerusalem, and their various military and government sites will be targeted in any next round of war.

Lesson 10 – Invasion: During Operation Protective Edge, Hamas brought the war to Israel when it sent fighters through tunnels into Israeli territory. At Kibbutz Nahal Oz, Hamas fighters dressed as Israeli soldiers killed five members of the IDF and brought great panic to the Israeli civilian population in the area.

Hezbollah Takeaway for a Future War: Expect Hezbollah to send forces into Israel’s northern communities to wreak havoc on Israeli civilians and hold different territories for short periods of time. Both Hezbollah and Israeli forces have warned that this should be expected in the next round of war.
2)-- Look Who is Behind the New US Democratic-Style Campaign in Israel

There's a new grassroots, door-to-door knocking, community organizing style campaign effort that just landed in Israel. It's focused on hoping for change and changing for hope and taking-the-street-to-the-street style shake it up electioneering.

Flying in to run the show is none other than Jeremy Bird. The same Bird who was the deputy national campaign director and then national campaign director for Barack Obama's 2008 and 2012 presidential campaigns, respectively.

The new outfit is called V15 (as in Victory 2015), and it is a project of something called OneVoice,which is itself a program of the PeaceWorks Network, a non-profit, tax-exempt entity. Really. Funding this political campaign effort.

V15 sent out a press release in which it described itself as a "a non-partisan movement founded by young adults just as the 2015 Israeli elections were announced, V15 members have set aside party affiliation to disrupt the status quo." But just about everybody else is calling it the "Anybody but Bibi" campaign.

So who is behind this V15, in addition to Obama's former campaigns director? Well, as we learn from J.E Dyer, over at Liberty Unyielding, when OneVoice was formed in 2003, its inaugural board of advisers included Gary Gladstein. And who is Gladstein? He used to be the chief operations officer of Soros Fund Management. As in George Soros. Doesn't it feel as if everything really, really awful has Soros' fingerprints somehow, someway?

OneVoice explains in its 2014 Annual Report that it is dedicated to peaceful solutions in the Middle East. This is how it describes the actions it takes to bring about change:
promoting popular resistance, state-building, and the Arab Peace Initiative, while advocating for an end to the conflict and a two-state solution along the 1967 borders.

Hmm. Something is missing there. Nothing about ending terrorism or violence or incitement.

And it's pretty much the same view of how to "resolve" the Middle East conflict that flows out of the White House and Foggy Bottom. In Secretary of State John Kerry's requiem for Saudi Arabia's King Abdullah, he cited as one of the king's greatest contributions, that the "courageous Arab Peace Initiative that he sponsored remains a critical document for the goal we shared of two states, Israel and Palestine." 

Making cameo appearances in the OneVoice 2014 Annual Report are both Tzippi Livni and J Street. Not quite so apolitical as it claims.

Here's another problematic aspect of this whole V15/OneVoice/PeaceWorks Network Foundation campaign effort. What does the PeaceWorks Foundation have to say about its OneVoice project on its tax return? It describes this project as an organization which "aims to amplify the voice of the silent majority of moderates who wish for peace and prosperity. These efforts are known as the OneVoice movement."

And on its tax form, where it is required to state the purpose of grants it makes to entities or organizations outside of the U.S., including the grants it makes to the "Middle East and Africa," the purpose it states is "educate peace and condemn violence."  Nothing about running a campaign field office. And how could it, given it is a 501(c)(3) entity. Where is Lois Lerner when you need her?

Finally, there is another source of information about the kinds of bedfellows the V15/OneVoice/PeaceWorks Network keeps. It is the listing it provides of its partners. Along with at least half a dozen "peace" organizations and even the UK Conservative Party, it has lots of questionable listings. Those include: Association of British Muslims, the Christian Muslim Forum, the Rockefeller Brothers Fund, the New Israel Fund, Yachad (the "British J Street"), Labour Friends of Palestine & the Middle East, the UK Labour Party and Labour Friends of Israel.
Their partners also include the European Commission and the U.S. Department of State.

There will be much more to come on V15.

About the Author: Lori Lowenthal Marcus is the US correspondent for The Jewish Press. She is a recovered lawyer who previously practiced First Amendment law and taught in Philadelphia-area graduate and law schools

Wednesday, January 28, 2015

Executive Summary - A Must Read! The Bilderberg Group - Do They Provide The Tunes To Which The Western World Dances?

Girl of a gun!
I am posting the "executive summary" of a report stating  Iran is now most likely capable of producing a nuclear weapon.  The report is 23 pages and I have posted the link (right click) for those who want to wade through the entire document.

The report is devastating in terms of Obama's negotiating approach and emphasizes  the administration is focusing on Iranian intentions not their efforts and technical capabilities.  The report discusses how this administration has basically conceded virtually every initiative thereby, allowing Iran to move forward without any concern we are truly serious in stopping them.

Netanyahu's address to Congress and the American people could prove prophetic in view of Iran's progress made during the negotiations which have been a joke and the extensions Obama granted have been even bigger..  (See 1 below.)
I just received a call from a dear friend, fellow member reader who was responding to my complaint regarding Muslim silence. He reminded me of the story of the highly decorated 442d Combat Unit that fought in Italy  and was comprised of Japanese American volunteers whose parents were placed in domestic barbed wire camps shortly after Pear Harbor by Roosevelt - that great Democrat Liberal.

The point my friend was making was if Muslims wanted to show their love of this country and opposition to their own, who have allegedly hijacked their Islam religion, they would be volunteering to serve in  the  military  as interpreters etc.

My friend has made a cogent observation.

He also is somewhat of a conspiratorialist and attributes much of what happens in the world to this group and their, more or less, secret decisions and agenda:

The Bilberg Group is the embodiment of Wilkie's one world concept and their goal is to control the world.
Mauldin posts Shilling's themes. (See 2 below.)
Author:  Warren Marshall 

Iran has mastered the technology necessary to produce weapons-grade uranium and currently has enough centrifuges operating to produce fuel for several weapons each year, if its leaders choose to do so.
The U.S. is currently negotiating with Iran in hopes of reducing its stockpiles of enriched uranium and centrifuge capability, but the Obama administration has already conceded that Iran will retain some indigenous enrichment capacity. It has also apparently conceded that Iran will not have to come clean about the history or even current state of its efforts to perfect a workable nuclear warhead. Iran’s progress toward weaponization as opposed to enrichment has thus largely dropped from policy discussions. The trouble is that careful review of Iranian published scientific papers and advertised industrial capabilities indicates that Iran may be much closer to being able to build a nuclear weapon than many people think. In the worst case, Iran may already have the technical capability to complete every part of the weaponization process, including testing a nuclear device.
Too much of the policy discussion in Washington has focused on Iran’s intentions, although very little serious evidence has been brought to bear even on that question. The U.S. and its European partners must be clear-eyed about Iran’s actual capabilities as we head into what may be the final stages of the negotiations. Iranian nuclear proliferation is a threat if Tehran is able to build and test a warhead and retains the ability to produce weapons-grade uranium, regardless of the current statements of its leaders. The West seems to be underestimating that capability, unfortunately, by ignoring the work being done in Iran’s leading universities rather than in its military centers.
An examination of Iranian scientific literature demonstrates that Iran has conducted studies relevant to four of the five components of a basic nuclear implosion device (electrical firing set, detonators, high explosive lenses, and tamper/reflector) and may already have firing equipment and detonators suitable for a bomb. Several of the researchers involved in these experiments can be tied to Malek Ashtar University or the Organization of Defense Innovation and Research (SPND), both of which have been placed at the heart of Tehran’s potential nuclear weapons research by the International Atomic Energy Agency (IAEA). The close ties between the Iranian academy and the regime evident in this research show that Iran’s university system must be included within the verification protocols of any final nuclear deal with Tehran.
Link: Read the full 23 page Report
2)“If it ain’t broke, don’t fix it,” says my friend Gary Shilling as he kicks off today’s Outside the Box. He’s referring to his investment themes for 2015. He first gives us 11 reasons to continue favoring long Treasury bonds. That’s an obvious play for him if you know his view, but it’s nevertheless a compelling one this year and one that you should think through, given the specter of deflation about in the world, the firing up of QE in Japan and Europe (which gives folks money to buy … Treasurys), and the safe-haven status of the US dollar.

Gary’s reason #9 for buying Treasurys is that “The odds of a near-term Fed rate hike are receding. He sees any Fed rate increase being pushed out “as the deflationary effects of the oil price plunge sink in and investors – and the Fed – realize that foreign central bank stimuli amount to Fed tightening [in relative terms].”
Gary’s remaining themes for 2015 include some other clear winners like the US dollar and Japanese equities (no surprise there), but also some interesting defensive plays like consumer staples and foods and what Gary calls “small luxuries.”
Be sure to see the special offer for Gary Shilling’s INSIGHT at the conclusion of the letter...
You have a great week, and now let’s look at Gary’s investing themes for 2015.
Your overwhelmed with ideas analyst,

John Mauldin, Editor
Outside the Box

2015 Investment Themes

(Excerpted from the January 2015 edition of A. Gary Shilling's INSIGHT)
Our 2015 investment themes are quite similar to our 2014 list that worked well for us. If it ain’t broke, don’t fix it.
The Treasury “bond rally of a lifetime” still seems intact. The “risk on” investment climate for U.S. equities persists, but as in 2014, we approach it with trepidation and with a defensive portfolio position. The U.S. economy is continuing to grow but at subpar rates (Chart 1) while growth in China is slowing, is very sluggish in the eurozone and negative in Japan.
The dollar is reigning supreme (Chart 2)—and 2015 may turn out to be the year of the greenback as almost every other currency declines against the buck, especially the euro and yen.
Commodity prices may drop much further, especially petroleum, while financial problems in Russia, Venezuela and elsewhere escalate severely. Deflation is spreading worldwide and may expand beyond the energy sector to prices in general. And low-quality bonds here and abroad are likely to keep declining as are emerging market stocks.
Here are our 13 investment themes for 2015.
1. Treasury bonds. There are many reasons why we continue to favor long Treasury bonds. Here are 10:
1. Safe haven. Like the U.S. dollar, Treasurys are a safe haven in times of global turmoil and uncertainty, of which there are plenty today.
2. Deflation, extant in many countries (Chart 3) and looming in many others including the eurozone, makes current Treasury note and bond yields attractive.
3. Quantitative Ease, underway in Japan and likely soon in the eurozone, provides money to invest in U.S. Treasurys.
4. Treasury yields are attractive relative to those abroad. The 2.17% yield on the 10-year Treasury note vastly exceeds the 0.54% yield on 10-year German bunds, 0.33% for 10-year Japanese governments (Chart 4) and almost every other developed country 10-year sovereign (Chart 5). With the new round of QE in Japan and impending QE in the eurozone, the BOJ and ECB will be buying more government securities, sending yields even lower. The U.S. government obligation is probably at least as high quality as any of these others, and the rising dollar against the euro and yen enhances the appeal to foreigners of buying U.S. debt. What are we missing?
5. Foreigners are buying Treasurys. In the December sale of $13 billion in 30-year Treasurys, indirect bids, a measure of foreign demand, took 50%. The Fed is no longer adding to its Treasury portfolio but foreigners, as well as domestic investors, are more than replacing Fed purchases. With half of Treasurys owned abroad, it is truly a global market.
6. U.S. banks are buying Treasurys as they move away from lower-quality assets, in part to comply with new rules requiring the biggest banks to hold more liquid assets and 60% of these must be backed by the federal government. Also, in counting towards liquid assets, corporate obligations get a 50% haircut but those backed by the full faith and credit of the federal government get 100% credit.
7. Long Treasurys continue to be attractive to pension funds and life insurance that want to match their long-maturity liabilities with similar duration assets.
8. Junk and corporate bonds are losing favor vs. Treasurys. The spreads between junk vs. Treasurys are widening as Treasurys rally while junk bonds sell off under the weight of heavy issues and investor worries about defaults, especially on weak energy company issues. At the same time, the spreads between Treasury and investment-grade yields are widening. Note that energy bonds represent about 20% of most fixed-income benchmarks. Companies are issuing debt at the fastest rate on record, often to fund dividends and share buybacks. Meanwhile, the issuance of Treasurys is shrinking as the federal deficit falls (Chart 6). Unlike the ECB, which is likely to buy corporate debt, the Fed is highly unlikely to do so. This pushes money from U.S. corporates to those in Europe.
9. The odds of a near-term Fed rate hike are receding. Early last year, the futures markets assigned a high probability to an increase by year’s end. Now these markets indicate that the odds are receding, with a 24% probability of an initial Fed rate increase by June and 51% by July. And these numbers will no doubt be pushed out further as the deflationary effects of the oil price plunge sink in and investors—and the Fed—realize that foreign central bank stimuli amount to Fed tightening, relatively.
After its December policy meeting, the Fed said it would be “patient” before raising interest rates, adding that the overall outlook hadn’t changed much from earlier assurances that its policy rates would stay at essentially zero for a “considerable time.” Fifteen of the 17 policy committee members expect rates to rise this year and their median forecast was for 1.125% in 12 months through December, 2.5% in 2016 and 3.625% in 2017. As we’ve noted in past Insights, however, in recent years they’ve consistently forecast stronger economic growth and quicker rises in interest rates than have materialized.
Of course, the Fed is right in step with private forecasters. The Wall Street Journal’s poll of 49 forecasters (not including us) back in January 2014 found that 48 expected yields in the 10-year Treasury note to rise from 2.9% at that time to an average forecast of 3.5% by year's end. It moved in the opposite direction and ended 2014 at 2.17%, as noted earlier.
We continue to believe it will be years before the Age of Deleveraging ends and, with it, slow growth, and the Fed shifting to selling securities and raising rates. The recent nosedive in commodity prices and deflationary implications will probably stretch out the central bank’s time line.
But what if, contrary to our forecast, the Fed raises its benchmark rate before the Age of Deleveraging is completed? When it hinted at tapering its then-$85 billion in monthly asset purchases in May and June of 2013, Treasury note and bond yields leaped. Nevertheless, these moves were out of keeping with history. Interest rates rose in the post-World War II era up until 1981 as inflation rates climbed, but have fallen since then with receding inflation. After removing these trends, first up and then down, we examined the relationship between the Fed benchmark, the federal funds rate, and the yields on both 10-year Treasury notes and 30-year bonds.
On average, the spillover from federal funds was small, with a one percentage-point rise pushing up the 10-year note yield by 0.35 percentage points and the 30-year bond yield by just 0.23 points. So, we don’t expect a nosedive in Treasury note and bond prices even if the Fed tightens credit earlier than we forecast—unless the 2013 Taper Tantrum marked the beginning of a new relationship. Recall, however, the sage words of Sir John Templeton: "The most dangerous words in the English language are, this time it's different."
10. Postwar babies are aging and this favors Treasurys as older people reduce the riskiness of their portfolios and favor high-quality bonds, despite low yields.
11. Speculators are increasingly short the benchmark 10-year Treasury note in the futures market. If the rally in Treasury prices persists, sooner or later they will be forced to buy back their shorts, adding to demand.
More Treasury Rally Ahead
We expect a further rally in Treasury prices with the 30-year yield dropping from the current 2.75% to 2.0%, perhaps by the end of 2015. If so, the Long Bond would provide a total return of 18.8% and the 30-year zero coupon bond, 24.6%. If the 10-year note yield drops from the current 2.17% to 1.0%, as we forecast, the total return would be 12.4%. These may seem like big gains for yield declines of only about one percentage point, but that’s what happens when yields are low. In any event, we believe that “the bond rally of a lifetime” marches on.
2. Selected income-producing securities, including investment-grade corporate and municipal bonds as well as utilities and other stable high dividend-paying stocks, remain attractive. In fact, with municipal bonds on average yielding more than Treasurys, they are very attractive to bond buyers who concentrate on yields, especially on an after-tax basis (Chart 7). Furthermore, the yields on investment-grade corporates and munis are almost the same, after adjusting corporate yields for the minimum 39% individual income tax rate, and even higher in many states.
U.S. stocks are expensive. The Fed’s largess, which we believe was behind the rally that started in March 2009, is no longer there with the end of QE (Chart 8). The leap in the price-earnings ratio that accounted for 67% of the 29.6% rise in the S&P 500 in 2013 is no longer present, and at 19 at present, it is well above the long-term average of 15.5.
3. Consumer staples and foods. We favor these stocks, but defensively, advocating things that people buy regardless of economic circumstances—utilities, consumer staples and health care—in sectors that also tend to have attractive dividend yields.
4. Selected healthcare providers benefit from the increasing health care needs of aging postwar babies as well as the newly insured under Obamacare. Medical office buildings continue to be attractive as physicians migrate to hospitals from stand-alone practices in view of increasing regulatory costs.
5. Low P/E stocks with meaningful dividends also fit into our defensive category.
6. Small luxuries, things that financially-stressed consumers buy to get the best of what they can afford, also is defensive and benefits from the many Americans and people abroad who still have compressed incomes, including in developing countries. Global consumer products companies like Unilever and Proctor & Gamble are finding that poor people in countries like India with static or even declining wages and little discretionary income will still pay more for fancier soap, shampoo, razors and mouthwash.
7. Productivity enhancers should continue to thrive as slow sales growth and lack of market acceptance of higher raise prices keep businesses focused on cost-cutting and productivity improvement.
8. Japanese stocks remain attractive as the Abe government strives to stimulate economic growth while trashing the yen.
9. The dollar continues to look profitable vs. the loonie, kiwi, Aussie (Chart 9) and other commodity currencies as commodity prices, led by oil, keep dropping along with the deliberately-trashed yen and euro. Virtually all currencies are being devalued against the dollar, which, as the world’s reserve and major trading currency, can’t really be devalued. It’s a matter of other currencies falling against the greenback, the established norm, not the buck rising against them.
The euro looks especially vulnerable as the chasm between the Teutonic North, led by Germany, and the Club Med South, spearheaded by France, continues to widen. Labor reform efforts and other measures to improve efficiency in the Italian government and private sectors continue to meet huge resistance, and the Italian economy is back in recession. Meanwhile, economic growth is trivial and government debt levels huge (Chart 10). Greece is facing another national election with the anti-eurozone Syriza Party showing strength.
We seldom make explicit forecasts for investment themes because we seldom know how far investments moving in our favor will go. In the case of the euro, however, it’s interesting to note that it started out in 1999 with the dollar worth about 1.10 euros (Chart 11). It dropped to 0.85 in May 2001 before climbing to 1.58 in March 2008. Since then, it’s been on a downward trend. With all the problems in the eurozone and ECB President Draghi’s determination to devalue the currency, the euro might well drop back to 1.00, or parity with the greenback this year.
Similarly, the yen could drop substantially from here. Note in Chart 12 that in November 1982, it hit 278 per dollar. That’s a long way from the current 120, and a collapse to 278 would be a disaster for Japan and the whole world. Still, given the newly-re-elected Abe’s determination to trash the yen, it’s reasonable to see the yen dropping to 150 or 200 per greenback. Notice that Abe used his re-election momentum recently to recommend a corporate tax cut from 34.6% to 32.1% in the fiscal year starting in April and to 31.3% in the following fiscal year.
Unattractive Themes
Our unattractive themes list includes 10. Industrial commodities, especially copper (Chart 13), which we love to short. As in 2014, we’re refraining from shorting crude oil because of uncertainty over OPEC actions and the outcome of the Saudis’ game of chicken with weak OPEC producers as well as American frackers.
We do, however, continue to list 11. Natural gas as a short because of the spillover from oil and the abundance created by U.S. fracturing—at least until LNG exports become substantial. It goes without saying that we’ve dropped our North American energy theme on the attractive side.
12. Emerging country stocks and bonds continue to be unattractive, in our view. With developing countries that depend on oil exports in deep trouble and other commodity exporters such as Brazil in doubtful positions, this whole investment sector is under pressure with both stock and government bond prices falling on average of late (Chart 14).
13. Junk bonds (Chart 15) continue to be interesting on the short side, especially those issued by energy-related companies. The rest may well be dragged down as investors flee to safe havens.
A Shock
In past Insights, we’ve explored the Grand Disconnect between slowly-growing major economies and soaring equity markets, propelled by central bank money and, in the U.S., by unsustainable corporate cost-cutting as well.
This gap will get closed sooner or later, either by Fed tightening and the recession that has followed in 11 of 12 similar incidences in the post-World War II era, or a substantial shock that will have the same effect. The resulting recession will no doubt become global, given the already weak state of many foreign economies and financial structures.
We also stated that it will be years before the Age of Deleveraging and slow economic growth are concluded, and the Fed then begins to raise interest rates and shrink or sterilize the $2.3 trillion in excess member bank reserves that have accumulated with QE. So a major shock may occur before the Fed shifts gears toward credit restraint. The obvious current possibility, of course, is the financial fallout from the ongoing weakness in commodity prices, especially crude oil, and the soaring greenback.
In “Past External Financial Shocks and Their Effects” (also in our January 2015 Insightreport), we examine the effects of past shocks on the U.S. economy, going back to the 1973 Arab oil embargo.
The dollar was up over 7% last year against emerging economy currencies, and about $1 trillion in their corporate bonds were issued before the buck surged. So the cost of servicing those dollar debts is climbing, much as in the late 1990s when a similar problem with government dollar issues precipitated the Asian financial crisis that led to defaults in many Far Eastern economies as well as Russia, Brazil and Argentina.
Last year, companies in emerging markets issued almost $280 billion in dollar-denominated bonds to take advantage of low interest costs. Governments have joined this parade but not as extensively as in the late 1990s. Still, total company and sovereign debt issuers had $6 trillion in outstanding bonds at the end of 2014, up four times since the 2008 financial crisis.
As investors retreat from these emerging markets to dollars, local currencies will fall even further. The Indonesian rupeah, Chilean peso, Brazilian real and Turkish lira are near multi-year lows and the Mexican central bank recently spent $200 million to support its peso. The IMF and Bank for International Settlements worry that exchange rate problems could sire corporate defaults and asset price busts worldwide.
In any event, a major shock and resulting recession would shift the investment climate from the current “risk on” to “risk off,” emphasizing what we call the Quartet—Treasurys and the dollar would be attractive as safe havens while equities of all types, be they in developed, developing or frontier markets, would be dumped along with commodities. Interestingly, three of the four members of the Quartet are already on the stage and beginning to play. Treasurys are leaping in price. The dollar is soaring against almost every foreign currency. And commodity prices are plummeting. Only stocks are yet to enter the stage and tune down.

Obama's Economy Is Improving But What About Those Strong Dollar Headwinds? Fed In A Box?

At least Dagny is cheerful and happy!

OUCH! Snopes says this is not so but I think it is still enlightening and poignant!

OUCH Again!

And then how 'bout this in your face messge?  

While Obama is busy making everything free to win more blind adherents to the Democrat Party, maybe Obama could start dispensing free prophylactics.  (See 1 below.)

Succinctly Defining America's Dilemma : Too Many dings!

Commitments expanding

Military capability aging

Deficit rising

Dependency on Government wrenching 

Family structure breaking 

Children born out of wedlock exploding church attendance declining

Middle class shrinking

College tuition debt soaring

Interest rates declining

Energy costs dropping

Energy production increasing

Deflation possibly looming

Borders remaining porous

COL outstripping earnings

Taxes rising

Health care costs up, actual care falling

Race relations polarizing

China's influence expanding

Russia and Putin Invading 

Middle East Imploding 

Iran Weaponizing

America withdrawing, it's influence collapsing

Jihadism beheading

Obama continues dodging, patronizing  denying, lying and incapable of defining and leading

Meanwhile, I am seething while my country is bleeding (See 1a below.)
Obama may claim America's economy is strong and yes, it is better than it has been, but as I pointed out in a recent memo there are clouds gathering on the horizon as well.

A strong dollar cuts both ways.  The recovery has many headwinds and a weaker Europe and China does not bode well for American companies dependent upon exports.  But then, whoever said Obama understood economic. He does understand how to spend money though.

Now think about this.  With slumping corporate earnings can the Fed increase rates making the dollar even more attractive and stronger?   Furthermore, a strong dollar makes energy less expensive for American consumers because the vast majority of oil is priced in US dollar terms.  Just another conundrum for a Fed that eventually wants to repurchase all that debt it issued to save our economy.

So I would argue The Fed is in a box and raising rates will make their problems worse because it will drain money from economies that need capital and send it here which, in turn, makes our ability to export more difficult.

The bond market is responding as yields keep dropping.

The consequences of economic actions never runs in a straight line but again Obama is a politician so economics is irrelevant to him. He just lies, takes credit for everything positive and blames others when things go awry.

Bless his heart! (See 2 below.)
Hezballah escalates and two Israeli soldiers killed in Golan.  If it continues I believe Netanyahu will be compelled to strike back with a vengeance. (See 3 below.)
1)  Obama's 'Free Stuff Army'
By Robert Knight

America's Founding Fathers apparently underestimated the power of promising something for nothing – which has become politicians' mantra.

Fresh from offering "free" health care, "free" phones and "free" food to the masses, Barack Obama has upped the bribery to "free" community college tuition and "free" child care. It's not that the Clintons oppose any of these; they just need to affect moderation in case Hillary runs for president and has to knock back boilermakers again with the good old boys in Pennsylvania taverns.
Since someone has to pay for these expensive, new entitlements to the Free Stuff Army, Mr. Obama has proposed yet another "tax the rich" scheme that, if enacted (which is unlikely) would eventually plunder working-class families. To liberals, that's what tax "reform" is all about.
Over a few decades, the U.S. government has morphed into a gigantic income-redistribution machine, the ultimate mugger.
Since the New Deal, the only serious challenge to the mentality of plunder in both major parties came during the Reagan administration. To true believers like Mr. Obama, the Reagan years were a speed bump on the way to transforming America, and something to pretend to admire to keep the suckers ignorant.
Government is necessary because men are not angels. Its legitimate role is to secure justice by punishing evildoers, and to protect property and individual rights. Government does other things, such as delivering mail and public works – things like roads, water and sewage.
But its main focus has become redistribution of wealth in the name of "compassion" and "equality." Its sheer growth and trillions of dollars of debt coincides with the rise of the Free Stuff Army, whose ranks have swelled exponentially with Mr. Obama's edicts and economic malaise.
In 1850, faced with a tide of sentiment toward socialism, French legislator Frederic Bastiat confronted the left's claims of government superiority with a timeless critique, The Law. In fact, after the Bible, C.S. Lewis' The Screwtape Letters, and Shakespeare, The Law is arguably the most penetrating analysis of human nature.
Bastiat began by echoing truths about God and man that animated America's Founders:
"[G]ifts from God precede all human legislation, and are superior to it. Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place."
Add marriage to that list.
He then explained why governments inevitably fall into redistribution:
"Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property. But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.
"Now since man is naturally inclined to avoid pain – and since labor is pain in itself – it follows that men will resort to plunder whenever plunder is easier than work. When they can, they wish to live and prosper at the expense of others. This is no rash accusation. Nor does it come from a gloomy and uncharitable spirit. The annals of history bear witness to the truth of it."
As such, it is easy to succeed by promising something for nothing – the politicians' mantra. A modern, liberal fiction is that government officials are somehow immune to human foibles such as greed. They are nicer than we are – as long as other people pay for it. The system they have built is functionally Marxist, deploying government force to extract "from each according to his ability to each according to his needs."
Armed with an accurate view of human nature, America's Founders did their best to ensure that man's worst tendencies would not lead to tyranny and that man's God-given talents could flourish. Still, they apparently underestimated the power of something for nothing.
The forces cultivating personal responsibility are the church, the family and the American spirit of liberty, all of which liberals have targeted in a relentless culture war. If you still think the drive to legalize same-sex "marriage" is about marriage, you haven't been paying attention to the leftists' war on normalcy, privacy, religion and – ultimately – freedom. Not satisfied with plundering our wallets, they are plundering society's moral capital.
If the Supreme Court does the dirty deed and institutionalizes a counterfeit, it will force tens of millions of Americans to lie. More power will accrue to those who expand the enforcement machinery of "equality" into all areas of life. Resistance to big government will cost far more than it does now.
Leading the charge in this radical remaking of America is Barack Obama, general of the Free Stuff Army, which grows as the moral foundations crumble.
Bastiat perhaps had someone like him in mind when he wrote 165 years ago:
"There are too many 'great' men in the world – legislators, organizers, do-gooders, leaders of the people, fathers of nations, and so on, and so on. Too many persons place themselves above mankind; they make a career of organizing it, patronizing it, and ruling it.

2) S

Why Can’t He Tell the Truth?

By Ben Stein – 1.26.15
Obamadate/January 25, 2015
Captain’s Log:

I have been observing President Obama for a few days and a number of questions have occurred to me:

1. In the President’s State of the Union address, he bragged about how U.S. oil production has surged thanks to shale drilling. Question for Mr. Obama: Does he not recall that he and his followers have been fighting and harassing the oil companies that are finding and producing all of that oil? Does he believe he deserves any credit at all for acts and successes done by people against whom he has waged war since he was a child?

2. In his SOTU, Mr. Obama bragged that the USA now has the highest high school graduation rate in its history. Roughly 80 percent of entering high school freshmen now graduate.

Questions: Is Mr. Obama aware that in the city where he gave his speech, Washington, D.C., only about 53 percent of high school students graduate? Is he aware that in this country the high school graduation rate in predominantly black cities is on average roughly twenty percentage points lower than for whites? Is Mr. Obama in possession of any data that shows whether the students who receive those high school diplomas actually know anything useful?

Mr. Obama boasted repeatedly about his successes fighting terrorists, not some of whom, all of whom are Islamists. Questions: Did he at any point use the word “Islamic” or “Islamist” in referring to terrorists in his speech? Why not? Who is he afraid of? Why can’t he tell the truth?
Is he aware of the near takeover of the strategically key nation of Yemen by Islamic fanatics? Is he aware of any major setbacks to date for the Islamist terrorists in the Middle East or in Nigeria? If he is, would he make them known? Is there anything stopping the Boko Haram from dominating Nigeria? Is he doing anything to stop them? The Islamic State is presently in the approaches to Baghdad. In what way does this show success in the fight against them?

Five years ago, there were dictators in power through the Middle East. They were awful people but their countries were fairly calm. Now, from Algeria to Pakistan, with the exceptions of Israel and Egypt, much of the Arab world is in total chaos and has returned to primitive times in terms of the absence of law.

Question: In what way does this show success for Mr. Obama?

There is now a diplomatic brouhaha about Benjamin Netanyahu, Prime Minister of Israel, coming to D.C. to address Congress at the invitation of Speaker John Boehner. Mr. Obama is apparently furious that he was not consulted beforehand and was unable to veto the event.

Question: When the President of the United States directly or indirectly calls the Prime Minister of Israel, the only law-abiding democracy in the Middle East “a chicken s--t coward,” as Mr Obama did, what kind of behavior does he expect in return?

(By the way, my pal, N. Visser of Alberta, has pointed out something powerful: while Arabs and their courtesans on the left bewail Israeli bullying of the Arabs, has anyone noticed that almost no Arabs in Israel emigrate to the West Bank or Gaza? They know they have it great in law-abiding, free, prosperous Israel. They ain’t leaving. I wonder if the European Union has ever thought of that.)

Finally, Mr. Obama is President of the United States. He is not a minstrel in a traveling show. The day after his SOTU, he had over to the White House an enormous supposedly comical online weirdo woman wearing green lipstick, shown frolicking in a bathtub filled with milk and breakfast cereal, to ask him softball questions.

Now, I think it’s just great that he has offbeat African Americans interviewing him at the White House. They are citizens, too. But on the day Yemen falls, this is how he’s spending his time? He wants respect as President. Hard to believe he gets it frolicking with this green lipstick creature. Hard to believe he has time for the green lipstick comedienne and not time for reaching a better arrangement with Mr Netanyahu (who is by no means perfect himself). Israel is facing an existential threat from Iran. Sanctions are on the table. This is a huge subject and Netanyahu is coming to town. Can they really not find an hour taken away from Green Lipstick for Mr. Obama to discuss how to prevent a second Holocaust? Or maybe Mr Obama really does think he is a character in a frat house comedy. I guess he sees himself as everything.

But how sad that this delusional little man is our President. And how Mr. Putin must sneer when he considers who he is up against. God help us.

The American Spectator Foundation is the 501(c)(3) organization responsible for publishing The American Spectator magazine and training aspiring journalists who espouse traditional American values. Your contributions are tax deductible to the extent permitted by law. Each donor receives a year-end summary of their giving for tax purposes.
2) Strong Dollar Squeezes U.S. Firms

Rising Currency Takes a Toll on Sales and Profits; Stocks Drop as Capital Spending Slows, Too


The stronger dollar is slicing sales and profits at big American companies, prompting them to put renewed emphasis on cost cutting and cramping the broader U.S. economy.

The currency effects are hitting a wide swath of corporate America—from consumer products giant Procter & Gamble Co. to technology stalwart Microsoft Corp. to pharmaceuticals company Pfizer Inc. Those companies and others have expanded aggressively overseas in search of growth and now are finding that those sales are shrinking in value or not keeping up with dollar-based costs.

The pressure on American firms from the dollar wasn’t a bolt from the blue. P&G, for instance, has been warning of impending damage for months. But the severity of the blow appears to have caught companies and investors by surprise. The Dow Jones Industrial Average plummeted 291 points, or 1.7%, to 17387, its steepest decline in three weeks.Even booming companies are contending with the currency fallout: Apple Inc. reported surging profits Tuesday, sparked by demand for its new bigger-screen i Phones, but it also pointed to the dollar as a drag on results.
Worse, the results were accompanied by fresh data Tuesday that suggests the fall in oil prices and the soaring dollar are rippling through the economy in unpredictable ways. U.S. businesses broadly cut capital spending in the final months of 2014, the Commerce Department said Tuesday, raising red flags about the economy’s ability to sustain momentum amid troubles around the globe.

Orders for so-called durable goods such as cars and kitchen appliances fell 3.4% in December from a month earlier, following a sizable decline in November.

Data on durable goods can be volatile, but the weak numbers prompted some economists to downgrade expectations for growth in the current quarter. Many project that gross domestic product grew at a roughly 3% pace in the final three months of 2014 after expanding at a 5% rate in the third quarter. But first quarter estimates are closer to the 2% range.

“The rising dollar will not be good for U.S. manufacturing or the U.S. economy,” Doug Oberhelman , chief executive of Caterpillar Inc., told analysts and investors Tuesday.
The heavy-equipment maker said a stronger dollar is adding another weight on sales, though its bigger problems are the plunge in oil markets and weaker prices for copper, coal and iron ore. Caterpillar promised further cost cutting in 2015 to offset its weaker markets.

The strong dollar can hurt U.S. companies in several ways. The most typical is the so-called translation effect: Companies’ sales in overseas markets may keep growing in local terms, but they look smaller when converted back into stronger dollars. It also can lead to big mismatches between costs and revenues and make it harder for export-oriented companies to compete.

P&G was hammered by a number of those impacts, as the dollar and a write-down of its Duracell battery business pushed its profit down 31% and its sales down 4%. The company said currencies could reduce its profits by $1.4 billion this year.

Executives outlined the sorts of problems they are facing around the world. P&G is heavily exposed to Russia, for instance, where it sells razors and blades that are made at a Gillette plant in Germany.

The slumping ruble means the company has to jack up prices in Russia to cover the spread, but can’t raise prices fast enough for fear of suppressing demand. Meanwhile, the Russian unit’s bills for those razors—booked in euros—gets bigger if the ruble falls during transit across the border. That sort of damage will force the company to make adjustments to its balance sheet, Chief Financial Jon Moeller told analysts Tuesday.

The company is also exposed to the soaring Swiss franc. P&G’s headquarters for Europe, the Middle East and Africa is in Geneva. The company is a large employer in Switzerland, leaving its business costs in the country much bigger than its sales there.

P&G said the currency impact is largely concentrated in six countries: Russia, Ukraine, Venezuela, Argentina, Japan and Switzerland. It projects the decline in the Russian ruble alone will knock $550 million off its annual profit.

To offset the impact, it is relying on cost cuts including reduced headcount and shifting more of advertising to digital channels, which already account for more than 30% of the total. The company is also raising prices and building about 20 new manufacturing plants, largely concentrated in the faster growing markets, to more closely match its costs and sales. The moves take time, however.
Pfizer said unfavorable moves in currencies over the last year will take a $2.8 billion bite out of its 2015 revenue. Above, multivitamins on the packaging line at the Pfizer plant in Montreal.ENLARGE
Pfizer said unfavorable moves in currencies over the last year will take a $2.8 billion bite out of its 2015 revenue. Above, multivitamins on the packaging line at the Pfizer plant in Montreal. PHOTO: GRAHAM HUGHES/ASSOCIATED PRESS
“We have many things at our disposal, which we are obviously engaged in,” P&G’s Mr. Moeller said on conference call with the media. But, he added, “most of them come with some time lag.”

Absent the currency hit, P&G said its business plans largely remained on track, as stronger performance in developed markets like the U.S. offset some of the challenges elsewhere.

Other companies were hurt as well. Pfizer said unfavorable moves in currencies will take a $2.8 billion bite out of its revenue. Microsoft issued a financial forecast that was weaker than analysts had expected, in part because of effects from a stronger dollar. That sent the company’s stock down more than 9% and wiped out nearly $35 billion in market value.

Expectations for the quarter, already low among investors and analysts, have worsened as the results have rolled in. Analysts now expect companies in the S&P 500 index to post a scant 0.5% in sales growth, with per-share profit gains of 3.3%, according to financial data firm Thomson Reuters. The figures reflect actual results for 119 companies and analysts’ estimates for the rest of the index. As recently as Jan. 1, analysts were expecting sales growth of 1.3% and earnings growth of about 4.2%.

Tuesday’s stock-market tumble was driven in part by fears that the poor results foretell a period in which the dollar’s recent gains will boomerang on U.S. multinational companies by reducing international demand for their goods and services and slashing the value of their overseas earnings.
The seven-month-long plunge in oil prices also continues to weigh on investor sentiment despite the savings consumers are reaping at the gas pump, said traders and analysts.

“The two things everyone’s wrestling with is lower oil,” said Joseph Amato, chief investment officer at Neuberger Berman, “and for multinationals, what impact will a stronger dollar have on sales overseas.”

The bad news on the earnings front comes as economists are grappling with mixed signals about the health of the U.S. economy. While broad data on economic growth and jobs creation were strong going into the end of the year, more recent data has been less certain.

Retail sales also fell in December, posting a 0.9% drop that underscored the limits of relying on cheaper gasoline to fuel growth in spending.

Tuesday’s durable-goods data raised more uncertainty about the outlook for U.S. factories. Japan is in recession, China’s growth has cooled and Europe’s economy is stagnating.

Factories are getting a boost from higher demand for cars and other consumer items. But business investment remains uneven. Tuesday’s report showed orders for machinery fell 3.7% in December following declines in November and October.

“Today’s numbers are stunningly soft, which should pour a hefty pitcher of cold water on those optimistic sentiments regarding business investment in 2015,” economist Stephen Stanley of Amherst Pierpont Securities said in a note to clients.

Reports from manufacturers this week have shown the impact of the stronger dollar.United Technologies Corp. , maker of Sikorsky helicopters and Carrier air-conditioning equipment, slashed its projected 2015 sales by $1.5 billion, to a range of $65 billion to $66 billion, almost entirely because of the effects of foreign-exchange rates—a bigger hit than it had forecast in early December.
Emerson Electric Co. , which makes factory-automation equipment and heating-and-cooling systems, said orders in the three months through December fell from a year ago in part because of the stronger dollar. The company said the dollar’s strength would leave its sales 4% to 5% below where they otherwise would have been this fiscal year.

The reports are still coming in, however. 3M Co. , maker of Scotch tape and Post-it notes, reinforced its reputation as a steady performer in turbulent times by posting a 6.9% increase in profit for the fourth quarter and promising further growth in 2015.

“We have nearly 140 companies to get through this week,” Gina Martin Adams, equity strategist for Wells Fargo , said of the ongoing earnings season. “We’ll have a much better idea as to how things are going at the end of this week.”

Corrie Driebusch, James R. Hagerty and Ted Mann contributed to this article.
2) Hezbollah Escalates Shelling, 2 Soldiers Killed

The IDF confirmed two soldiers were killed when an anti-tank rocket fired from Lebanon hit a military vehicle in the Har Dov area. Mortars also fell in the Hermon region. Several other soldiers were hospitalized and a Spanish member of UNIFIL died of injuries from the crossfire. Israel denied any soldiers were abducted. More on the story at the Times of IsraelJerusalem PostHaaretz, and YNet.