mdef metals defense energy food

What is MDEF™ Investing? Strategy before tactics. Strategic investments dictate tactical actions in the Metals, Defense, Energy & Food sectors.

- Jeffrey C. Borneman

Demand News

The 2015 Propaganda Award Goes To ...

Jeffrey C. Borneman | March 13, 2015

Mr. Robert Reich, with his completely vapid proclamation: "The critical choice is between the 'free market' or 'government.' Baloney. The free market doesn't exist in nature. It's created and enforced by government," (Salon). Mr. Reich is a cog in the economic propaganda machine, the purpose of which is to compound the financial illiteracy of the average American. But why is this important?

Mr. Reich's statement is not just factually false; it is purposely crafted to placate the ignorant and bolster support for government intervention and regulation. The quote is the second of three comments he made in "The 3 Biggest Myths Plaguing the U.S. Economy". Reich gets a pass on the first comment but taken as whole (below), they demonstrate the extent to which generations of falsehoods have been promulgated.

Mr. Reich's Answer to Myth Two was: "Baloney. The free market doesn't exist in nature." Really, Mr. Reich? You would have us believe that free trade or free markets cannot exist without some catalyst other than need and opportunity? That free markets cannot organically develop in "nature"? Mr. Reich demonstrates he knows nothing about the synergies of DEMAND and supply - the attraction of capital to meet DEMAND for profit. This is akin to declaring that gravity does not exist in nature.

Here we must ask, is Mr. Reich saying no free markets have everdeveloped spontaneously? While it is true that the size of government dictates the extent of control of trade, this doesn't mean free markets do not/cannot exist in nature. Mr. Reich must be addressing today's global markets via crony-capitalism, as we know free trade existed throughout human history. His statement is reminiscent of the now infamous "You didn't build that ... " line from Elizabeth Warren. This leads us to his real point in "Myth Two" - a stark declaration that justifies abuse of power:

Reich adds, "[The free market is] created and enforced by government". Simply stunning.

In fact, following Mr. Reich's reasoning, government is also outside of nature. The logical extension of his first claim that "the free market doesn't exist in nature" is that today's markets are the creation of a magical and benevolent government. It is here that any literate adult would, after straining to comprehend Mr. Reich's paradigm, simply walk away from a fool.

The adult knows that government "creates" nothing but rather injects itself into the free market. The examples are legion: Set the rules for winners and losers; establish barriers to entry; and create tax laws and loopholes, to name just a few common laments. However, by "enforcement" government steals an individual's production. In Reich's world, government is then free to claim all production for itself.

Government becomes the stork that moves on to another's nest and claims the eggs for itself. She cannot produce eggs of her own so will claim those of others. The stork is now both the mother and "the enforcer" is she not? Does she keep the chicks in line? Feed them and teach them the ropes? What if she decides to "unmake" one of the chicks due to her dislike of it - what if it is an ugly chick, misbehaves, or the nest becomes overcrowded?

Herein lies the danger in Mr. Reich's propaganda. He echoes and promotes a dangerous thought pattern which investors will recognize immediately: If government convinces the citizenry that it creates free markets, through that same power, government is then free to un-create a market by force. This is not what Mr. Reich meant with his comment "created and enforced." He would have us believe government's benevolence holds the citizen's highest achievement as its goal to justify such rampant power and choice.

The evidence of government's power of destruction is now hard to miss: The efforts to destroy the once free markets of coal; the limiting of C02 production and the EPA's attempt to own-by-default all waters including streams and puddles (even rainwater); shutting down farmers markets, etc. All of these are efforts to unmake free markets. What is of particular note to investors is that "clearing of the nest" efforts are manufacturing scarcity in the critical areas that investors should fear: Water, Food and Energy.

The fact that Mr. Reich boldly attributes God-like status to government to "create" a free market is beyond staggering but the investor must realize that he parrots only what Power wants repeated to the citizenry until it is believed. The true irony is that government owns this current economic crisis, and the levers it throws only increase the need for further crony-capitalism (control) - this is why Reich's propaganda is important now. The propaganda machine is masking the manufacturing of scarcity and the citizen is meant to look to government for answers.

To the savvy investor his claims drip with irony: We know government (the benevolent creator of free markets) cannot create DEMAND (growth) no matter how many levers of the fiscal/monetary machine it throws. As we await Reich's next claim – perhaps that government created nature - we should remember the virtues of a truly free market are anathema to the vices of interventionism and storks.

Here is the essential point: Investors should take care to note that two critical market sectors of MDEF™ are center-stage in Reich's comments and that manufactured scarcity is the goal. If you want to know more about how the MDEF™ Investing strategy is positioned in this, or other geopolitical possibilities, please contact us directly.

Read the Original Article

The 3 biggest myths plaguing the U.S. economy
Salon Original Article Date: 2015-03-12

The Effect of Inflation On DEMAND

Jeffrey C. Borneman | July 13, 2014

The premise of the MDEF™ Investing strategy is to own companies that are best positioned for a period of rising prices and the downward spiraling of employment. In other words: MDEF™ takes advantage of the pivot by owning the things we need. Gallop's new poll agrees.

Gallop says: "They’re (consumers) spending more on things they have to buy, and in many instances they’re spending more in these categories because prices have jumped."

Some investors are still too focused on "the future" and the next-generation tech-toys now stamped-out by the quarter. Households are in fear - that is a given - but how do they act while "in fear?" 

Gallup found that “the increasing cost of essential items is further constraining family budgets already hit hard by the Great Recession and still reeling from a stagnant economy ... Hence, the less essential the expense, the more it got cut."

Investors must let that statement sink in ... The consumer - the engine of the US economy - is now beginning to cut all non-essentials from their budget. Therefore, earnings for non-essential companies will (must) contract; while earnings for the essential companies must rise (due to Inflationary pressures and manufactured scarcity). Add the real fear and threat of a geopolitical unraveling (war) to Energy prices and the fear becomes paralyzing to some. 

Do contact me directly to discuss how MDEF™ might best position your portfolio for the DEMAND pivot we are witnessing. The quotes above shines light into the mind of the US consumer - here's another (full article follows):

Americans who are struggling to make ends meet, and who cut discretionary spending in order to pay for essentials, form a large part of the middle class.

Read the Original Article

Gallup Slams Lid On Hopes for US Economy
ZH Original Article Date: 2014-07-13

JPM: US Economy In Freefall

Jeffrey C. Borneman | July 8, 2014

JPM is so quick on the gun it hurts. On the heels of a horrid Q1 GDP, the boys at JPM literally cut the full-year US GDP forecast in half. This does not bode well for DEMAND outside the essentials addressed in the MDEF™ Investing strategy ...

The question for investors is: What will this do to DEMAND (of stuff and services)? This is not the complicated issue the talking-heads make it out to be. 

Certain DEMAND will always be met regardless of the economic condition (MDEF™) while other DEMAND is fluid and depends on consumer's emotions. In my talks I reference the consumer's choices in different cycles of the economy and use the iPhone, McDonald's and Tiffany's as examples. Today's Samsung report was very close to home re DEMAND for non-essentials.

We are entering a time that the confluence of high pump-prices resulting in ever-worsening unemployment and the incessant money printing (all Inflationary) that DEMAND for non-essentials literally ceases. The JPM article below is warning us of this very issue ... A wise investor will combine this knowledge with an understanding of the geopoliticial chess game of warfare and you are left asking: Where will all the investing capital go in the future?

Here's a money quote from JPM (full article follows):

JPM has just followed with a revised GDP forecast. Its latest (and certainly not least) prophecy for the full year GDP: precisely one half of what it expected 6 months ago, or just 1.4%, following a cut to Q2 GDP to 2.5% from 3.0% (which means negative growth for the entire first half, something in a less insane world would be called a recession), while keeping Q3 and Q4 GDP miraculously at 3.0% for both quarters.

Read the Original Article

Collapse of DEMAND or Why MDEF™

Jeffrey C. Borneman | June 25, 2014

Today's revision of US Q1 GDP to a negative 2.9% (originally +.01%; revised to -1%) was not only predictable but expected. More and more analysts will be forced to admit that government's seizure of health care and increased Energy prices are the defining issues.

Businesses spell government intervention thusly: F-E-A-R. Fear causes the seizure of capital producers which only freezes citizens propensity or ability to pay 'for things.' That's it. Nothing more simple than Econ 101. The ACA is killing general DEMAND as the most disruptive realignment of capital in America's history, and its ramifications are neither fully implemented or understood. Watch for calls to continue and increase QE (something I predicted in January 2014) as the economy "just isn't strong enough to stand on its own." Any additional QE can only exacerbate Inflation pressures further. Watching how Q2 GDP numbers are massaged (revised) will be a lesson in stretching the lexicon. 

Note the money quote below (full article follows) and understand that $6.4B equates to an evaporation of $71M per day, every day, for 90 straight days. When the average citizen cannot afford the new itoy or is too worried to take a zero interest rate car loan (unmet DEMAND), they will spend money on the basics: Metals, Defense, Energy and Food (MDEF™). If you want to discuss if the MDEF Investing strategy is appropriate for you, do contact me:

instead of contributing $40 billion to real GDP in Q1, Obamacare magically ended up subtracting $6.4 billion from GDP. This, in turn, resulted in a collapse in Personal Consumption Expenditures as a percentage of GDP to just 0.7%, the lowest since 2009

Read the Original Article

Here Is The Reason For The Total Collapse In Q1 GDP
ZH Original Article Date: 2014-06-25

How To Fix The DEMAND Problem

Jeffrey C. Borneman | June 19, 2014

It's rare I say "I wished I'd written that," but today Paul Driessen from Townhall literally nailed it concerning the EPA's effect on DEMAND.

Investors should know that money does not make the world-go-round: DEMAND does. Money (capital) always chases DEMAND. General DEMAND for non-MDEF™ goods and services, both at home and abroad, CAN NOT return to anything close to normalcy under the rules and regulations by this EPA - and it's not done yet. Do I think the EPA will relent (retreat) on any issue or conform to the laws passes by congress? No, I do not. Businesses do not see any EPA accommodations either and the results can be seen clearly in the MDEF™ Investing strategy performance. Contact me to discuss DEMAND in general, or performance in particular.

Here's one money quote from a must-read (full and factual article follows):

Those who control carbon control our lives, livelihoods, liberties, living standards and life spans. It is essential that EPA’s climate and pollution data and analyses reflect the utmost in integrity, reliability, transparency and accountability.

Read the Original Article

Fixing Our Dictatorial EPA
Townhall Original Article Date: 2014-06-19

IMF Warns US - Very Serious Inflation Implications

Jeffrey C. Borneman | June 16, 2014

Inflation is the goal. Let's all say it together: INFLATION is the GOAL. The IMF was established to create a new international monetary system (from the ashes of WWII) that would stabilize currency exchange rates without backing currencies entirely with gold. That's it ...

Mission Creep

The IMF now see fit to dictate both monetary and fiscal policy in its member states (180 at last count). Today's comments by IMF Chief LaGarde began by lowering the 2014 US GDP estimated growth rate from 2.8% to a mere 2% (she's late to the party), and suggesting (not dictating yet) the US increase its minimum wage, increase infrastructure spending and limit (eliminate) itemized deductions. This is far, far beyond the IMF's original mandate and would be comical - unless our leaders agree. The US has encourage the IMF mission creep since 1946 and now the IMF guns are pointed at it.


If any of the IMF "suggestions" are acted upon, it will introduce the next leg up in the Inflationary cycle. The cycle is simple: Capital always chases DEMAND so reduce DEMAND by high Energy costs which causes DEMAND for goods and services to contract resulting in higher unemployment. Capital seeks a return so bids up all stock prices: essentials and non-essential alike. Tax revenues decline which cause a further strain on government services provided now by borrowing/printing, which pushes Inflation higher. Consumer DEMAND dwindles for non-essentials as consumers are forced to choose between need and want. And this is the Inflation cycle the IMF (and NYTs) sees as necessary to maintain the status quo. It is helpful to stop here and understand that world wide DEMAND is weak (or negative) based on US consumer weakness; and all Inflation of Energy and Food prices in the US are exported to poorer countries who have limited or no choices to adjust. World history is replete with examples of what people do when hungry. 

Investor Options

If you noticed above the culprit of dwindling DEMAND is high Energy prices. I've stated before that Energy prices cannot be allowed to fall (too many countries are reliant on high Energy prices for military and social needs). The USD, although not backed by a Gold standard, is in fact the backed by Energy. It is not surprising the US will not allow a Manhattan-like project to easily produce its own Energy as fossil fuel in the ground is understood as money in the bank. And, the cheaper the Energy, the weaker the USD. The MDEF™ Investing strategy is based on an understanding of these (an other) factors. If you'd like to know more about MDEF™ Investing; its performance and management in this cycle, contact us directly.

Here's a money quote from ZeroHedge (full article follows) - spot the IMF hubris, low Inflation comment and the hint the US Fed is overwhelmed:

The Washington-based IMF now sees the world’s largest economy growing 2 percent this year, down from an April estimate of 2.8 percent. The IMF left a 2015 prediction unchanged at 3 percent, and said it doesn’t expect the U.S. to see full employment until the end of 2017, amid low inflation. For the Fed, the forecast means “policy rates could afford to stay at zero for longer than the mid-2015 date currently foreseen by markets,” the fund said in its annual assessment of the U.S. economy.

The Trajectory of DEMAND Via Employment and GDP

Jeffrey C. Borneman | June 4, 2014

Demography is to Destiny as DEMAND is to employment and GDP. Without a major catalyst like baby-booms, a country (and its economy) withers. So with DEMAND, employment and GDP: no catalyst for DEMAND necessitates decreasing DEMAND.

Today's ADP print of 179K private sector job growth shows no sign of the promised bounce in hiring. This doesn't portend well for Friday's BLS print. Couched in the econom-speak meant to distract the average American, we're told how "moderate" growth has yet to "break out from the pace of growth that has prevailed over the last three years.” Let me translate this: DEMAND for employment is on a three-year (or more) decelerating trajectory because DEMAND for goods and services is decelerating. America is by no means alone in its economic trajectory. What America and, by extension, the world needs is a catalyst to DEMAND to jump start employment. This is not possible with pump-prices at $4+/gal. 

Investors have the best of memories and are seeing today's employment numbers through the lens of the just-revised Q1 GDP print of negative one percent (this was with the additional ObamaCare spending). Knowing this is an election year and the infusion of $1T of fresh budget money, we may eek out a flat year but the "R" word (recession) is clearly back on the table. Even with additional stimulus, but absent a true catalyst, DEMAND can only continue its downward trajectory. Here's the best money quote with graphs (full article follows):

Rubbing salt in the wound of recovery, April's data was revised downward. It was so bad, even the permabullish Mark Zandi was unable to spin the data: "Job growth moderated in May. The slowing in growth was concentrated in Professional/Business Services and companies with 50-999 employees.

Read the Original Article

Massaging The IMF (DEMAND) Numbers - You Can't Be Serious

Jeffrey C. Borneman | June 2, 2014

Our government is wonderful at very few things. Massaging economic numbers is one of them. Today's two revisions merely shows the memos don't get around fast enough.

Yes, it's amateur hour again at the ISM as the first print of May ISM came in at 53.2 - that was an 'unexpected' drop from the April print. A drop, however just won't do, as America is on the rebound and confidence to borrow and spend (in that order) must be bolstered. Someone jumped the shark and restated the May ISM at 56.0 - there, that's up and somewhat believable, right? Nope, someone else thought that too optimistic and lowered the ISM print to 55.4. It's good to know Goldilocks got her porridge just right in the end. What is an investor to take away from this? That DEMAND is continuing to wane and the numbers must be fudged. If the American economy were truly in any rebound mode, the ISM would be printing in the high 60's and with no need to fudge. Investors: it's imperative to know now the market sectors that will always be both in DEMAND and, in times of turmoil, will be in even greater DEMAND. This is why the MDEF Investing strategy exists. Here's the money quote (full article follows):

Remember: when manipulating data for "seasonal adjustments" you may at least want to fudge all of it, not just those cherry-picked components that help you goalseek a number that does not anger the gods of centrally-planned stock markets.

GDP Officially Negative for Q1 ... Lack of DEMAND

Jeffrey C. Borneman | May 29, 2014

"Aside from spending on services, consumer demand for goods cooled from the end of 2013 ... " This is the comment investors must understand in gauging the economic direction for the balance of 2014. 

According to Moody's, we're not to worry too much about the decline. After all, it was the weather, and the weather is temporary. Excuse the impertinence but the world's largest economy is now in negative territory. Public companies are piling up the profits and so returning value to shareholders in one of three ways: Special dividends, increased dividends or stock buy-backs. As DEMAND for products and services wane, companies are left with only the merger and acquisition (M&A) path to growth. If Q2 prints a negative, the US is officially in recession. Perhaps then we will be allowed to say the recession of '08 never ended. The MDEF Investing thesis notes that countries often turn to war to deflect attention away from gross fiscal mismanagement. Here's another money quote to ponder (full article follows):

A pickup in receipts at retailers, stronger manufacturing and faster job growth indicate the first-quarter setback will prove temporary as pent-up demand is unleashed. Federal Reserve policy makers said at their April meeting that the economy has strengthened after adverse weather took its toll.

Read the Original Article

Killing DEMAND One EO at a Time

Jeffrey C. Borneman | May 28, 2014

June 2 is the expected release date of the new EPA mandates that promise new, costly and useless Clear Air Act compliance.

Voters may remember the Cap 'n Trade legislation pushed by the administration died in the US Senate. Undeterred, a mandate was handed to the EPA, effectively performing a pivot around the congress. The new EPA "rules" will mean loss of generating capacity, jobs, higher utility bills and a siphoning of capital for a failed Green agenda. No one knows the true losses the US economy will suffer, but seeing what must come through the eyes of decreasing DEMAND for goods and services, is a good place to start. Here's the money quote (full article follows):

The administration is focusing on an approach that would let states set up their own systems to achieve mandated cuts, including linking into existing cap-and-trade networks ...

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Chamber Study Predicts Obama Climate Rule Will Kill Jobs
Breitbart Original Article Date: 2014-05-28

This is Real DEMAND in Energy - A Home Grown Qatar

Jeffrey C. Borneman | May 28, 2014

"As an economist, I can only say,'Wow. Holy Cow,'" said Loren Scott, a Louisiana economist who has studied the state for 40 years. This is the next move of "perpetual check" in the geopolitical Energy chess match. 

A fascinating history combining DEMAND, necessity and nefarious people converge in Louisiana to create one of the largest engineering projects since TVA. And the Sasol project is just one of many: "In all, some 66 industrial projects—worth some $90 billion—will be breaking ground over the next five years in Louisiana ... " This is the kind of project the Saudi Royal Family fears most and why it has financially backed the anti-fracking movement here in America. Will this mean lower Energy costs for Americans? Time will tell but building the infrastructure alone will be a boom to DEMAND in employment - That is truly exciting. Here's one money quote (full article follows):

Assuming that most will, you realize we are still probably underestimating the positive impact of the gas boom on both local and national economies.

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Are We Underestimating America's Fracking Boom?
WSJ Original Article Date: 2014-05-28

The Death of Retail DEMAND

Jeffrey C. Borneman | May 26, 2014

In this rather long but painfully accurate article, I note a line most might miss that explains why we are here:

" ... built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. Yes, there is too much debt and that is working itself out. It is the high cost of Energy that is strangling the economy. Energy prices will not be allowed to decease (for reasons mentioned here many times), but investors need to understand the effect on DEMAND when the 100,000 or so retail employees become jobless. Investors must start to see events before they unfold and invest accordingly. Here's the horrid money quote (full article follows):

This isn’t some doom and gloom prediction based on nothing but my opinion. This is the inevitable result of demographic certainties, unequivocal data, and the consequences of a retailer herd mentality and lemming like behavior of consumers. The open and shut case for further shuttering of 3 to 4 billion square feet of retail is as follows:

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U.S. Retail Economic Death Rattle Grows Louder
MarketOracle Original Article Date: 2014-05-26

$601B Defense Authorization Bill Passes Congress - Here's Your DEMAND

Jeffrey C. Borneman | May 23, 2014

What other market sector commands the overwhelming bipartisan legislation - other than Defense? This is Real DEMAND. 

The president could still veto this legislation (doubtful) as it continues funding for weapon-systems considered obsolete - including an aircraft carrier; however, I appreciate the Israeli perspective as recipients of Iron Dome funding. If Defense spending is like peanut butter - the thicker, the better - the Defense Bill is by far the largest jar of peanut butter in the store. The rule for any investor is to follow the DEMAND as the capital eagerly seeks to satisfy it ... Here's the Israeli money quote (full article follows)

“Given the significant US taxpayer investment in this system, the committee believes that coproduction of parts and components should be done in a manner that will maximize US industry participation in interceptor and battery deliveries for Israel’s defense needs,” an Armed Services Committee markup of the bill’s text reads.

Read the Original Article

US lawmakers vote to double funding for Iron Dome
The Times of Israel Original Article Date: 2014-05-23

DEMAND Continues to Wane - What it Looks Like

Jeffrey C. Borneman | May 23, 2014

Modern economies are either expanding or contracting, a middle ground cannot exist. If one looks static - it's a mirage.

In the Hewlett Packard news today we see another admitted contraction of DEMAND. In this case, the blame for additional layoffs (totaling 50.000) is being laid at the feet of radical shareholders demanding their stock be supported at the expense of people. While it is true that CapEx decreased and share buybacks increased, the article below misses the big picture: The culprit is declining worldwide DEMAND for the next-stage technologies. The question for investors is: What market sectors are expanding CapEx now,  or simply cannot contract based on a stable population? This point is all you need from the article but here's the money quote (full article follows):

"As HP continues to reengineer the workforce to be more competitive and meet its objectives, the previously estimated number of eliminated positions will increase by between 11,000 to 16,000." This is in addition to the 34,000 layoffs already noted previously, meaning HP will fire a total of 50,000 in the near future.

Read the Original Article

This Is Why Hewlett Packard Just Announced Another 16,000 Job Cuts
ZeroHedge Original Article Date: 2014-05-22

What This Will Do To DEMAND

Jeffrey C. Borneman | May 20, 2014

We are consistently hearing that, as people fall off the unemployment dole, the become "disabled."

There is probably some truth to this, in that, after unsuccessfully searching for gainful employment for 99 weeks, you might lose your mind. The point is that DEMAND for goods and services must drop as people will continue the never-ending search to cut expenses. Disability is also a permanent condition (unless you're caught water skiing or mud wrestling) which means, we now how 11 million wards-of-the-State. So, like an uncomfortable mother, the government is merely allowing the masses to switch teats. By all means, let's pass amnesty ... Here's the money quote (full article follows):

The number of Americans receiving disability benefits continues to exceed the populations of Greece, Tunisia and Portugal, and is approaching the population of Cuba, which according to the CIA World Factbook is 11,047,251.

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10,996,447: Disability Beneficiaries Hit New Record
CNSNews Original Article Date: 2014-05-20

Major Pivot in DEMAND for Energy

Jeffrey C. Borneman | May 19, 2014

The major geopolitical shifts happening right now are hard to appreciate for their long term effects.

The 30-year-deal for Russia to supply China with nat-gas solidifies a relationship that the west fears but cannot stop. The opportunity for Russia to have a reliable buyer of its nat-gas allows it diversify away the fear of non-payment from an economically crippled Eurozone and fund its space and military programs (but I repeat myself). The 70-year schoolyard hierarchy of national strength of importance is fading fast and it is DEMAND driven. History is replete with examples of similar pivots that invariably lead to war(s). Here's the money quote (full article follows):

A deal after nearly two decades of talks would secure the world's top energy user a key chunk of supply as demand for the cleaner burning fuel is set to surge.

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Predicting Future DEMAND via An Illiterate Citizenry

Jeffrey C. Borneman | May 16, 2014

Investors are a smart lot - when paying close attention, they can generally see what's coming. Investors appreciate phrases like "Demography is Destiny."

We readily understand the logic of population fluctuations and resulting patterns of future DEMAND. Similarly we must recognize the effects on future DEMAND from the demise of literacy in the US. Consider the lack of comprehension of the written word. Seriously. Take a minute and consider what the stats in the article below mean to the value of the lives of the kids in school today, as well as their future earning potential. I take no pleasure in this money quote (full article follows):

... but in 2013 fully 83 percent of the eighth graders in these schools were not "proficient" in reading and 81 percent were not "proficient" in math.

Read the Original Article

DC Schools: $29,349 Per Pupil, 83% Not Proficient in Reading
CNSNews Original Article Date: 2014-05-16

An Excuse For War: The Environment

Jeffrey C. Borneman | May 15, 2014

Connecting the dots on the 'green-push.'

First, adhere to the admittedly flawed climate forecast models and assume imminent catastrophic events. Secondly, declare unabashedly the need for increased military involvement to meet same by " ... wean(ing) the nation, including the military, off of fossil fuels ... " As an investor, this spells DEMAND. This next story wins today's prize in explaining the MDEF™ investment strategy. Play a round of Spot the DEMAND with your friends. Here are two money quotes (full article follows):

The warnings are the same: Rising sea levels and storm surges could wipe out port cities. Drought and flooding could alter crop production and cause famine and civil unrest (war)." And: "And melting polar ice caps could produce new competition for oil and mineral rights as well as conflict (war) over how countries share that wealth.

Read the Original Article

Former general sees climate change as ‘catalyst for conflict’
The Columbus Dispatch Original Article Date: 2014-05-15

Confession: Space Will Now Be Militarized

Jeffrey C. Borneman | May 15, 2014

The admission that space would eventually become a battlefield surprises no one. Couched in the term "security," we now visualize Star Wars-like lasers to blind the eyes of our enemies.

To date, Russia, China and the US plan on establishing a permanent moon presence with eyes on Mars. Strategically, the "high ground" becomes the limit of human travel - the further out, the better. Russia's choice to limit accommodation of US astronauts to the ISS after 2020 means we should expect considerable resources to catapult the US back in front of the new space-race. This is high DEMAND in Defense.

"There will be security concerns," said Jeff Trauberman, vice president of Boeing's Space, Intelligence, and Missile Defense Systems. "There will certainly be security operations going on in space. More and more countries are working on military space-related activities. So it's inevitable."

Read the Original Article

A 21st century collision course in space
CNBC Original Article Date: 2014-05-15

Governments Shedding Jobs - The Corporate Model at Work

Jeffrey C. Borneman | May 14, 2014

I'm combining two stories (and showing one - trust me on the other). Russia today (not shown) announced planned layoffs of 20% of all federal workers, ostensibly to streamline operations.

The story below details the ax to the Aussie federal workforce but honestly lays the blame on previous " ... spending sprees of previous governments." It is also a great compare & contrast with our federal. state & local governments. The question for investors is constant: "Where will the investment capital go as the world goes through the eventual corporate layoff model"? This is the value of MDEF™ Investing. Here are the money quotes (full article follows):

Treasurer Joe Hockey’s budget is based on the idea that governments, like families, need to live within their means. As he put it Wednesday: “The days of borrow and spend must come to an end.” And: In practical terms, that means layoffs for 16,500 government workers. It means cuts in entitlements, cuts in welfare, new fees on ...

Read the Original Article

Aussie Rules
NY Post Original Article Date: 2014-05-14

Russia Streamlines Government By Cutting Labor Force?

Jeffrey C. Borneman | May 14, 2014

This is the act of a US corporation ... streamline by cutting the unproductive. 

The questions are: Will the 20% really be cut, or is this just a clever political rouse to show American-style corporate 'ruthlessness' and increase worker performance? And: has DEMAND contracted to the point that it is cheaper to pay a retirement stipend than full employment?

Meanwhile, Medvedev recalled he had already decided to lay off state officials by 20% several years ago. “This was fulfilled better at some places and worse at some other places.

Read the Original Article

Medvedev instructs ministry to work on 10% layoff of public servants
Itar-Tass Original Article Date: 2014-05-14

Recession Coming?

Jeffrey C. Borneman | May 13, 2014

New data suggesting Q1 GDP at a negative growth rate is not a surprise to investors who watch DEMAND. It is now clear why Fed Chair Yellen recently said the economy will continue to need considerable stimulus.

Keep in mind the QE taper will continue (ending in October) as the newly passed $1.1T budget replaces that spending. That budget, passed in an election year, should be viewed as a shot of Adrenalin into the heart of the economy. The politicians are just praying it has positive effect before November. Here's the money quote (full article follows):

Incorporating the new data, J.P. Morgan ChaseJPM -0.05% on Tuesday estimated GDP contracted at a 0.8% rate in the first quarter. Macroeconomic Advisers put the contraction at 0.7%. Barclays Capital predicted a 0.6% decline. Pierpont Securities estimated output fell at a 0.4% rate. Action Economics estimated a 0.2% decline.

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What Was Goldman Sachs Selling Last Friday?

Jeffrey C. Borneman | May 13, 2014

We haven't figured out exactly why Goldman Sachs upped its GDP forecast last week only to lower it three days later. But if jerking the forecast around was meant to confuse investors, it did not. We can see DEMAND as clearly as than they can. There projections leave them looking rather feckless. Here's the money quote (full article follows):

It was just last Friday when we reported that "Humiliated On Its Q1 GDP Prediction, Goldman Doubles Down, Boosts Q2 Forecast To 3.9%.

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Lack of DEMAND Showing Up in Earnings

Jeffrey C. Borneman | May 12, 2014

Don't get me wrong when I harp on dwindling DEMAND. The American consumer is a purchaser of goods and services.

Don't get me wrong when I harp on dwindling DEMAND. The American consumer is a purchaser of goods and services. Our GDP leads the world by virtue of this ability. DEMAND is declining, not because consumers don't want to purchase; DEMAND is declining because people either cannot afford to spend, or dare not spend. The next story is a graphic illustration of declining DEMAND in earnings and investors will understand the pattern (take note of any comparison to '08-'09). Here's the money quote (full article follows):

Last week, the earnings beat rate was weighed down by a large number of smaller cap names missing estimates. If the current beat rate holds through Thursday, this would actually be the weakest reading we've seen during an earnings season since the bull market began in early 2009.

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Original Article
BusinessInsider Original Article Date: 2014-05-12

Ratchet Up the Worry at Home ... It's Still MDEF™

Jeffrey C. Borneman | May 12, 2014

Stories like this have been dismissed when published by lesser authors. 

However, IBD is considered A-One in investigative, financial news reporting. It bothers me that this scenario has gained such high status; that Americans would be tossed back to the 19th century and, by extension, our reliance on technology would be the cause of many deaths. Some have mentioned to me that we are being "prepped" for just such an event. The MDEF™ strategy includes personal preparedness as well as financial preparedness. Yes, investors should own physical precious metals, defensive capability, one or more energy resources and food. Here's the money quote (full article follows):

Airplanes would fall from the sky; most cars would be inoperable; electrical devices would fail. Water, sewer and electrical networks would fail simultaneously. Systems of banking, energy, transportation, food production and delivery, water, emergency services and even cyberspace would collapse.

Ties That Bind

Jeffrey C. Borneman | May 10, 2014

China thinks in generational terms.

As the US withdraws to play a lesser role on the world stage, China has patiently grown from outsider to economic prominence in a mere two generations. With this new power comes the need to secure and expand its sphere of influence with a variety of alliances. What are the largest areas of trade within these new alliances? They are MDEF trades ... Here's the money quote (full article follows):

That China would embrace Iran is no surprise,” said former Pentagon adviser Michael Rubin. “What worries me is the big picture: China is building a naval base in Pakistan, cementing ties with Iran, building business in Iraq, and also courting Turkey. It’s creating an anti-American alliance through the heart of Asia and the Middle East.

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Iran, Chain Expand Military Ties
FreeBeacon Original Article Date: 2014-05-08

No Pleasure in Being Correct ...

Jeffrey C. Borneman | May 10, 2014

... on this one. At least the writer got Yellen's relevant comments in the front of the article to spare us reading time re the strength of the US economy. 

DEMAND is dismal and Yellen confirms it. Note she mentions again achieving the target Inflation rate The Fed's answer to the current conundrum is higher prices which consumers cannot afford at an increasing rate. Here's the money quote(s) (full article follows):

(Yellen) " ... believes the economy still requires a strong dose of stimulus five years after the recession ended because unemployment and inflation are well short of the Fed’s goals.“ And: "A high degree of monetary accommodation remains warranted,

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Yellen Says "High Degree" of Accommodation Still Needed
Bloomberg Original Article Date: 2014-05-08

DEMAND for US Defense Hardware - More is Coming

Jeffrey C. Borneman | May 9, 2014

Same footprint, better everything else ...

Same footprint, better everything else ... That sums up the new heavy lift helicopter the US is buying - at a cost of $115M each for 200 units (that is a FOB cost, we can be sure, with lots of add-ons). Here's the money quote (full article follows):

The USMC intends to order at least 200 CH-53Ks and set up eight operational squadrons and one training squadron.

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Sikorsky Roles Out Heavy Lift Helicopter
AINonline Original Article Date: 2014-05-09

War & I Robot ... If it Can Kill, it Will Be Built

Jeffrey C. Borneman | May 9, 2014

Defense, or War, is integral to the MDEF strategy because War is human nature; it is part and parcel of our genome.

Defense, or War, is integral to the MDEF strategy because War is human nature; it is part and parcel of our genome. We deplore War but rely on it for too many reasons to restate here. Ponder this next article and remember the Defense Industry is technologically 40-50 years ahead of what we currently understand. Will killer robots be built? It is a simple DEMAND question and safe to assume that, if the UN is to debate it, they are well on their way. Here's the money quote (full article follows):

Those in favour of killer robots believe the current laws of war may be sufficient to address any problems that might emerge if they are ever deployed, arguing that a moratorium, not an outright ban, should be called if this is not the case.

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Killer robots to be debated at UN
BBC Original Article Date: 2014-05-09

Maintaining Artificial Scarcity ... For the Children, of Course

Jeffrey C. Borneman | May 9, 2014

It's not often I openly challenge Heritage but this needs to be clarified. Federally controlled lands in the US contain more oil and Nat gas than all of the rest of world combined.

It's not often I openly challenge Heritage but this needs to be clarified. Federally controlled lands in the US contain more oil and Nat gas than all of the rest of world combined. If you're unfamiliar with the topic, this may sound hyperbolic - it is not. The excuse offered by Heritage that Energy production on federally controlled lands is due to "inefficiencies" in the paperwork process is utter nonsense. These Energy assets are being denied to the taxpayer, period. The reason is obvious: Energy supports the USD. A better way to state this is: US oil reserves ARE the petrodollar. Energy in the ground is akin to gold in the vault. The less gold, the higher it's value. Here's the money quote (full article follows):

Congress should consider privatizing some of the federal government’s land, Loris says, but in the meantime, free the states to join in this economic boom – and provide homegrown energy for their neighbors while they’re at it.

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Federal Government Holding Back Oil Production on Federal Land Original Article Date: 2014-05-09

The Fed & Future DEMAND

Jeffrey C. Borneman | May 7, 2014

Why DEMAND is fading - it's the USD and a desperate Fed.

Today we learned what the Fed sees via DEMAND for goods and services in the US economy. Essentially I was correct when I stated that QE, while lessened, will not be abandoned. This is Inflation. 

“A high degree of monetary accommodation remains warranted ... ".

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Original Article

Stealth Taxing, Or: How to Strangle DEMAND

Jeffrey C. Borneman | May 1, 2014

It is the premise of the MDEF strategy that DEMAND for goods and services will rotate out of the "want" categories and in to the "need" categories.

It is the premise of the MDEF strategy that DEMAND for goods and services will rotate out of the "want" categories and in to the "need" categories. IBD has a great piece below outlining how this administration seems hell-bent on increasing the stealth tax of regulations. Creating or expanding a business in this environment is getting more onerous and expensive by the month. Add the Inflation rate to the regulation cost and the rotation of DEMAND comes into focus. Here's the money quotes:

... the "regulation tax" imposed on the economy now tops $1.86 trillion.

By comparison, Canada's entire GDP is $1.82 trillion. India's is $1.84 trillion.' And,

The problem, Crews notes, is that the combined cost of this "tax" never shows up anywhere in the federal budget — or any other official report — even though it is now bigger than individual and corporate income taxes combined.

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U.S. Regulatory Costs Are World's No. 10 Economy
By: John Merline Investor's Business Daily Original Article Date: 2014-04-29