Terror Trade (Echoes of 9/11)
The Terror Trade (We’ve Seen This Movie Before)
As the saying goes, never believe a rumor until it’s been officially denied…
Two American academics issued a study this week turning up some hinky stock-market activity in the days before Hamas launched its attack in Israel back on Oct. 7.
New York University’s Robert Jackson Jr. and Columbia’s Joshua Mitts uncovered significant levels of short selling — bets that share prices would fall.
"Days before the attack, traders appeared to anticipate the events to come," the researchers write.
They examined data from FINRA — the U.S. financial industry’s self-regulating body. They found short interest in the iShares MSCI Israel ETF (EIS) "suddenly, and significantly, spiked" on Monday, Oct. 2 — six days before the attack.
Likewise, they found a “dramatic” increase in short selling of Israeli securities on the Tel Aviv Stock Exchange.
The volume of activity “exceeded the short selling that occurred during numerous other periods of crisis" — including the 2008 financial crisis, Israel’s 2014 attack on the Gaza Strip and the COVID-19 pandemic.
"Our findings suggest that traders informed about the coming attacks profited from these tragic events,” write Jackson and Mitts.
The official response from Israel amounts to la, la, la can’t hear you.
It seems Jackson and Mitts did make one flub in the course of preparing their 66-page report. In evaluating the short position in Israel’s biggest bank, Leumi, the researchers cited the wrong denomination of Israeli currency — a mistake comparable to confusing cents and dollars. The researchers tell the New York Post they’ve corrected that portion of their paper.
But on the basis of that one oversight concerning one block of trades, the Tel Aviv Stock Exchange has dismissed the entire 66-page report as “inaccurate” and “irresponsible.”
And according to the BBC, the Israeli Securities Authority has already dropped its investigation — concluding there is no evidence that investors profited from foreknowledge of the attacks.
We’ve seen this movie before: It’s exactly the same playbook U.S. authorities ran after the 9/11 attacks in September 2001.
The attacks took place on a Tuesday morning. The previous Thursday and Friday, something funky was going down in the options markets.
Paradigm Press macroeconomic maven Jim Rickards recounted the story in his book The Death of Money: “On Sept. 6 and 7, option bets that United Airlines stock would fall outnumbered bets it would rise by 12-to-1. Exchanges were closed on Sept. 8 and 9 for the weekend. The last trading session before the attack was Sept. 10, and on that day, option bets that American Airlines stock would fall outnumbered bets it would rise by 6-to-1.”
There was no news to trigger that sort of action. And there was no similar action in the other airlines like Southwest or US Airways — only United and American, the ones whose jets were hijacked.
“Seasoned traders and sophisticated computer programs recognize this pattern for what it is,” Jim wrote — “insider trading in advance of adverse news. Only the terrorists themselves and their social network knew that the news would be the most deadly terrorist attack in U.S. history.”
The 9/11 Commission dodged the issue, saying the feds uncovered “no evidence” anyone with advance knowledge of the attacks profited.
The parallels are stunning: Overwhelming evidence, financial and otherwise, that a plot was being hatched… total failure on the part of investigators to connect the dots… a shocking level of death and destruction from the plot… and a massive overreaction that plays right into the hands of the attackers. No one ever learns…
It’s Not “Peace on Earth”... But It IS Sub-$70 Oil
The big story in the markets today is crude — down nearly three bucks and below $70 for the first time in over five months.
It’s Wednesday, the day the Energy Department issues its weekly inventory report. No real surprises in crude, but the report does show a substantial build in gasoline stockpiles — rising to what’s more or less normal for this time of year.
But the sell-off was underway even before that report was issued at 10:30 a.m. EST. It’s not just a one-day inventory story.
If it wasn’t obvious before, it is now: The geopolitical “risk premium” is coming out of the oil price.
As we mentioned four weeks ago, the desire is waning in Washington and Brussels to keep pouring money down a bottomless pit called Ukraine.
That’s even more the case now: When perpetual warmonger Sen. Lindsey Graham (R-South Carolina) does a 180 and demands funding for the border before Ukraine — “I’m not helping Ukraine until we help ourselves first,” he told CNN Sunday — you know the worm has turned.
Meanwhile there appears to be little appetite by major powers in the Middle East — not Saudi Arabia, not Iran and not Turkey — to stoke the current conflict beyond the confines of Israel, the West Bank and Gaza.
Thus, oil is quiescent. For the record, $65 marks the bottom for the oil price since Russia invaded Ukraine in early 2022. At under $70 we’re not that far away…
Meanwhile, the major U.S. stock indexes sit nearly unchanged from yesterday’s close — the S&P 500 at 4,565. (It’s also nearly unchanged from this day two years ago.)
The sideways action this week is no surprise to Greg Guenthner of Paradigm’s Trading Desk advisory: “The market posts a historic November rally. Now it's December and the screws start to twist a little. It makes sense. The market's punishing folks who got into the rally late -- a phenomenon you'll see a lot in the middle of big moves.
“The market needs to keep traders honest, so we can’t expect it to move in a straight line without shaking some branches every once in a while — even during a melt-up move.”
Gold has added a few bucks to sit at $2,026. But silver is sliding — indeed, hanging onto the $24 level by closely cropped fingernails.
After racing past $44,000 yesterday, Bitcoin has pulled back slightly below that level.
Truth-Telling at a UN Climate Conference? Say It Ain’t So!
Gee, this isn’t the level of candor you’d normally expect from a United Nations climate conference.
Here we are, one more sign that we’ve reached Peak Green — the beginning of the end of the climate-change hysteria.
Last week, we noticed how General Motors announced plans to take some of the cash it previously intended to plow into electric vehicle development — and use it instead to buy back shares. We also took note that the governor of blue-state Connecticut withdrew a proposal to ban the sale of vehicles with internal-combustion engines come 2035.
This week, the 28th edition of the United Nations climate change conference — aka COP28 — descended into farce.
The signs were already there long before the conference was underway. For one thing, the host for this year’s event is the United Arab Emirates — one of the top 10 oil-producing countries.
And the president for this year’s event is Sultan Ahmed Al Jaber — CEO of the state-owned oil company ADNOC.
Late last month, Al Jaber made some eye-opening remarks during an online panel hosted by Mary Robinson, former UN special envoy for climate change. For whatever reason, the remarks didn’t come to light until they were reported by The Guardian last Sunday — at the very moment that COP28 attendees began to converge on Dubai in their private jets.
“I’m not in any way signing up to any discussion that is alarmist,” said Al Jaber.
“There is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is what’s going to achieve 1.5 C.” — i.e., to limit global warming to 1.5 degrees Celsius, the lodestar of the climate-change obsessives.
Then he doubled down: “Please help me, show me the road map for a phase-out of fossil fuel that will allow for sustainable socioeconomic development, unless you want to take the world back into caves.”
Hear, hear. As we’ve said for years now, that’s one of the core issues when it comes to “climate change.” The transition to green energy comes with the implicit promise that Westerners can retain their first-world lifestyle — except in those occasional moments when the mask comes off and it turns out that, yeah, we’re all supposed to be packed like sardines into urban high-rises with public transit the only option for getting around.
As for how China, India and the rest of the Global South are supposed to attain a first-world lifestyle without fossil fuels — that part gets ignored altogether.
Al Jaber has done the world a good turn by calling BS on the whole ruse.
Of course, the disclosure of Al Jaber’s remarks prompted much pearl-clutching among the purveyors of conventional climate wisdom.
From The Guardian’s story: “The comments were ‘incredibly concerning’ and ‘verging on climate denial’, scientists said, and they were at odds with the position of the UN secretary-general, Antonio Guterres.”
But as colleague Sean Ring wrote in yesterday’s Rude Awakening, the contretemps “highlights a persistent issue in international climate discussions: the gap between rhetoric and action.”
Starting with the 1992 “Earth Summit” in Brazil and continuing to the present day, “a commitment to ditch fossil fuels has never been solidified in a final pact,” says Sean. “And it never will be because the UN is toothless.
“This ongoing failure underscores the complexity of balancing economic, political and environmental priorities in a world still heavily dependent on fossil fuels.
“It also explains why Greta Thunberg never protests in China.”
“Investors should have no fear for the future of oil and gas,” Jim Rickards wrote yesterday to readers of The Situation Report. “They’ll be with us for decades to come.
“We are witnessing the collapse of the climate alarm and EV narratives. The climate alarmists are losing the battle economically (their solutions are more costly than oil and gas energy production), logistically (EV charging will collapse the grid) and scientifically (it's clear that normal climate fluctuations have nothing to do with CO2, which is a trace gas with no ascertainable impact on climate).
“These trends will continue to the benefit of oil and natural gas companies.”
Even if oil prices fall — as they are now (see above) — major producers like Exxon and Chevron can grow their profit margins, because “costs can drop faster, and large efficiencies are now being realized through the implementation of recently announced mergers and acquisitions.”
Oh No, Now a Recession Is a Sure Thing
We present the following with no further comment…
Mailbag: Apology Demanded
After a passing mention of the blatant market manipulation in gold’s steep tumble from record levels Sunday night, we heard from a longtime reader — and critic…
“Quoting Ed Steer, are ya? Now, isn't that quite the change from when you were so insolently dismissive of anyone who told the truth about the obvious manipulation of the gold futures market by ‘Da Boyz?’
“I know Rickards set you straight. That’s nice, but some of us are still waiting for a long overdue apology. You ridiculed us. I was likely living in my mother's basement, dreaming up conspiracy theories. That at a time my mother was in a nursing home, nearing 100, and I was spending hours a day with her. Not exactly the ‘basement’ and I didn't appreciate the slur.
“Still waiting for that apology but I won't hold my breath. I understand that pretty much nobody takes any responsibility for unwarranted attacks once the truth makes itself clear — clear to even the most venal and dimwitted.”
Dave responds: I dimly remember making that crack some years back. There might have even been a mention of boxer shorts and Cheetos. If it cut too close to home at a challenging time in your life, my bad.
I still don’t know if there’s any good to be achieved by (for instance) analyzing the Commitments of Traders reports to identify smoking-gun evidence of manipulation. However abundant the evidence is, no one’s doing anything about it. JPMorgan Chase CEO Jamie Dimon happens to be testifying on Capitol Hill today; rest assured no one’s going to bring it up.
The only thing that will overcome gold manipulation is the forces of the free market — something that’s inevitable but not necessarily imminent.
It really does come back to Marc Faber’s truism from over a decade ago. He was a skeptic about manipulation, but it’s hard to argue his point here.
In the end, we’re all on the same team. Keep stacking!
Managing editor, Paradigm Pressroom's 5 Bullets