Larry Summers On Dollar Strength

Posted in Currency, Dollar | Tagged , | Leave a comment

My 9/11 Story — The Day History Changed

It’s hard to believe it’s been twenty-one years.  If you haven’t journaled your story, what are you waiting for?

Repost of a Repost of a Post

Posted on

It was early August 2001 when I asked my wife if we should fly into Washington, D.C. a few days early before my best friend’s wedding.  He was planning to marry his sweetheart on September 16, 2001, at St. John’s Episcopal Church.  My 6 and 3-year-old daughters and I were in the wedding party.

I wanted some extra time for the girls to see the great sites of the Capitol City, where I had attended graduate school and began my career several years earlier.

I secured some VIP passes from our congressman for tours of the White House and the U.S. Capitol.   The passes came in the mail around mid-August with the date for the Capitol tour scheduled at 8:30 am, September 11, 2001.

Just another day.  It was before history changed.

Sep11_Congress

We also planned a trip to New York after the wedding as my girls wanted to visit their birthplace.  The oldest specifically requested a trip to the top of the World Trade Center’s (WTC)  Windows on the World.

Their last night in New York before moving to California was spent at the Marriott World Trade Center,  South Tower.

We booked our flights.

The return flight from New York was familiar. I had flown it at least a hundred times — United Flight #93, Newark to San Francisco.

Just another routine United flight.  It was before history changed.

Sep11_Flights

Washington, D.C.

We arrived at Dulles airport on Sunday night, September 9th, and it felt good to be back in Washington.

As we were disembarking, my 3-year-old noticed the overhead air blowers were still on and blowing hard.  She shouted at me, “dad, they are wasting energy.”

The plane burst out in laughter.  California was in the middle of an energy crisis and experiencing brownouts on a daily basis throughout that summer.

September 10, 2001

The following morning we had some downtime, and because the White House was only a few blocks from our Georgetown hotel, I took the girls down to see the president’s house.  We arrived at the front gate, and I noticed the secret service on top of the White House with high-powered binoculars looking into the sky.

I hadn’t seen this since the day after the U.S. bombed Libya in 1986 in retaliation for Gaddafi’s bombing of a Berlin disco, which killed some American soldiers.   I had an interview the next day at the Council of Economic Advisers (CEA) in the Old Executive Office Building.   I recalled how tight security was, specifically, the sharpshooters on top of the White House.

Just for context,  I hadn’t been in Washington in five years before our September 11, 2001 visit, and, no doubt, security had ramped up considerably.   Put away those conspiracy theories.

Video Tape

I began filming the White House on the day before history changed, specifically the secret service with their high-powered eyes trained on the sky above the White House.

I mentioned to my family there must be “some sort of terrorist alert.”  My bright, analytical 3-year-old immediately chimed in, “dad, they are trying to hurt the president.”

After thinking another minute, she asked, “dad, do they [the secret service] know we are good guys?”  It was somewhat hilarious, at least, at the time.  We have it all on tape.

Lafayette Park

It was hot and humid in Washington on September 10, 2011, the day before history changed.  I took the family across the street, sat them on a bench in Lafayette Park, and went to fetch them some water from a street vendor.

Before leaving on the water run, I noticed a middle eastern looking man sitting on the bench next to my daughters.  He was fiddling with his cell phone and rapidly thumbing through a stack of ATM receipts.  I recall some were from Bank of America.

What struck me most was his fidgety and nervous demeanor.

He was casually dressed in nice khaki slacks, an olive-green button-down shirt, and sandal-like full-toed shoes.  He smelled of cheap European cologne.  I will never forget his face.

During my search for water, for some reason, I had a bad feeling.  I began to think the man on the bench fit the profile of a terrorist.  I seriously thought about walking back across Pennsylvania Avenue to report the suspicious character to the uniform secret service officers at the White House north gate.  I am sure they would have laughed and dismissed me as some kook.

When I got back to the park, the man was gone.  I asked my wife, “what happened to the guy sitting on the bench?  He reminded me of a terrorist.”   True story.

Racial profiling?  Do you really think I gave a shit?

I had a strong feeling based on his actions and my experience being so close to the first 1993 bombing of the World Trade Center when I worked on Wall Street.

September 11, 2001

At about 8:00 am, my wife woke us in a panic.   We had overslept and needed to hurry to get to the Capitol building.

I knew we wouldn’t make it on time and, reluctantly, put the kibosh on our trip up to the Hill.   She and the oldest went down to the lobby to grab some breakfast.   My youngest, still suffering from jet lag, was sound asleep.

I was reading the Washington Post when they returned to the room in horror and said to turn on the television as a plane had crashed into the World Trade Center.

For the next few hours, I watched in shock and was on the phone constantly to my friend, the bridegroom,  who had a view of the WTC from his Greenwich Village apartment.

When American #77 went into the Pentagon about an hour later, it was only a few minutes before the F-14s buzzed over our Georgetown hotel.

I went outside, saw people hustling up the sidewalk, and noticed the military had come out on the street.  A military Humvee stationed at every corner in Georgetown.   This doesn’t happen in America.

Get Out Of Washington

I began to fear for the safety of my family and decided it was time to get out of Washington.  I told my wife, “if these people have chemical or nuclear weapons, we are smack in the middle of their target.”

As I was going out the door to rent a car, my oldest shouted, “dad, get a purple car.”  Yeah, right,  I thought.

I arrived at Hertz in Georgetown, and the clerk said I was lucky as there was one car left.  They pulled the car up to the office.  A purple Volvo!

Charlottesville  

On our way to Charlottesville, I was overcome with the incredible grief that all of America was suffering,  especially thinking about my friends in the WTC.   I felt sick.

It was the end of American exceptionalism.  These things just don’t happen in America.

Seeing the American flags draped over the freeway overpasses on our drive to southern Virginia, I thought, as many others did on that day that changed history, this is my generation’s Pearl Harbor.

September 12

The next day at Jefferson’s Monticello, a busload of senior Japanese tourists pulled up to our third president’s home.  They were soon smitten with my 3-year-old.  She was one helluva of a cute baby with a unique and very friendly persona.

The Japanese tourists asked to take pictures with her.   I warmly agreed and thought how surreal, the day after our own Pearl Harbor.  Surely some of these people were alive, and on the other side, on December 7, 1941.

It was the first few days of the grave new crisis, and the nation was grieving and in complete shock, just as the Pearl Harbor generation was on that dark December day, which changed history 60 years earlier.   And there was my child chumming it up, the pearl in the eyes of these beautiful Japanese seniors, who were once considered the enemy of the “greatest generation” just a little over a half-century prior.

It gave me a glimmer of hope that the country would make it through the dark days.

The Japanese are now one of our closest allies, which could never have happened without forgiveness.  No peace without justice,  no justice without forgiveness.

Whenever I have a chance and feel it’s safe or not inappropriate, I ask my Japanese friends if they forgive the U.S. for bombing Hiroshima and Nagasaki.   I have never received an unequivocal answer.  Not once.

It seems the official position is to sweep it under the rug,

In 2007, during Shinzo Abe’s first term as prime minister, Defense Minister Fumio Kyuma referred to the bombing of Hiroshima and Nagasaki as “something that couldn’t be helped.” – LA Times,  April 2016

The FBI

Nevertheless, the day after the September 11th attacks, I began to think about that man I encountered in Lafayette Park the day before.

I contacted the FBI to report the incident.

At first, they seemed to mock me.  Asking how he was dressed, probably thinking I would reply,  “in Arab garb,” such as thobe and a ghutra and egal.

I spoke with the FBI several times after that.  They always remained aloof and never provided information.

Enter Bob Woodward

I then contacted the Washington Post’s Bob Woodward, who put me in touch with his research assistant.  We had about an ½ hour conversation in which he told me that Al-Qaeda liked to scout their targets just before hitting them.

Was the White House a target?

Several reports specifically identified Capitol Hill and the White House as targets on Sept. 11. One said a bin Laden associate — erroneously — “gave thanks for the explosion in the Congress building.”

A key figure in the bin Laden financing organization called Wafa initially claimed “the White House has been destroyed,” before having to correct himself. – Washington Post, January 28, 2002

I can’t remember if the FBI or Woodward’s guy confirmed that the 9/11 terrorists were emptying their bank accounts just before the attack and transferring the cash back to the UAE.

From September 5 through September 10, 2001, the hijackers consolidated their unused funds and sent them to Hawsawi in the UAE – National Commission on Terrorist Attacks

The ATM receipts were convincing enough, but my suspicions about the man in the park were confirmed when the FBI released the photos of the 9/11 hijackers,

Sep11_Khalid

I will never forget that face.

I had sat my daughters down on a park bench across the street from the White House on the day before September 11, 2001, with one of the hijackers.  Khalid Al Mihdhar was a senior Al-Qaeda operative who crashed American Airlines Flight #77 into the Pentagon.

How twisted was it that on September 10, 2001, secret service agents were on top of the White House combing the sky for potential terrorists, and one of the Al-Qaeda hijackers was sitting just under their nose, less than 1,000 feet away?

The Wedding

My friends bravely decided not to cancel their wedding the following Sunday, and we participated and shared with them their joy under highly stressful conditions.

The church was located just across the street from Lafayette Park, a stone’s throw from the White House, where presidents-elect traditionally attend their pre-inaugural church service.

During the middle of the wedding, with the country and all of us still nervous and on pins and needles, an army of sirens began to blare.  It seemed like it lasted for an hour.  Almost certainly, everyone in the church thought another attack might be underway.

I thought the presbyter was going to stop the wedding.   We got through it.

Back Home

When the government lifted the ban on air travel, we caught one of the first flights out of Dulles back to the west coast.  That was one nervous flight.

One of our flight attendants freaked out when a passenger refused to sit down.  I have no doubt our plane was crawling with air marshals.

We Made It

We did get through it.  The nation got through it.

The world is much different now.

September 11th was way too close to my family, and we were fortunate to escape the ultimate tragedy.

Not so for many of our friends, fellow Americans, and good citizens from other countries who lost their lives on that day that changed history.

I miss my friends who lost their lives that day.

Please, God, bless their families and all those who lost loved ones, the brave Americans who have made the ultimate sacrifice protecting us,  and the many who still work to keep us safe.

Everyone Has A Story

Every person remembers precisely where they were, and what they were doing on the day that changed history.

I have wanted to write this story down for 17 years but just couldn’t do it.  Now my children will have it to pass on to their children.

Everyone has a 9/11 story.  Write it down.  It’s cathartic.

Posted in Geopolitical, Uncategorized | Tagged , | Leave a comment

Global Stock & Interest Rate Monitor

Posted in Uncategorized | Leave a comment

QOTD: Voltaire’s Lifeboat

Posted in Uncategorized | 3 Comments

Friday CK ChartFest

Rapidly Rising Global Interest Rates

U.K. Leads Global Inflation Spike

Real Interest Rates Rising 

Industrial Metals Price Correction

U.S. Luxury Vehicle Sales Outpacing Non-Luxury 

Euro Inflation Accelerates 

Global Shipping Rates Trending Lower

ECB Deposit Rate 

Posted in Uncategorized | 2 Comments

Double Rainbow Appears At Buckingham Palace As Queen Elizabeth Dies

Posted in Uncategorized | Leave a comment

Econ 101: Thinking On The Margin In The Gym

One of the most complex concepts for my students to internalize when I taught Econ 101 was that of thinking on the margin. You probably remember the theory of diminishing marginal productivity, diminishing marginal returns, and diminishing marginal utility (satisfaction).   For the math inclined, they are functions with a positive first derivative coupled with a negative second derivative.

This image has an empty alt attribute; its file name is diminishing-marginal-returns.jpg

Economists like to dress up pretty straightforward ideas with very big words, most likely to obfuscate the fact that economics is just reasonably simple logic.

Traders And Investors Must Also Think On The Margin

It is also essential for traders and investors to think on the margin. They must understand and identify the marginal (last) buyers and sellers in the markets they traffic because those buyers and sellers set and determine the market price. It applies to all asset markets, from stocks to residential real estate.

You have undoubtedly heard the adage “retail always buys the top,” which was a reasonably good contrarian indicator before central banks flooded the markets with liquidity and repressed market interest rates. When I was a trader on Wall Street, the Japanese piling into a market was usually a sign of a top. Not because they were inferior but because they had so much asset purchasing power, i.e, money,  and their conservative culture of decision-making by committee almost guaranteed they were always late to the party.

Diminishing Marginal Returns In The Weight Room

I have discovered the law of diminishing marginal returns in the gym, which has changed my life and significantly improved my health.

In their MOOC (massive online open course) – Hacking Exercise For Health. The surprising new science of fitness –  Martin Gibala and Stuart Phillips of McMaster University teach the concept of diminishing marginal productivity or returns in the gym without using the economic mumbo jumbo.   It cut down my workout time from, say, two hours to just 30 minutes, and here’s how.

I used to be very rigid in my workout, never straying from three sets of 10 repetitions. That third set I hated most would slow me down,  procrastinating to pump it out until the cows came home.

Two or three hours in the gym was too much and led to an inconsistent workout schedule and less than optimal health.

I learned from the McMaster MOOC that 85 percent of the benefit of a three-set exercise comes from the first set!  Doing just one set over a 10-week period improves your strength by 30 percent, while doing three sets increases your muscle by 35 percent, just an extra 5 percent increase for the last two sets.

That is the best and most practical example of diminishing marginal productivity or returns I have seen and experienced. The second and third set, though, still improves overall strength, but most of the bang for your buck is in the first set.

I cut my workouts down to just two sets for each muscle group and get in and out of the gym in thirty minutes. I will trade off the extra 7 percent benefit of the third set for a shorter and more consistent and disciplined workout schedule, any day.

This image has an empty alt attribute; its file name is marginal-strength-increase.jpg

Thirty minutes work for me.

Diminishing Marginal Utility (Satisfaction)  

I used a simple golf analogy to teach the concept of diminishing marginal utility, which my students could relate to.

After a four-hour round of golf in the hot sun, the first beer on the 19th hole tastes fabulous. The second is fantastic but not as awesome as the first. —a classic case of diminishing marginal utility (satisfaction). The third? Call an Uber. We’re talking craft beer, folks, not Coors Light.

Pretty simple, no?

Watch This Video! 

We highly recommend this video, which taught us how to make our exercise more efficient.  The five-minute investment of your time will change and may save your life.

Posted in Sports, Uncategorized | Tagged , , | 4 Comments

Memo to Wall Street:  The Monetary Cavalry Ain’t Coming

For the past 25 years, markets have depended on central banks to bail them out because of the delusion that “inflation had been vanquished to the dustbin of history.”

Even after the Jay Powell smackdown, we still hear talk of a “pivot,” “close to neutral,” “imminent recession,”  “the lows are in,” blah, blah, blah.  It is getting close to bonus conversation time, ya’ know.

Inflation is still and will continue to run several laps ahead of the Fed for some time. There is way too much money — loosely undefined — in the global monetary system.

We are still not confident the Fed has the backbone to back up its tough talk, and may God help the ECB.

Steven Roach gets it.  The real Fed Funds rate needs to move “10 percent higher from its lows,” which would be through a combination of lower inflation and higher nominal rates.

Go to 1:50 into the video to get the upshot. 

Posted in Inflation/Deflation, Monetary Policy, Uncategorized | Tagged , , , , | 22 Comments

Should We Worry About The Rise Of Fascism?

Uh…HELL YES!

 

Posted in Uncategorized | Leave a comment

Julian Robertson, R.I.P.

We are very sad to hear of the passing of the hedge fund great, Julian Robertson.  He was one helluva trader and an even better man. 

When I was working on the sell side, almost every visit to his office to meet with his portfolio managers, he would make it a point to stop in and say, “Hi, guys, how you doing?” 

Julian began his career on Wall Street at Kidder, Peabody as I did, and think he had a special affinity for us when we visited his office. 

JR also loved golf and helped develop many great courses, including Bandon Dunes on the southern coast  of Oregon and Cape Kidnappers in New Zealand. 

The view from his office was also stunning, which looked directly into the top of the Chrysler building.

 

Rest well, JR, we will all see you on the other side. The world is darker today, but your legacy shines even brighter. 

What I really liked about you?  This, 

In addition to his hedge-fund career, Robertson ran the Tiger Foundation to support low-income New Yorkers and their families. Since its inception in 1989, it has provided more than $250 million in grants to help schools, employment training programs and childhood education, according to its website. During his lifetime, he contributed more than $2 billion to charity.  – Bloomberg

You knew exactly where to store up your treasures. 

Treasures on earth are evanescent and corruptible, whereas treasures in heaven will never pass away or suffer corrosion. What one treasures matters, because “where your treasure is, there your heart will be also.” – Gospel of Matthew

Posted in Uncategorized | 3 Comments