Monday, November 3, 2014

The Month That Was - October 2014

      Sydney M. Williams
                                                                                                                  November 3, 2014
                                                                                                             
The Month That Was
October 2014

“There is something in October sets the gypsy blood astir:
We must rise and follow her,
When from every hill of flame,
She calls, and calls each vagabond by name.”
                                                                                                                William Bliss Carman (1861-1929)

Seventy-three years ago my mother wrote, “An Ode to October.” It was the month of her parents’ birth and of their wedding. The poem begins:

“October is a happy month,
A month of love and song.”

This October was more mixed. On the positive side, markets rose, despite the S&P 500 dropping 5.6% in the first two weeks. Oil prices declined 11% during the month, a welcome relief as we head into the winter season.

Of greater concern, market volatility, as measured by the VIX, rose 61% by mid-month; though by the end of October was lower than where it had been at the start. Additionally, there were four days when the DJIA moved more than 1.5%, the most since June 2012. Increased volatility serves as a reminder of the unpredictability of markets. While bear markets always come to an end, bull markets do not grow to the sky.

Terrorism came to the Western Hemisphere, with two instances in two days in Canada and with a hatchet-wielding Islamist whacking a cop in New York. In all three cases, justice was swift. Venezuela won a seat on the United Nation’s Security Council. An unmanned NASA-contracted rocket exploded on lift-off at NASA’s Wallop Flight Facility in Virginia. The craft, a commercial vehicle, was carrying 5000 pounds of supplies to the International Space Station. Fortunately no one was hurt. A Russian spaceship made the trip in its stead. Not so lucky were the pilots of SpaceShipTwo, a Virgin Galactic craft designed for tourists that fell apart over the Mohave Desert. One was killed; the other managed to parachute out, but was badly injured. The two incidents highlight the fact we have lost our leadership in space.  

The month was not easy for the Obama Administration. Mr. Obama, a narcissist by any measure, saw his popularity drop precipitously. Keep in mind, this was the megalomaniacal candidate who after winning the Democrat primaries in June 2008 said that his victory will be remembered as “…the moment when the rise in oceans began to slow and the planet began to heal.” This was the man who accepted his Party’s nomination six years ago on a Colorado stage bedecked with fireworks and Grecian columns before 75,000 people. Today, few candidates want to be seen with him. Alison Lundergan Grimes, in a debate with Kentucky Senator Mitch McConnell, refused for 40 seconds to answer the question as to whether she had voted for him in 2008 and 2012. From a rock star to pariah in six years!

Regrettably for Mr. Obama, the month was consumed with ISIS and Ebola, as well as the election. In Iraq, Anwar Province is again under siege by ISIS. An estimated 1200 Iraqis were killed by ISIS in October. The Kurdish city of Kobani in Syria, on the border with Turkey, remains under attack from the same group. When Mr. Obama belatedly decided to confront ISIS, the Nobel Peace Prize-winning internationalist was unable to gather a coalition that came close to the one put together by unilateralist George Bush eleven years ago. Since August, the coalition has flown about 4,100 missions, about one tenth the number flown over Kosovo over the same time frame.

Ebola made landfall in the United States, making it only one of eight countries in the world that has experienced this disease. In their bid to calm the public, the Administration and the CDC have intensified concerns because of the incompetency of their response. It apparently is alright for aid workers to return from West Africa without being quarantined, but not for U.S. soldiers. We are told to pay attention to the science, not the hype, but then doctors admit there is much about the disease they do not know. Should the rights of the individual take precedence over the welfare of society? Unable to come out with a coherent response, the Administration has fumbled along like the Abbott and Costello skit, Who’s on First.

On even years, the American people are subjected to the endless bloviating of political hacks and wannabes. October is the worst, as it is the month that precedes the election. The issues we face are critical, but the endless negativity that serves as campaigning is exhausting. Each side tries to wear out the other, hoping to hear the cry, “uncle!” Despite Democrats running for the House, Senate or governorships choosing not to have Mr. Obama by their side, they do like the money he raises. (OpenSecrets.org estimates that $3.7 billion will be spent this election year, about evenly split between Democrats and Republicans.) Seemingly tone death to polls and to those candidates trying to distance themselves, Mr. Obama has said that while he is not on the ballot, the election is about his policies.

Elsewhere around the world, Iran continued its march toward nuclear capability despite dire consequences for the Middle East. China continued to flex its muscles. North Korean President Kim Jong-un reappeared in public after a six-week absence. Vladimir Putin persisted in testing the limits of power. Yet, Mr. Obama’s Secretary of State insisted that climate change is the number one national security threat. An economically weakened Europe challenges the concept of the welfare state. The British Parliament took a non-binding symbolic vote recognizing Palestine. And a “senior White House official” called Israeli Prime Minister Benjamin a “chickenshit.” In response, the phraseology-challenged National Security Advisor Susan Rice said that relations with Israel have never been stronger, lending credence to the assertion that politicians are not truth-tellers. Forty-three people, mostly Nepalese Sherpas, died during unseasonal blizzards and avalanches on Annapurna, making it one of the worst disasters ever in the Himalayas. By month’s end the Hong Kong protests had petered out, but disharmony is simmering not far below the surface, with neither protestors nor Communist leaders giving in.

After losing thousands of relevant e-mails at the IRS, cyber attacks hit the White House and JP Morgan-Chase. The latter gave up addresses, phone numbers and e-mails on 85 million accounts, representing 76 million households. It prompted one government security advisor to declare, if you really want security don’t use computers.

Financial markets had a good October. After a dicey start, U.S. equity markets finished higher than they began. Even the Ten-year ended the month with a yield 15 basis points below where it started. The Dollar gained strength. But commodities fell, with oil down $10 and gold lower by $40. Globally, the economy seemed to be struggling; though in the U.S., preliminary GDP numbers for the third quarter were reported at plus 3.5%, better than expected. The Federal Reserve voted to end quantitative easing, but promised to keep Fed Funds at current levels. On the other side of the world, Japan expanded its program of quantitative easing.

In sports, the San Francisco Giants beat the Kansas City Royals in seven games to win the World Series. New York yawned. On the other hand Knicks’ fans cheered when their team beat the Cavaliers in LeBron James’ first home game since he re-joined Cleveland.

Death gathered in Ben Bradlee, famed editor of the Washington Post, best known as the man behind reporters Bob Woodward and Carl Bernstein when they were assigned to cover the Watergate break-in in 1972. He was 93. Oscar de la Renta, who was born 82 years ago in the Dominican Republic, died on October 20th. One of his last public appearances was at the fitting of Amal Alamuddin’s wedding dress at the end of September. The Duchess of Devonshire, Deborah Cavendish, the youngest and last surviving of the Mitford sisters, died at age 94. She lived at Chatsworth, her husband’s ancestral home, a modest dwelling of 297 rooms! Boston’s longest serving mayor, Thomas Menino, died October 30 at age 71.

Elsewhere at home, Hillary Clinton tried to one-up Elizabeth Warren: “Don’t let anyone tell you that it’s corporations and businesses that create jobs.” Accused cop killer Eric Frein was captured after a seven-week manhunt in Pennsylvania. Sergeant Andrew Tahmooressi was released on Halloween, after seven months in a Mexican jail. A popular, but disturbed young man of American-Indian heritage shot five students in a Marysville, Washington high school cafeteria, before taking his own life. Unlike other high school shootings that showed elements of randomness, this one seemed deliberate and pre-planned. The shooter, Jaylen Fryburg, had invited five friends to have lunch, and then point blank shot them. Three of his victims are now dead. The month ended with the tragic hit-and-run deaths of three teen-age girls who were trick-or-treating in Santa Ana, California.


Depending on how tomorrow’s elections turn out, either Democrats or Republicans will celebrate October as a “happy” month, full of “love and song.” The other will not.

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