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Mark's Market Blog

5-11-14: N.Korea races towards nukes and ICBMs

By Mark Lawrence

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Markets spend the week continuing to rebalance. The S&P and Dow were relatively flat; the Nasdaq and Russell continue to decline as money, lots of money pulls out of tech and other high flying stocks and moves to boring blue chips. So much money has moved that it's getting hard to have a tech IPO. Some say this is preparation for the Alibaba IPO, which is going to suck multiply tens of billions out of other tech stocks, effecting everyone's price. The Fed continues to print money, as does China, Japan and Europe; the recovery continues on its tepid way; when the rebalancing is done I see the markets continue up. For a while.

S&P 500 November 14 2013 to May 9 2014

All the indices are below their 52 week high, meaning their all-time high, but that's where the similarity ends. Blue chips are only down a bit; tech and small cap stocks are taking it on the chin. The average stock is already in a bear market.

North Korea, racing to commit national suicide, is flying drones over S.Korea. Three of these have crashed and been examined in detail by US and SK forces. This is a clear violation of the armistice. The drones appear to have been built by a Chinese company. China doesn't want to deal with a fallen NK government and the mass immigration they project. SK doesn't want to deal with unification costs that will make the German unification look like a government funded picnic weekend. And NK sees this refusal by their two neighbors to do anything to destabilize the NK government as a get out of jail free ticket. NK is perhaps the world's largest counterfeiter, the world's largest producer of meth, and is behind much of the nuclear program in Iran. Any incursions into NK by US special forces would be seen as highly provocative by China, just as we would never allow China to mess in Canada or Latin America. If NK is allowed to continue on their path, they're going to have a nuclear missile capable in principle of hitting the US within a couple of years. No one, least of all NK, will be certain if it will work, but the threat will still be there. Shortly after that they will most likely have nuclear missiles capable of EMP attacks on the US. EMP attacks are where you set off a nuke 100 miles up in outer space and destroy all transistors for a range of hundreds or perhaps over a thousand miles. Half a dozen or fewer such nukes would put the US back into the 1930s and result in two-thirds or more of our population starving to death within a year or two. Imagine LA with no functioning trucks, trains, planes, ships in the US. In the face of such an attack we would have no choice but to launch against Russia and China or face an invasion. I think allowing rogue states like Iran or NK to develop such capabilities is unconscionable - they could reduce us to a pre-industrial nation (with nuclear submarines) and we would have no realistic options for response. How do you nuke a nation back into the stone age when, save for a few companies in their capital, they already live in the stone age? This is not the Mutually Assured Destruction of the cold war, but rather the onset of asymmetric nuclear threats. I'm nearing the point where I think we should tell China to bring their dog to heel or we will turn Pyongyang into a large glowing crater. I honestly believe our national survival will require an unprovoked nuclear first strike on N.Korea sometime this decade if they continue on their chosen path. Just as Israel's survival may require them to strike Iran.

Thailand, racing to commit government suicide, has just had their supreme court rule that their caretaker prime minister, the otherwise adorable Yingluck Sinawatra, must step down due to appointing relatives to too many high government positions.

Japan, racing to commit racial suicide, has passed an interesting milestone. They now have more pets than children.

Japan has committed to a program of printing wild amounts of money - more than the US is printing in an economy 1/3 our size. And raising sales tax at the same time. . . how's that working out? Not so well. . . industrial purchasing and GDP are both in decline. They're squirting starter fluid as fast as they can and the fire is still going out.

France has been having increasing attacks on Chinese tourists - muggings and theft. Chinese tourists bring serious money into Paris each year. Increased presence by French police have not improved the situation; so apparently France will now let China supply additional armed police to help patrol the tourist portions of Paris.

John Kerry got into huge trouble for saying in public that if Israel does not enable a Palestinian state they will turn into an Apartheid nation - a copy of S.Africa with two types of citizens. I've been saying for 15 years that Israeli arabs with the vote are out breeding Israeli jews and will vote Israel into a muslim nation by 2050, so in my opinion Kerry, in an extremely rare moment, was just speaking the truth. Less than a week after filing complaints with the US about this, Israeli prime minister Benjamin Netanyahu introduced a law declaring Israel a jewish state; if passed this would lay the ground work for either disenfranchising the arab minority or expelling them. I tell my boys frequently, no one ever gets in trouble for saying the sky is pink with green paisleys - you get in trouble for speaking unwelcome truths.

Amazon patented taking pictures of products against a white background. I can't believe they filed for this patent. I can't believe they thought they would ever get it. I can't believe the patent office awarded it. Maybe I'll file for a patent on taking pictures of pretty women outdoors wearing sunglasses.

Women who stay out of the sun and wear sunscreen otherwise have twice the rate of skin cancer and twice the rate of death from any cause as women who sunbathe. Meanwhile, in the last fifteen years cases of rickets have risen fourfold. It turns out tanning is a great source of vitamin D and helps prevent cancers and diabetes.

Speaks for itself, I think. . . next time you reach for a Gatoraid, ask yourself if you would be willing to drink 12oz of water and eat 22 hershey kisses instead. . .

In 2002 Tacoma WA furniture salesman Jason Padgett was severely beaten while leaving a Karaoke bar, putting him in the hospital with a serious concussion and a bleeding kidney. Previous to the beating he was uninterested in academics, never completing 8th grade algebra. Now he can do math and physics - he's a student at U.WA majoring in number theory and with a talent for making drawings illustrating math concepts. Previously I reported on a guy who knocked himself out and woke up being able to play the piano; I offered to beat my readers on the head while sitting at my piano until they were proficient. Now I can extend my offer: I'll also beat you until you're fantastic at math and physics. Memory is not stored in the brain. By the way, this is old news: nearly 75 years ago Harvard professor Karl Lashley trained rats to perform tasks, then surgically removed portions of the rat's brains. After healing, all the rats were able to remember how to perform their learned task, no matter which portion of their brain had been removed.

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