Author Topic: Cuba  (Read 6832 times)


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« on: December 22, 2014, 01:41:36 pm »

      Financial Intelligence Report
The Newsletter for people willing to take control of their financial future

December 21, 2014 
Greetings Friends!
This is today's issue of the Financial Intelligence Report

Contributing Editors: Bob Rinear,  Robert Foster, Ted, Chuck and the gang!

Wall Street Lunacy donated by Janet Yellen, and Central Bankers the world over!

Part 1:  General Commentary
Part 2:  Market Commentary

General Commentary...
The moment the news started hitting the wires on Wednesday that Obama had decided to lift a lot of the embargo/sanctions against Cuba, I instantly had just one reaction...Russia.
Everyone is talking about whether creating closer ties with Cuba is good or bad. Everyone's talking about the fact that Cuba is still going to be a country run by pure socialists, with a horrible track record of helping their own people advance. Our politicians are pushing back, saying that opening the door to Cuba while not demanding more personal freedoms for the people is a giant mistake. Back and forth political posturing.

I think it's all a bunch of hooey.

Consider this for a minute...until Wednesday, was the subject of CUBA on anyone's radar? Was there any hints a year or six months or even six weeks earlier that Cuba was going to become a center of Obama's policy?? Nope. Not a word. The news hit in what can rightfully be called "out of the blue".  So, where did it come from?? What spurred Obama to decide that right now is the best time to reunite with Cuba, put up a new embassy, reduce travel restrictions, lessen import restrictions? Did he find religion or something? Does he really care about the plight of the Cuban people and it was driving him nuts?
Not a chance. This is all about Russia, the military and oil folks. The madmen at the Pentagon want to make absolutely sure we have a say in what Cuba allows on their little island just 90 miles south of Florida. With the US still desperate to push Putin into some form of shooting war, they feared that Russia might try and base some of their long range navy ships in Cuban ports, and possibly recreate some of the cold war military installations that Cuba housed for Russia back in the late 60s, and 70's. Not only that, we've got millions of barrels of shale oil looking for a home, and with Venezuela's troubles, Cuba might be looking for a new supply. Russia wants to be that supply, and the US wants to head that off.
People have such short memories. No one seems to remember that just this past July, Russia and Cuba reached an agreement to open an old "spy" compound on the island. The deal to reopen the signals intelligence facility in Lourdes,which is south of Havana, was agreed in principle during president Vladimir Putin's visit to the island as part of a Latin American tour in late June.
Opened in 1967, the Lourdes facility was the Soviet Union's largest foreign base, yet it was just a mere 155 miles from the US coast. It employed up to 3,000 military and intelligence personnel to intercept a wide array of American telephone and radio communications, but Putin announced its closure in 2001 because it was too expensive - Russia had been paying 100 million  a year in rent. But it wasn't just the rent... the Americans hated it, and for the most part, in 2001, the US and Russian were best buddies of sorts. So Putin closed it.
After Putin visited Cuba in June-July, the Kremlin press service said the president had forgiven 90% of Cuba's unpaid Soviet-era debts, which were not chicken feed, something like 20 billion dollars. This "deal" was obviously part of the agreement to allow Russia to reopen the base. Well as you might imagine, Washington was none too keen on the idea of the Russians once again having a military presence just 100 miles off our coast. But what were they going to do about it?

Do any of you remember the Cuban missile crisis? I was a youngster, but I remember it in my youth. We were "that close" to a full shooting war, and probably nuclear with Russia over the fact that Russia was indeed planning to host nuclear weapons on Cuba. But wait a you know WHY?? Do you know why Russia and the US were inches away from nuclear war in 1962?  Follow along here....
In 1961 an invasion of Cuba was launched called the "bay of pigs".  It was a failed military invasion of Cuba undertaken by the CIA-sponsored paramilitary group Brigade 2506 on 17 April 1961.  It was a counter-revolutionary military trained and funded by the United States government's Central Intelligence Agency.  Brigade 2506 fronted the armed wing of the Democratic Revolutionary Front and intended to overthrow the left-wing government of Fidel Castro. Launched from Guatemala, the invading force was defeated within three days by the Cuban armed forces, under the direct command of Prime Minister Fidel Castro.
Well what many don't know is that Cuba ASKED the Russians to place those nukes on Cuban soil. They feared the US would try again to upset their government with another attack, and wanted the protection that an ally like Russia could afford. The ballistic missiles were Cuba's idea, not Russia's.

Fast forward to today. WE are over in Ukraine, doing damn near anything we can do to start an all out war with Russia. We've sanctioned his country, shut off his ability to use global banking systems, blockaded trade agreements, and overthrew the Ukraine Government to install a West friendly puppet. Russia not being stupid, has not fallen into the trap so far, but has indeed felt the pain. However they do feel the need to build their defenses as rapidly as possible, because it is indeed possible that some Pentagon lunatic will start a hot war with them somewhere.
So it was pretty easy to see back in July that Russia figured that if the US is going to move NATO to their doorstep, breaking agreements that have been in place for 30 years, Russia was going to have to revisit the idea of having bases close to the US mainland. But on top of that, IF Cuba's oil supplies were to get cut off from Venezuela, the Russians would be more than happy to fill that void. A "two for one" win so to speak. When they announced re-opening of the Lourdes facility in Cuba in July, I understood only question was "What would the US do about it?" 

I had expected to see a bit more push back from the US than they actually did. It was a bit surprising to me, considering the history we'd seen over that Island in the past. But now the pieces are starting to fall into place. Since there are no missiles on the island as of yet, we really don't have any legal right to do blockades of the surrounding waters. We really can't even whine too loudly to the Cuban Government about the Russians opening their listening facility there. Does not the US have major businesses and installations owned by say the Chinese in country? We certainly do. So Cuba has the right to have Russian installations on their territory.
The only thing we can do is to play the economic angle and try and get the Cubans to be so buddy-buddy with us that they would not allow Russian military weapons of any real threat to be moved to the island.  We are throwing open the arms of friendship NOT because Obama gives two craps about Cuba. He's doing it to try and make it so economically "wonderful" for the Cubans, that they side with us if/when Russia tries to move heavy military to their base.
I really do wish our Government had the best interests of the Cuban people in mind with this new push for friendship, I really do. I don't know a lot of Cuban people, but the ones I know are darn good people, and they tell me of the poor living quality of their relatives back home. The standard pay is 20 bucks, and the highest paid jobs are bartenders who get tips from the European travelers; and the artists that Cuba allows to travel out of state, they're thought of as "ambassadors" of sorts. Most have to resort to some form of black market dealings just to survive.
 But no folks, I don't think so. Obama didn't wake up one day and say "Ghee, after 6 years in office the one thing I really wanted to do was get the Cuban people more rights".  Nope. Sorry.  He saw a way to maybe move some of the shale oil out of the States and down to Cuba, which takes pressure off them as Venezuela is in deep trouble, AND keep Russia from becoming a bigger supplier while moving ships into their ports.

This is a military operation, covered in humanitarian clothes. Haven't we seen that movie before? You bet we have.

The Market...

700 points in two days. Normal right? Maybe in some parallel universe somewhere, but's not normal. Yet that's exactly what happened after they got the green light to go crazy from Janet Yellen.
We don't pull any punches here at IY. I expected the market to herk and jerk itself higher into year end. I did NOT expect to see a 421 point gain on Thursday. That's so far out of the ordinary that it's only happened a handful of times in history. 
Sure you can cite "short covering" as being partly responsible, but it was much more than just that. We saw hedge funds that were woefully behind the gains the indexes have made, put in huge basket orders. They wanted to look "smart" for their year end statements and they didn't care about the risk, they just wanted in. Oh and don't forget the Fed's. According to the NY Fed's Mr. Dudley, the Fed is indeed active in controlling equity prices. Evidently the Fed's wanted prices "up" and nothing was going to stop them.
The bottom line is that we went "up" and we went up in a big way. It was spectacular to watch, although it was so "over the top" that even the most bullish of bulls were a bit embarrassed by it. How "in your face" can you get?  The week before we LOST 800 points, and just because Yellen told them they could be "patient" we get it all back? What happened to the so called fundamentals?? Likewise, the week before the big boogey-man was "falling oil". Yet we gained the 421 points while oil and oil related stocks were soaring. So much for that theory.

We figured on something of a Santa rally and it seems to be in place.  But we're a tad early. In the literal terminology, the Santa rally is actually the last few trading days of the year and then the first 5 or so of the new year. But as everyone trips over themselves to be involved, it tends to appear earlier each year.

Friday the action was a bit more muted with a lot of the day spent hugging the flat line. It was a big options expiration day and volumes were high, along with the fact that the S&P was going to be re-balancing at the close. So we did see some peculiar movement here and there. But no one cares about the inner workings, all they care about is "is the market up or down?"  It ended the day "up".
Okay so what happens now?   We close at 1 pm on Wednesday and of course they're closed on Christmas day the 25th. With next week being a Holiday shortened week, and a ton of upper level traders starting their Holiday this weekend and not even manning the post all week, we'll probably grind sideways and slightly higher. Sort of a consolidation of the past few days.
So that's our guess for the new week, a sideways pattern, a couple red dips that amount to nothing, and small pushes higher.  We're currently in NBR, CSCO and EA, and looking to possibly add more oil/energy related issues if the rebound holds.
I will be posting a Newsletter on Wednesday evening, but being Christmas Eve it's not going to be all that much. So let me take a moment now to wish you all the best! I hope Santa brings you your favorite wish, and I truly hope you get to enjoy friends and family you haven't seen for a while. I'll see you all Wednesday!

PS.. If you'd like to see the exact stocks/options/metals/ETF's and 401K moves we will be looking at for this week, please consider becoming a member of the "Insiders Club" located here: Click Here


This newsletter is for educational purposes ONLY.


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