BREXIT – Market Hype and FUD

On the various talking head TV shows there is an ongoing drumbeat of “End Of Life As We Know It!!!” and “Financial Doom In Our Time!!!!” coverage of the BREXIT. Do the charts support that interpretation of the market moves of the only trading day we’ve had?

In my opinion, no.

Lets look at a bit of the hype and the reality. I’ve heard several folks now say that the £ is at a low not seen in … then they pick various numbers. They keep getting longer, despite no currency trading happening at the moment. Sigh. So what is it? 20 years? 30 years? What? Oh, and they never mention what ‘cross’ they are looking at. Against the ¥? The €? The Swiss Franc? The $US? It makes a BIG difference.

Currency Wars, The Long Horizon

Here are a couple of long term graphs of currency crosses. They each tell a similar story, with variations. I got these from Finviz here:

http://finviz.com/forex.ashx

GBP x USD 22 year chart

GBP x USD 22 year chart

One thing that always causes me heartburn on currency crosses is figuring out “which way is up”. This is measured in that and sometimes that is measured in this and an up in that can be a down in this and… Sigh. Add in that for historical reasons some crosses have the $US first, others the £ and it gets a bit of a mess. In this case, we have the £ in $US. It is about $1.40 to buy one £ and a ‘weaker pound’ is lower on the graph.

Measured in the rubber ruler of $US, the pound is quite low. Yet 30 years low? It is in the noise band of a match to 2009 and 2001. Furthermore, the great loss of relative value was 2009, not now. Frankly, we’ve got one day of panic trades as the major houses were “on the wrong side of the trade” and desperate to get out of positions before a weekend. Having it spike down and recover (as it did) is hardly a surprise.

Note, too, that this graph confounds $US strength with £ weakness. We need to look at the other two major currencies to get more clue as to overall performance.

On this chart, we have the € in £ terms, so weaker pound is higher.

Euro in Pounds 22 year

Euro in Pounds 22 year

In many ways, this is the graph that matters. As an EU member, it is compared to the EU that has been the major cross of interest. Here we see the spike up at the end, but it is relatively tame compared to the total range. Compared to the € the £ is the weakest it has been since about 2 years ago… Suddenly not so scary, eh?

It was far weaker in 2009 to 2011, and is roughly a match to 1994 through 1997. If “exchange rate stability” vs the Euro Zone was a major goal (and it ought to have been) having “basically no change” in 22 years but with wobbles on major events is exactly what would be expected.

Taken together, those two graphs say to me that the present “record low” £ is really a high $US. Certainly not anything exceptional in € terms.

Just to round it out, let’s look at Yen. Divorced from the whole Euro Zone thing, unconnected to the $US, a major currency. Fairly unbiased ruler. On this graph, weaker £ is lower.

GBP in Yen 22 year

GBP in Yen 22 year

Golly. Rough match to 2014, 2009 and 1996, with strong excursions on various panics. Once again we also see the major damage was done in the 2009 Financial Crisis and that recovery from it was weak. (No real surprise as governments set about breaking banks and damaging earnings, and London is a major banking center).

Taken together, those three charts show me a one day panic as traders were on the “wrong side of the trade”, and not much long term history making. The £ is low, but not exceptionally so and the major issue is $US strength. Compared to the € it is absolutely unexceptional.

As the week unfolds, a lot of folks will be setting new bets on currencies. The most extreme volatility ought to be past, as traders cashed out big time on Friday. By the end of the week, I expect it will all be over. With that said, the chart is your friend and who knows what fresh hell of stupidity the political class can inflict. So watch the news.

Stock Markets

I’ve found a couple of charts of the DAX index and FTSE. Being an index it ought to be free of $US contamination. So where are the two major markets in the EU as of Friday? FTSE first, then DAX.

http://finance.yahoo.com/echarts?s=^FTSE+Interactive#{%22range%22:%2210y%22,%22allowChartStacking%22:true}

FTSE post BREXIT 10 year

FTSE post BREXIT 10 year

http://finance.yahoo.com/echarts?s=^GDAXI+Interactive#{%22range%22:%2210y%22,%22allowChartStacking%22:true}

DAX post BREXIT 10 year

DAX post BREXIT 10 year

Both near the end of long secular bull runs up. Both “toppy” with “failure to advance” to the upside the last few years. Both with recent lows forming a base. Very similar, IMHO, to the USA markets.

I’d expect that kind of long term high to result in a break lower. Any excuse will do. In my opinion, BREXIT is just an excuse for the shorts to try running the markets down. It is what they do at the end of every secular bull run.

The panic day barely shows up at this scale, and I’d not expect it to show up. That the DAX took a much larger hit on Friday than did the FTSE says, to me, that Germany is in worse shape out of BREXIT than is the UK. That makes sense as they sell more to the UK then they buy, so any trade fight hurts them most, not the UK.

With that kind of long term ‘set up’, I’d wait before doing any bargain hunting. On a trade basis, there is usally a 3 day cycle. Sometimes only two. Mid-morning Monday ought to be a nice time to reevaluate on a rebound trade (i.e. an oversold buy for a one or two day holding period bounce). But that secular high argues for a longer term reversal to a downtrend, BREXIT or No.

Watching the divergence between FTSE and DAX ought to be very interesting…

In Conclusion

I’m not seeing a reason to jump in big time just yet, but a potential rebound day trade is shaping up. The £ ought to recover in the next week or two, the € not so much. In no case am I seeing anything particularly “historic”. Just regular trade stuff.

The major message seems to be that the $US is out of whack with Europe. But we already knew that…

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Posted in Economics - Trading - and Money, Political Current Events, World Economics | Tagged , , , , | 10 Comments

BREXIT – The night after the morning after

The vote is done and counted. The United Kingdom has chosen “exit”. The wailing and gnashing of teeth has begun.

I’ve had a long enough news cycle to have sampled fairly widely. One surprise was just how snarky / mean the “progressive” media has been. Not only is there a great load of FUD Factor (Fear Uncertainty & Doubt) being pushed (even now that the vote is done) but even the straight stories tend to the mean and nasty.

I also find that I’ve even been pulled in by one of them. Before I’d noticed it was a pattern, I let one of the news “reports” that Scotland was looking for a do-over on their UK Exit Vote and maybe even North Ireland would want to join the Republic Of Ireland, shift my attention. I was busy enjoying the returns on the news and not engaging as many critical faculties as normal ( a few pints of Grolsch will do that to you) and got carried away with the idea of a Gaelic Reunion, inside a Greater UK, in a comment here:
https://chiefio.wordpress.com/2016/06/22/laugh-or-cry-and-then-they-came-for-the-kettle/#comment-69302

While doing my regular “news cycle” that same idea, that Scotland would exit the UK and “stay” in the EU, and North Ireland would join with the Irish Republic to stay in the EU, came around no less than three times in rapid rotation. On MSNBC, CNN, and PBS. All “left leaning” and strongly pro EU. One of them even had a EUrocrat making the suggestion. They also reported that the EU Ministers were meeting with part of the agenda being to “make it painful” for the UK to exit so that others would be “discouraged”.

Well, it may be a dim lightbulb, but it finally lit up. The E.U. and their sycophants were the ones promoting the dissection of the UK as punishment.

Sidebar on Clubs:

Once upon a time, the kid across the street had a “club”. It was a bit of tacky crap nailed together and to the fence, but it was his “club house”. To join his “club”, you had to do what he said. He said to walk on broken glass he had spread in the alley behind his house. Being all of about 5 years old, I considered it for about 30 seconds. Then declined to join his “club”. Now in my small town, you had a choice of ONE set of folks to know and with which you attended school. Being the same age, I had to cope with this guy for the next dozen years. He decided to be very mean to me ( i.e. be a bully) due to my not wanting to “join his club”. That was my first experience with sociopaths.

Well, after a dozen years + 1 or so, he “woke up dead” out at the river. The story around town was that either the KKK or the Neo-Nazi (back then they were just called Nazi as the Neo part wasn’t around yet) had killed him off for “giving them a bad name”. Yeah, that bad. The local police investigated thoroughly, but could never identify the killer. (That is, they went to the river, looked at him, and said “Yup, looks like it’s him. Looks dead to me.”… Yeah, that bad…)

After a small amount of rejoicing in the town, life moved on. But it left me with a deep appreciation for the sociopathic mind (though I didn’t have the name for it then) and for the idea that any “club” with pain to enter and penalties to exit was no club I ever wanted to be part of.

Back at the EU:

So here we have the EU. It has a load of “pain” to enter. You have to walk on their version of broken glass and be subject to “their rules” (that also includes taking your money – ask Cyprus) and now with talk of “penalties” to exit. Now where have I seen that before…

And it was just these folks that were talking up the dismemberment of the UK so as to carve off chunks of it to keep “in the club”. And I’d not noticed at first blush.

In general, I’ve found that when someone is doing that kind of thing, stating it in public to their face is often the best cure. Shady dealers do not like public view.

The Problem

As I see it, Scotland can’t just “vote to stay” in the EU. That club nas “rules” for joining. As an independent Scotland would be a new country, it could not be just grandfathered in based on a different country.

For North Ireland, it is a more complicated story. While the CNN news had a nice simple graphic showing ALL of North Ireland as “remain”, it was pointed out that was a lie.

h/t Paul, Somerset same thread as above link:

Paul, Somerset says:
24 June 2016 at 11:48 pm

Would US readers please beware of all the maps painting Northern Ireland as entirely “Remain”. They are incorrect. The border areas and a couple of parts of Belfast voted that way. The areas such as Antrim closest to Scotland were solidly “Leave”.
http://www.bbc.co.uk/news/uk-politics-36616028
There was no mandate for any unification with the Republic of Ireland, Scotland or anywhere else, and as someone old enough to remember the misery caused by those arguing over that cause in the past, I’d be grateful for it not to be promoted again.

Which has this graph in it:

BREXIT Vote Patterns

BREXIT Vote Patterns

Look closely at North Ireland in the right picture. It is half and half. While the net is for “remain”, it is NOT uniform. There is no consensus in North Ireland for “remain”, so can be no consensus to “stay in the EU” via binding to any other party after cleaving from the UK.

In short, that “scenario” must be a fabrication. The general pattern of nixed yellow and blue is not significantly different from patches of England and Wales.

Now who would want to do that…

The City

In oh so “concerned” a voice, the folks at CNN were terribly worried about The City and went to great lengths to stress that services could not be imported to the EU from outside without a special dispensation (that they called a ‘passport’) and they were certain that would not be issued by Brussels so as to “punish” the UK and discourage others from thinking of exiting. Then time was spent contemplating where to relocate London Financial Services out of London and into the Rump EU. Dublin was suggested, as was France. One even stressed that Switzerland was not allowed to “export services” into the EU.

Unmentioned was that Switzerland seems to be doing fine, thanks…

Then there was pants wetting and hand wringing over the “next two years” of “uncertainty” for businesses and the “30% of employees from other EU nations”. Really? You can’t figure out that having some of them “gone home” is a feature? So pack up the “EU” sales department and send it to a local sales office “back home”. Everyone will be happy.

Oh, and great chalkboards of nails of complaints were spent on how hard and long and drawn out it would be to “negotiate trade deals”. Well, only if you load them up with all sorts of crap like the TPP with secret courts that can enforce climate doctrine. If all you want to is trade there are a few simple paths.

1) Unilaterally state your trade terms. This was common when I was a kid. A country just posts their tariffs, if any, and is done. Things like “10% on manufactures in the FOO industry” and “5% on all other goods” were common (especially where the FOO industry had connections in government). The EU members can accept them and trade, or not sell any Mercedes in the UK.

2) Negotiate a simple direct deal. Don’t make it a Christmas Tree for every loony pathological idea your Staff has, or your political class wants. It doesn’t take long at all to negotiate “We have a zero tariff between the EU and UK, and any goods legal in the EU can be traded”, for example.

Then, my favorite, as it doesn’t need the EUrocrats to do anything:

3) Set in law a “symmetrical tariff scheme”. The UK passes a law that states: For any nation or collection of nations with which no other trade agreement exits, the tariffs on goods imported shall be set to match their tariffs on our exports to them. Any goods forbidden by them for import to them are forbidden for import from them.

Your part is done. They can now choose to pay tariffs, or not.

All up, I’d figure about a week to get #3 passed.

The R.O.W. row

The Rest Of World is just waiting for you to join it. This will cause a row inside the E.U. as you sign up partners and shift focus elsewhere. So what. What are they going to do, kick you out?

So starting Right NOW, send off trade envoys to the FBE Former British Empire. We all know you are looking for action, and we all know that the EU barriers will soon be gone. “Cut deals” that say “Like this now, like that after exit from the EU”. Or just have open trade deals and let the EU swear at you. Why care?

As I read “Article 50” (or at least the summaries of it) they say you have 2 years to “negotiate the terms of exit” and then you are out. It doesn’t say you can’t be out earlier. It doesn’t say you can’t do things while you negotiate. It says that 1/2 the remaining rump nations in the EU have to ratify the new deal for it to be accepted, but doesn’t say you can’t just do what you want anyway. (See item #3 above…)

So draw up a document that says:

In the absence of any other agreement to the contrary, all EU enacted rules, regulations, and laws are rescinded in the UK. Tack on a #3 above. Put in a term about “Non-UK Citizen residents of the UK have a year to apply for a resident work visa or wind up their affairs and depart the country”. Also add one or two lines like those for whatever else I’ve forgotten. Then sign it and ship it. Maybe something like “EU Passport holders will have visa free access to the UK for one year from the BREXIT vote” just to make them feel warm and fuzzy.

You are now “negotiating from strength”. They can choose to cut a better deal with you, or not. Not your problem. As a Sovereign Nation, you get to set your own rules, and you have.

Frankly, I’m not seeing the problem.

The EU are the ones who need to decide the “rules” for UK citizens living outside the UK in the rump EU, not you. They will do what they want anyway, so make it their problem. IF they want to be tough about it on UK citizens, you tighten your terms to match.

I’ve negotiated a LOT of contracts, and the one tool that has done far more for me than than other is the rule of symmetry. Wherever there are two lines of text saying “I get FOO” and “You get BAR”, change them to one line saying “We both get FOO”. Any “you must do FOO” becomes both parties must do FOO. The only real deviation is when real asymmetry exists. So “both parties charge 25% tariff on lamb” doesn’t mean much if you don’t import lamb… Instead, change it to “All agricultural and food products for both parties will have the same tariff of __%” and ask what number they want there…

Generally that cuts negotiation time down “right quick” as most bad things get rapidly removed. The one or two “odd cases” can be resolved fast, then.

I did notice that MSNBC? said fully 1/3 or 1/2 of UK Gin was shipped to the EU. IFF, for whatever reason, they start giving you grief, publicly start negotiating to sell it to the Russians and Chinese. Just state, blandly, that the EU is being a pill about (whatever it is) and that for this reason you have (size of Big Gin) to redirect from them to a new market and invite Russia, China, and “any other interested party” to contact you.

There is nothing like the prospect of no Gin Martinis and no Gin and Tonic to get someone’s attention and cause them to sober up. Voluntarily or not…

To me, it looks like the EU Powers That Be want to play mean and insist you stay in the club or at least walk barefoot on broken glass to get out. Simply pick up their shoes and say “After you”…

Their basic position is “Our Club is Exclusive and YOU can’t play in it without our favor.” Your position of strength is “We have the whole world, your club is cute, but if you don’t want to play fair, well, I’ve got the whole world to deal with… oh, look at the time…”

Financial Markets

First off, they panic over anything. Something like 70% of trades are now done by computers anyway, and they just scan key words and react for news driven events, Then price action drives them into odd extremes on major events. So ignore them for at least a day and a half. (One day already in the bag).

I’m going to do a full on posting a bit later. For now, just look at the top numbers. EU stock markets down about double the UK market. 3.x% and 6.x% tells you that THEY are the ones in trouble, not you.

Talking heads are saying all sorts of silly things. Like that the £ is at levels not seen for a decade or some such. Well, that means it WAS at about that level once before and you did just fine. They also don’t say “crossed against who?” so it really is a useless statement. Against the $US when it is particularly strong? That’s not a £ issue, but a $ issue.

This is a 5 year chart. It is for ETFs. That is colored by the fact that ETFs using futures and similar contracts have a slow decay built in (‘tracking error’) so it isn’t clear if the general downtrend is due to $ strength, or just that this is a 5 year chart and tracking error via fees is adding up. So only look at the relative position of the lines, not the slope per-se.

Yes, the £ is down 10% in $ terms over 5 years. Yes, it took an added 5% plunge down on the news. (That last bar). But look at the Swiss (FXF) Franc and the Euro and the Yen! About a match to the Swissy, beating the Euro handily, and the Yen only started coming up off the floor at the end!

ANY currency that matches the Swiss Franc is NOT a weak currency nor in trouble.

Yes, crossed against the $US and with ETF tracking error / fees, you have a drop. That just means the USA is in trouble with a strong dollar and that over the long term ETFs tend to drift down from fees and leakage.

I hope to find decent long term real currency cross charts this weekend. I don’t normally trade currencies, so need to search a bit.

But even with ETF issues, it is very clear that it isn’t the £ in trouble, but the €.

British Pounds 5 year in $ vs Yen, Swiss, and Euro  ETFs

British Pounds 5 year in $ vs Yen, Swiss, and Euro ETFs

In Conclusion

It sure looks to me like the FUD Machine continues to operate. Deception and dirty tricks are not just for campaigns, it seems.

It is my opinion this will not get better in the next year. Prepare a pound of salt to help ease the attempted force feeding of this kind of thing from the MSM. Mainly Slime Media. Avoid the pants wetters and the chicken littles and “carry on”.

Stride boldly onto the world stage and state that Great Britain is now free to do business with all. Terms available upon request.

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Laugh or Cry?- And Then They Came For The Kettle…

As the BrExit war heats up in the final run to the finish line, one news program here mentioned that the E.U. was banning the Electric Tea Kettle and that was as likely to drive the vote as anything financial.

What? I thought… Ban the kettle?! Have these folks no brain at all?
Never, ever, under any circumstance, mess with a Brits tea!

First off, do realize that the U.S.A. exists because King George messed with the tea tax. The “Americans” who tossed the tea in Boston Harbor were at the time of said tossing British Subjects. It was “messing with a Brits Tea” that got the whole fuss started in the first place. Had old King George left well enough alone and let us continue drinking tea in peace, we’d be saluting the Union Jack to this day. ( IMHO, of course.)

Sidebar on W.W.II: I have no idea if this is an apocryphal story or true. Told to me by my wife’s Dad, who was in W.W.II (USA Airborn, British liaison on D-Day to the Glider Corp and entered with them) and as an officer was not known for telling ‘whoppers’. The story goes that traditionally shelling stopped at tea time. IIRC, the setting was N. Africa. At tea, some Germans had the nerve to commence shelling and interrupted tea. Very uncivilized. The enraged Brits, advanced on the Germans until the source of the irritant was dispatched. Then resumed tea. It is a very bad idea it interrupt tea.

Now this? The E.U., blind to history, is going to mess with British tea?

A more astounding level of stupidity is hard to imagine…. so I checked.

http://www.telegraph.co.uk/news/worldnews/europe/eu/11061538/EU-to-ban-high-energy-hair-dryers-smartphones-and-kettles.html

EU to ban high-energy hair dryers, smartphones and kettles

By Bruno Waterfield, and Emily Gosden

3:01PM BST 28 Aug 2014

The European Union is considering pulling the plug on high-wattage hair dryers, lawn mowers and electric kettles in a follow up to its controversial ban on powerful vacuum cleaners.
[…]
A study ordered by the European Commission, currently in draft form, has identified up to 30 electrical appliances including lawn mowers, smart phones and kettles that could be covered by the EU’s Ecodesign directive outlawing high-wattage devices.

Günther Oettinger, the German EU energy commissioner, said that legislation preventing consumers from buying high-wattage appliances was necessary to fight climate change.

“We haven’t got round to these devices yet, we want curb power consumption,” he told Bild newspaper. “All EU countries agree that energy efficiency is the most effective method to reduce energy consumption and dependence on imports and to improve the climate. Therefore there needs to be mandatory consumption limits for small electrical appliances.”

The proposals will be a controversial flagship policy for Jean-Claude Juncker when he takes power as commission president in November in order to meet a binding target for energy savings of 30 per cent across the EU by 2030.

Clearly they have zero clue about physics. To boil a cup of water takes a specific number of watt-hours (or joules) of energy. Can’t change it. Might as well try to legislate the value of pi. Now a “high power” kettle will get their quickly, and a low power one very slowly. Which is more efficient? As the hot kettle constantly leaks heat to the environment, the fastest kettle is always the most efficient. It’s physics, folks.

I’ve tested this, indirectly. I was using a kettle on a camp stove for a while (don’t need to leave my desk to make tea. Not that I’m compulsive about tea… but Mum was a Brit ;-) On a slow camp stove, fuel consumption was significantly higher. On my fastest stove, fuel was much more efficiently used, simply because waste heat is minimized then.

So first clear “Strike One” is just being so incredibly stupid as to confound wattage with efficiency.

Second clear “Strike Two” is not knowing enough about heat flow to realize most rapid heating is most efficient. For maximum efficiency, make it the highest wattage possible. Their behaviour is backassward to reality.

Third clear “Strike Three” is fooling around with a Brits Tea. That is just suicidal! IF they have proceeded with this, I predict the demise of the E.U. in about 3 years (or however long it took the U.S.A. to stop being British and get their tea back as American Tea…)

But Wait! The Millennials!!

Then they compound it with an attack on the Smartphone?

Have they no love of their own life? An entire generation of Millennials lives in their Smartphone. To expect to think you can tell them they can’t have the smartphone they want is to invite Holy Hacker Jihad on your computers!

My God Man, have you no fear? Even the Pakistanis and Indians will be after you for this one. No computer will be safe. You will have nowhere to hide (your secret data). Customer Support, once they see the call is from Brussels, will suddenly lose their Queen’s English and revert to the most severe Hyderabad accent. Your curry will arrive at table cold, and bland. Oh, the humanity!

I fear for the safety of all in Brussels should they proceed with this.

For their own safety, Britain must secede from the E.U., and fast. For the peace of all, vote Brexit now! To do otherwise is to risk civil war, the collapse of nations, revolution and the complete collapse of the internet and computing (at least in Brussels) not to mention cold bland curry.

A worse fate can not be imagined.

(Though many in power and the media are trying very very hard to drum up something greater than Y2k as a Brexit FUD).

So please remember tomorrow to vote to save the Kettle, and the world as we know it. It all depends on you now. Chose wisely: Vote to Save The Kettle!

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Is Soros “Talking His Own Book”?

Soros is being shown around on various news programs predicting a horrible collapse of the British Pound should the UK vote for Exit.

He is known for staying in the shadows and for shorting currencies at the same time he “talks them down” via FUD. (Fear Uncertainty Doubt). His biggest killing was in the “take down” of the British Central Bank many years ago. He bet on socialism damaging the currency, the Bank was defending the pound, and he was able to (help?) exploit a run on the pound.

His typical mode of operation is not to be highly visible, but to work through NGOs and other organizations, staying personally in the shadows.

So when I see him making big public pronouncements on a currency, with the trade catalyst just days away, it is odd. Most odd.

A couple of terms:

“Talking your own book” means that when you have a ‘book of trade’, that is, you have some ownership or position / interest in a stock, bond, whatever; you talk to media and others in such a way as to help your position make money. So you buy GE, then go on financial shows talking about how great a company GE is and how much you think it will make money. Alternatively, you could short a stock, say Exxon, then start talking up how they ought to be sued for crimes and the board are criminals waiting to be caught. For a public dealer to do that is a crime. For a private party, it isn’t a crime. Soros is not a public dealer. (“Pump and dump” is the crime of owning and selling after pumping the stock price up).

“Catalyst” is a trade term. For every trade, there is a set-up (what you do to get ready and the expected position of the trade vehicle), and then some “catalyst” that makes the trade event move, after which you exit. So lets say you think Chrysler and Fiat are going to merge. That event is the catalyst. It is the thing that will power the trade, and the thing that marks the end of the trade event, when you close out your position. You put on a trade, then close it out when the merger is announced. (“Buy the rumor, sell the news”.)

How Do Soros and the Catalyst Connect?

In the case of BrExit, the day of the vote is the catalyst. It will either be stay, or go. That will be the moment things change. When that vote is over, the catalyst has passed, and the trade is over. There may be some other trade, but it will have some other catalyst. So a short on German Wind Turbines might come up based on speculation of a catalyst of higher tariffs on import to the UK as a self-reliant agent. But that depends on the catalyst of tariffs going up, which would not happen for a long time as the exit process unfolded.

Now Soros knows all these things. He also knows that talking about a drop in the £ does him no good unless he already is short the £.

Is there evidence for a big short position in British Pounds?

British Pound vs $US along with Euro vs $US

British Pound vs $US along with Euro vs $US

This has the exchange traded funds on it, not the actual currency crosses, but the funds tend to be managed to stay the same as the currencies. Over multi-year scale, the sync will drift due to management fees if nothing else. For our purposes, they are “close enough”.

FXB is the British Pound. FXE the Euro, and FXF is the Swiss Franc.

The £ has already dropped in anticipation of the catalyst / vote.

The “setup” for a short would be the £ at normal price vs € and that moment passed 6 months ago. The setup is over, the trade is already on, and the catalyst to signal close out the trade is just 2 days away.

The FXF is on here as a baseline of sorts. The Swiss Franc tends to be very stable. What it shows is that there has been $US strength against the bundle last year. The three currencies (FXF, FXE, FXB) traded more or less together until about December of last year. Then the Euro diverged up, the £ down. IMHO, this shows a large trade being put on. Short £ long € with the catalyst being the vote.

Now notice the big jump in volume at the right end. (This is but a tiny fraction of actual currency volume… and often the less skilled as the terms are much better directly trading currencies rather than using the kludge of a currency ETF). What this shows is the recent dramatic ‘swap’ of the vote in the poles from “leave” to “stay”. It was almost time to “cover the short” via buying £ and then a surprise news event happened. Anyone “short the Pound” would be wanting to cover their shorts a bit sooner than originally planned. There are a LOT of shorts in the pound.

So is it an accident that just now Soros, the renowned currency shorter, is talking down the £ just when he would want out of a short position? Is it just possible that he is instead “talking his book” and trying to get a load of “sheep” lined up selling Pounds just when he needs to buy them to cover his short?

I don’t believe in coincidences when it comes to professional traders talking their book on global media.

In any case, trades precede the catalyst and are closed out once the catalyst passes. The pound is already down, and I’d expect short covering to drive it up, post vote, even if an Exit vote happened (that might cause a brief spike down and trigger all the short covers.)

In short, where I placing a bet, I’d bet on Soros talking his book. He wants that tail spike up in the last couple of days driven back down so he can cover his shorts as the election stress is at the peak.

Here is a smaller harder to read chart that is a direct currency cross of the £ & €

British Pound in Euros

British Pound in Euros

Note the “double bottom” and “failure to advance” to the downside in the last few months. Short £ vs € to me is saying “time to exit the trade”.

This “takes the dollar out” and just shows £ in € where you can easily see the £ is already down. The trades are already on, and after the vote, the shorts need to come off, which IMHO will raise the £ in Euro terms. Frankly, in a British Exit YES! vote, it is the Euro I’d expect to drop the most. Europe ends up minus one large fat economy to be plucked…

Michael Spence


https://en.wikipedia.org/wiki/Michael_Spence

Andrew Michael Spence (born November 7, 1943, Montclair, New Jersey) is an American economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences, along with George Akerlof and Joseph E. Stiglitz, for their work on the dynamics of information flows and market development.

Was on one of the Financial News shows this morning. I think it was CNBC, but it might have been another. He basically said he didn’t expect Brexit to be that big a deal and in a very polite way said Soros was likely overstating things. IMHO that’s as close as he could come to saying “talking his own book” on a national TV show.

I’ll side with the name Economist with no dog in the fight over the known “slimy weasel trader” who likes taking the short side and manipulating political events for his gain. But that’s just my opinion. We’ll see on Friday.

In Conclusion

So that’s my evaluation of the Soros News storming around the TV News Echo Chamber. It seems to be picked up everywhere now, and folks have an awe struck tone as they fawn over his insights as a trader… yet never question his motives nor examine his methods.

To me, it looks a lot like News Sucker Anchors being played.

One can only hope it doesn’t influence the Brexit vote too much. I really don’t like it when folks use shady means to fleece the moral and honest. We will know how this one works out if post vote, Soros shows a bib jump in net worth…

I’m not a currency trader. I mostly just use it as an occasional hedge. But, were I putting on a trade right now, that FXB chart looks firmly bottomed. The Euro out of line high compared to the FXF. I would be putting on a “long £ short € trade” right now. They ought to come back into alignment post vote. IFF it is for ‘out”, the € ought to drop. If “in”, the £ ought to rise. In either case, the pair trade ought to close the gap.

But that’s just what I’d do, and I might well be wrong.

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Obama as Satan? It’s funny what folks can get by torturing data…

I do not, even for a moment believe this is evidence of anything. I do find it an amusing example of what can be done if you ‘torture the data long enough’ and ‘get it to confess’. Search enough data and enough writings in enough languages long enough, eventually you will find something like this.

With that said, it is a remarkable find. From 2009, someone matches a bible verse to say ~”Satan is Barak Obama” when read in old hebrew.

Looks like there was a later “remake” (2014) of it by someone else:

Kind of funny, IMHO…

Then again, one does wonder when The Bible calls him out by name…

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BrExit – Can’t Sell to EU Lie

All over the the news is the pervasive lie that if the UK leaves the EU system it loses access to something like 500 Million folks worth of market. The clear assertion is that if the UK is “outside the EU” it can’t possibly sell products and services into the EU.

In my opinion, that is a flat out lie.

Further, there is the implicit assertion (sometimes explicit) that some magic “trade deal” needs to be instantly negotiated. IMHO, that, too, is a lie. Trade deals sometimes help trade, but a great deal of trade happens without them.

To illustrate that point, a couple of maps of OTHER EU Countries, and from where they buy things.

The source for these maps is the same is in the prior BrExit posting:

http://atlas.cid.harvard.edu/explore/map/import/fra/show/all/2014/

As before, this is one link, and you can ‘go there” and change the knobs as you like to get any other graph I use here.

So let’s start with Germany. THE powerhouse of the E.U. From where do they buy things? Surely it must be dominated by the U.K. and France as the other two major E.U. countries, followed by Italy and Spain? IFF it is so horridly difficult to sell into the E.U. from outside, it simply must be that large internal trade partners will dominate? No?

As before, the dark red is a lot, the lighter yellows progressively less. Why their saved images have poor legends is beyond me, but for actual dollar bands, hit the web site.

From Where does Germany Import?

From Where does Germany Import?

Oh Dear! Most comes from China… I guess being “outside the EU” is not hurting them much. Hard to see, but if you hover over it at the original site, Holland is next with $96 Billion. One presumes due to buying a lot of external goods and materials needed by Germany, but we’ll chart them next. The UK eventually shows up at $43 B, but after Switzerland $50 B and the USA $62 B.
Golly. Both not in the E.U.

It sure doesn’t look like being “inside the E.U.” is very essential for trading with it.

The Netherlands? It is interesting in that Holland looks to be importing from just about the whole world. They do seem to buy a lot from Germany, too. Perhaps cars? Or maybe things for export… At any rate:

From where does The Netherlands import?

From where does The Netherlands import?

Golly, China again. Though in fairness, it is Germany that dominates them. How about the UK? $32 Billion, tied with the USA. We don’t seem to have a problem “trading in”. Nor, given the widespread yellow on that map, does most of the world. I took a look at the Netherlands by product map and it is mostly petroleum & petroleum products, computers, phones, cars, and medicines. The UK is in a global market for Petroleum, so that isn’t going to be a BrExit issue. Phones? China I’d bet. Maybe cars and medicines from the UK? Or cars from Germany, medicines from the UK… Medicines being dominantly a proprietary business it is unlikely to take a hit from being outside the E.U. It, too, is a global market.

Maybe France?

From where does France import?

From where does France import?

Oh Dear, Germany again. It is starting to look like the E.U. is a Germany Trade Promotion Authority… Then China. The UK ships $25 Billion, well behind the USA at $40 Billion, and even Spain at $38 Billion. It sure is starting to look like Germany sells most to the EU members, but nobody else is really winning much from the deal. It also looks like China and the USA are quite happy to sell lots into the EU… from outside

You can go right on down the list of major E.U. economies and the picture is the same. Italy, Spain, even Poland. All economic satrapies of Germany. In fairness, it is the case that Portugal mostly trades with Spain and Ireland with the UK. Their prior dominant partners.

In Conclusion

My conclusion from this is pretty simple and direct. Whatever is asserted to be the benefit of being “inside the E.U.”, the major benefit accrues to Germany. All over the E.U., countries “inside” are dominated by it. Those countries outside, with desired products, have no problem “trading in”. Products from all over the world flow in to the E.U.

A second necessary consequence is simply that to the extent there is an artificial trade barrier with the E.U., the UK inside of it is blocked from the Rest Of World.

Which is bigger: the R.O.W. or Germany? Which do you think is the better trade partner? Is it better to have a negative balance of trade with Germany, as the UK does now, or a positive one with the R.O.W.?

One final note:

Hong Kong. Hong Kong became a global trade power of fierce size via the simple expedient of lowering their own tax and tariff barriers. They didn’t give a whiff what their potential trade partners did, they just provided an easy trade station. The rest was history. One of the most astounding growth and wealth creation cycles in economic history. That policy was created by a Brit. It works. To the extent the E.U. wants to pursue high taxes and high barriers to trade, it is much much better to be outside of that trap than inside. There is a long history and large body of evidence for that observation (and it is an observation, not a surmise).

So that, IMHO, is the choice facing folks in the U.K. today. Satrap to Germany, or free trader to the world. Your choice. Choose wisely.

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What California Teaches About “Assault” Weapon Bans – They Fail.

Owning guns in California is a challenge. Any kind of gun. Owning any effective gun is even more a challenge. Doing anything other than keeping it in a locked box is almost impossible, outside of a very limited set of exception.

The short form of this article is that California already has EVERY single proposed ban on “assault weapons” and they cover far more than you might think, yet we still had the San Bernardino shootings. The laws fail.

Yet the San Bernardino attack happened.

Now, in the nightly news, we have “San Bernardino” being held up as an example of WHY we need more “gun control” (meaning gun banning). As though there were not already such law on the books in California.

Hearing that, again and again, I realized that many folks do not realize the flat our lie it pushes.

The notion that “IF ONLY we had ‘assault weapon’ bans” it would not have happened… Completing missing the point that they are effectively banned in California.

With that in mind, I’m going to list here some of the banned things and some of the California law, just so it is VERY clear what the rest of the country has to look for in their future and so that everyone can see just how useless banning “assault weapons” really is. Also the lie of just what one is. The popular notion is that these are “military guns”, often implicitly to include full auto or burst mode. The reality is that full auto and burst mode are entirely illegal in California (and much of the rest of the nation) without very special licenses that are very hard to get.

So what IS an “assault weapon” as the gun banners choose to define them?

Mostly it is an “ugly gun” in their eyes. Essentially NONE of the features they used to define one has any practical impact on lethality. The only exception is limiting magazines to 10 rounds, but even then it just means carry of 2 x the number of magazines (or 3 x) of smaller size each and about a 1 SECOND magazine swap. So also nearly nothing. That lead to a ban on magazines that can be removed without a ‘tool’. The San Bernardino shooters just made illegal modifications and got around it. By breaking the law.

Do note: It includes pistols with two grips, or a 10+round magazine in any gun. It also includes shotguns.

Not what you thought? That is the point of the “assault weapon” lie in law.

California Law

From the wiki:

https://en.wikipedia.org/wiki/Gun_laws_in_California

Here’s the intro, bold mine.

The gun laws of California are some of the most restrictive in the United States. A Firearm Safety Certificate, obtained by passing a written test, is required for gun purchases. Handguns sold by dealers must be “California legal” by being listed on the state’s Roster of Handguns Certified for Sale. This roster, which requires handgun manufacturers to pay a fee and submit specific models for safety testing, has become progressively more stringent over time and is currently the subject of a federal civil rights lawsuit on the basis that it is a de facto ban on new handgun models. Private sales of firearms must be done through a licensed dealer. All firearm sales are recorded by the state, and have a ten-day waiting period. Unlike most other states, California has no provision in its state constitution that explicitly guarantees an individual right to keep and bear arms. The California Supreme Court has maintained that most of California’s restrictive gun laws are constitutional, based on the fact that the state’s constitution does not explicitly guarantee private citizens the right to purchase, possess, or carry firearms. However, U.S. Supreme Court decisions of Heller (2008) and McDonald (2010) established that the Second Amendment applies to all states within the Union, and many of California’s gun laws are now being challenged in the federal courts.

California Penal Code §12031 defines what constitutes a loaded weapon.

Semi-automatic firearms that the state has classified as assault weapons; .50 BMG caliber rifles; and high-capacity magazines (magazines that can hold more than ten rounds of ammunition) may not be sold in California. Possession of automatic firearms, and of short-barreled shotguns and rifles, is generally prohibited.

California is a “may issue” state for permits to carry concealed guns. The willingness of issuing authorities in California ranges from No Issue in most urban areas to Shall Issue in rural counties. Additionally, the issuing authority can also impose restrictions on the CCW permit-holder, such as limiting concealed carry only to the purposes listed on the approved CCW permit application. However, concealed carry permits are valid statewide, regardless of where they were issued. This creates a situation where residents in presumptively No Issue locations such as Los Angeles and San Francisco cannot lawfully carry a concealed firearm, but residents from other counties with more permissive CCW issuance policies can lawfully carry within these same jurisdictions. California does not recognize concealed carry permits issued by other states, and non-residents are generally forbidden from obtaining a California concealed carry permit.

California has state preemption for many, but not all, firearms laws. Actual enforcement of California’s firearms laws also varies widely across the state. Urban areas, such as the San Francisco and Los Angeles metropolitan areas strictly enforce firearms laws, and some communities within these areas have passed local ordinances that make legally owning a firearm difficult. Meanwhile, some rural jurisdictions narrowly enforce the same firearms laws by prosecuting only those who demonstrate malicious intent, or not enforcing portions of the state’s firearms laws at all. The California Highway Patrol strictly enforces state firearms law anywhere in California.

So it is the “wet dream” of gun banners, er, “control” advocates…

ANY sale is only through a Federal Firearms License dealer, has a waiting period, and is forever engraved in Your Papers in Your Dossier at Central Authority. No “gun show loophole”. No difference either other than being a royal PITA and wasting a lot of money.

You MUST get a State Approved “certificate” to exercise your right under the constitution to buy a gun. ANY gun.

Anything the State chooses to call an “assault weapon” is illegal to buy. Anything with more than 10 rounds magazine too. Oh, and forget any actual machine guns even if you try to get the license. (Sometimes a movie studio can get an exemption / license). There is an exception made for tubular magazines on .22 LR Rifles as they are part of the gun and essentially all of them come in over 10 rounds.

So, with essentially EVERY POSSIBLE “assault weapon” banned at whim, we’re perfectly safe, right?

Ask the folks in San Bernardino…

Here are the details on what makes an “assault weapon”. I’ll interleave some comments, bold mine:

Assault weapons

Since 1989, it is illegal to sell a firearm that the state has defined as an assault weapon and that has been listed in the California Department of Justice (DOJ) roster of prohibited firearms. This includes many military look-alike semi-automatic rifles and .50 caliber BMG rifles.

So this isn’t something new. It has been around for 27 years now. All the “grandfathered” guns are getting worn out and / or moved out of the State. Anything new is under the ban. Oh, but you had to register them to be legal…

DOJ roster firearms may be legally possessed if registered with the state prior to January 2005. Military look-alike firearms that are not listed on the DOJ roster of prohibited firearms, known as “off-list lowers,” are legal* to own and possess as long as state laws concerning configuration are followed. It is illegal to import, sell, give, trade, or lend a magazine that holds more than 10 rounds of ammunition, except for fixed tubular magazines for lever-action rifles and .22 caliber rifles; however, the possession of such magazines is legal. *Technically these “off-list” lowers are Category 2 assault weapons under current California law. However, in the 2001 case Harrott v. County of Kings (25 P.3d 649 (Cal. 2001), the Category 2 assault weapon law was ruled unenforceable.
Assault Weapons Control Act of 1989

IF you have an old magazine from prior to 1989, you can keep it and be legal. No new ones though. So how’s that 10 round limit working out? Ask the folks in San Bernardino…

Main article: Roberti-Roos Assault Weapons Control Act of 1989

The Roberti-Roos Assault Weapons Control Act of 1989 (AWCA), its augmentation in 1999, and the .50 Caliber BMG Regulation Act of 2004 have led to many restrictions on semi-automatic firearms. In addition to a list of specific firearms that are banned by name, the following firearms are banned by characteristic (from Penal Code §12276.1):

(1) A semiautomatic, centerfire rifle that has the capacity to accept a detachable magazine and any one of the following:

(A) A pistol grip that protrudes conspicuously beneath the action of the weapon.
(B) A thumbhole stock.
(C) A folding or telescoping stock.
(D) A grenade launcher or flare launcher.
(E) A flash suppressor.
(F) A forward pistol grip.

Now just how a fluted barrel end so you don’t go night blind on a pig hunt, or a pistol grip changes a rifle from “Good” to “Bad” is very opaque. But just be forewarned: IF you want a gun with a folding stock (so it fits in your boat better) or a pistol grip (as they are easier for some folks to hold – like arthritic wrists), or even a thumbhole stock like competition shooters use, well, give it up. Someone doesn’t like that as they think it looks mean. Never mind it has no practical impact on lethality.

But just let that sink in. A Deer Hunting Rifle with with a 4 round detachable box magazine and target grade thumbhole stock is an “assault weapon”. Register yourself at the politically incorrect counter, pay your fees, and be prepared for bans and raids.


(2) A semiautomatic, centerfire rifle that has a fixed magazine with the capacity to accept more than 10 rounds.

ANY centerfire rifle over 10 rounds magazine, even if the magazine is fixed in place. This matters since The State effectively banned removable magazines in “ugly guns” by putting all of them on the banned list. The “work around” was something called the Bullet Button (ref below). You can’t eject the magazine by hand, but must use a “tool”. Via court case, a bullet was ruled a “tool”. (Hey, any chunk of metal would do, but the bullet is handy. Had the case been lost, then folks would just hang a hex key on a wrist band).

This matters because it is what the San Bernardino folks used. They did, however, modify the mechanism illegally to enable a finger push to work. (I surmise they figured out that a chunk of metal rod and superglue makes a non-finger button fingerable length…)

And that, in essence, is the problem. Folks willing to commit murder are not really concerned about following all the niceties of making their gun conform to stupidity.

So they had a friend buy a legal “semi-ugly” gun, illegally transfer it to them, then made illegal modifications, then transported it illegally after loading it, to commit illegal murders. I think I see a trend… Laws don’t stop them.

(3) A semiautomatic, centerfire rifle that has an overall length of less than 30 inches [762 mm].
(4) A semiautomatic pistol that has the capacity to accept a detachable magazine and any one of the following:

(A) A threaded barrel, capable of accepting a flash suppressor, forward handgrip.
(B) A second handgrip.
(C) A shroud that is attached to, or partially or completely encircles, the barrel that allows the bearer to fire the weapon without burning his or her hand, except a slide that encloses the barrel.
(D) The capacity to accept a detachable magazine at some location outside of the pistol grip.

(5) A semiautomatic pistol with a fixed magazine that has the capacity to accept more than 10 rounds.
(6) A semiautomatic shotgun that has both of the following:

(A) A folding or telescoping stock.
(B) A pistol grip that protrudes conspicuously beneath the action of the weapon, thumbhole stock, or vertical handgrip.

What difference does it make to have the magazine outside the pistol grip? None. What difference does it make to have a second hand grip? None. (Except maybe to the elderly and women with small hands who need a better grip on a gun). Essentially, this is an “ugly gun” spec, devoid of practical effect.

How about you folks with shotguns? Think you are exempt?

(7) A semiautomatic shotgun that has the ability to accept a detachable magazine.
(8) Any shotgun with a revolving cylinder.

Nope. Now a revolving shotgun is not exactly a state of the art “assault weapon”, but they do look scary. Welcome to banning state of the art 1800’s technology. Also note that most semi-auto shotguns let you feed ammo into the loading gate any time you like. A bag on the hip is an unlimited magazine, but that’s OK, it isn’t a detachable box. Forget having two boxes, one with turkey loads and one with deer slugs, and swapping as whichever one presents to you. That would be using an “assault weapon”.

And that is the essential lie at the hear ot “assault weapons” bans. They do NOT ban Military Guns, they ban things like shotguns and pistols with the “wrong” grips.

In addition, (Penal Code §12001.5) bans, by definition, short-barreled shotguns and short-barreled rifles. Defined in Penal Code §12020; a short-barreled shotgun is defined as a firearm (designed, redesigned, or altered) to fire a fixed shotgun shell and has a barrel or barrels of less than 18 inches or an overall length of less than 26 inches. A short-barreled rifle is defined as a semiautomatic, center fire rifle with a barrel length of less than 16 inches or an overall length of less than 26 inches.

Interesting note- While a Rossi Circuit Judge (18″ barrel) is considered a shotgun with a revolving cylinder (violation of #8 above), the CA DOJ claims it is legal because it has a rifled barreled. However, the Taurus Judge handgun is considered a “short-barreled shotgun” and therefore illegal in CA, even though it fires the same shot shell as the Circuit Judge, as well as has a rifled barrel. Conversely, there are many revolvers that fire shot shells made in different calibers (e.g. 22, 9mm, 38, etc.) mostly used to shoot birds or snakes. Even though these handguns, with less that 18″ barrels, fire shot shells, like the The Judge, they are legal in California.

Hopefully that helps make it clear why folks who DO know something about guns are so adamantly against “assault weapons bans”. First off, they are butt stupid. Second off, they just don’t work (see San Bernardino). Third, they are a royal PITA to us normal folks.

Bullet Button

https://en.wikipedia.org/wiki/Bullet_button


A bullet button is a device used to fix a magazine in a semiautomatic rifle
that replaces the magazine release with a block which forces the user to remove the magazine by using a tool as opposed to his or her finger; this allows rifles to comply with California’s firearms law. The name came about due to a 1999 California State law which said that a “bullet or ammunition cartridge is considered a tool.”
History

After certain rifles with detachable magazines and certain other features were classified as assault weapons under California State law, gun owners and manufacturers sought various ways to obtain certain styles of rifles similar to those determined to be assault weapons. One of the most common modifications is the use of a part known as a bullet button, which modifies a rifle so that the magazine is not removable without the use of a tool (a bullet was defined as a tool per state law). The bullet button was invented and named by Darin Prince of California in January 2007. Prince also holds the US Trademark for Bullet Button USPTO trademark registration number 77663672

The bullet button recesses a small release within a block that replaces the magazine release. The recessed button to detach the magazine cannot be pressed by the shooter’s finger. Firearms with this feature no longer have a “detachable magazine” under California’s assault weapons definition
, and therefore may be exempt depending on the other requirements.

The 2012 court case Haynie v Pleasanton validated that a bullet button is legal and rifles that have one installed are not considered assault weapons.

Many tools have been devised to make it easier and faster to release a magazine from a rifle, as California law states that the user must use an external tool not attached to the rifle.
A popular tool, the “magnet button,” which sticks on the bullet button, has not been determined to be illegal. The use of illegal buttons may cause the rifle to be considered an assault weapon, which is a felony and could result in prosecution.

Gun-rights activist Jeff Knox wrote that banning guns with bullet buttons would be unconstitutional.

California Senator Leland Yee attempted to have the bullet button outlawed in California, as did U.S. Senator Dianne Feinstein at the federal level; both attempts failed. On April 20, 2016, California state lawmakers gave initial approval of a bill that prohibited the sale of rifles with the bullet button. This followed a December 2015 terrorist attack in San Bernardino, California, in which the perpetrators, Rizwan Farook and Tashfeen Malik, used rifles with the bullet button, which they modified to circumvent the device.

So after breaking a few dozen laws, including murder, the “fix” is to make it even harder for all the rest of us to change magazines when we DON’T illegally modify our firearms!?

“The Stupid Is Strong In Them, OB1″…

Odds and Odder Ends

Just Traveling through?

Get your butt out of town fast, don’t stop unless you can’t keep moving, and better have a lot of locked boxes.

Nonresidents transporting assault weapons through California

There are protections under the federal Firearm Owners Protection Act for nonresidents traveling through California with firearms that meet the state’s assault weapon criteria. First, the weapon must be legal for the traveler to own under federal law and under the laws of his or her home state and the state of destination. Additionally, the weapon in question must be unloaded with the firearm and ammunition locked in separate cases and placed in an area of the vehicle that is not easily accessible, such as the trunk of a car or bed of a truck. Finally, the traveler should traverse the state by the shortest route and make the minimum number of stops practicable.

Those of you with hatchback cars, station wagons, vans, and no trunk, well, hope the cop takes pity on you… Also, do note the 2 boxes. No sticking ammo into the gun case and calling it locked and done. Oh, and no stopping for lunch and a movie with family or friends along the way. That stop wasn’t needed and you violated the “minium” “practicable” provision. Welcome to jail…

Oh, and make SURE you have a map of EVERY school of any kind whatsoever.

Transportation

When being transported, handguns must be unloaded and in a locked fully enclosed container other than the glove box or any console attached to the vehicle. The trunk of a car is considered to be a locked container but a glove box or “utility box” is specifically forbidden. If one believes he or she is within a “gun-free school zone” (area surrounding 1,000 feet from the edge of school grounds which teaches any grade from kindergarten to 12th grade) then the handgun must be locked in a fully enclosed container. Failure to lock up a handgun while in a school zone is a violation of federal (only if one does not possess a concealed weapons permit issued by California) and state law.

Long guns (rifles, shotguns) must be unloaded when transported in a vehicle. There is no requirement for a locked container with the exception of long guns considered to be “assault weapons”. Federal law requires locking containers when inside of a “gun-free school zone.” In U.S. v. Lopez the Supreme Court ruled the federal Gun-Free School Zone Act was an unconstitutional exercise of Congress’s power under the commerce clause. However, in 1996 Congress passed an amendment to the law requiring the gun to have traveled in interstate commerce, thereby voiding the effect of the ruling.

Assault weapons, as defined by California law, must always be transported in locked containers and may only be transported under certain circumstances

So note that simply transporting their guns was a separate offense for the San Bernardino shooters.

The school zone of 1000 feet is about 5 blocks in my neighborhood. Mapping out the local schools, it is essentially impossible to leave my neighborhood and not be in one at some point. Lord help the person who doesn’t know the area and doesn’t know a school is 4 blocks off the freeway…

Oh, and don’t let your 17 year old be in the presence of a gun:

Child safety

Firearms must be kept locked up when children may be present
. The 2008 California Dangerous Weapons Control Law modified California Penal Code §12035 defining criminal storage of a firearm as keeping “any loaded firearm within any premises that are under his or her custody or control and he or she knows or reasonably should know that a child is likely to gain access to the firearm.” A person may be charged with a crime, if he or she keeps a loaded firearm, and the child takes the firearm to a public place or causes injury.

Note the “may”. They don’t have to actually BE there. Just “may” be there. Someday…

So the San Bernardino shooters also violated that law as they had a kid at home. (Infants count too).

Also, be sure you do not “transfer” or “loan” a 10+ rd magazine to anyone. That’s a crime. A bit unclear is if letting them shoot your gun at the range is “loan” snd a crime, or not.

Section 32310 of the Penal Code states: “commencing January 1, 2000, any person in this state who manufactures or causes to be manufactured, imports into the state, keeps for sale, or offers or exposes for sale, or who gives, lends, buys, or receives any large-capacity magazine is punishable by imprisonment in a county jail not exceeding one year or imprisonment”. Thus, the offenses listed can be charged as a felony or a misdemeanor at the discretion of the prosecutor. The section continues further by explaining that: “‘manufacturing’ includes both fabricating a magazine and assembling a magazine from a combination of parts, including, but not limited to, the body, spring, follower, and floor plate or end plate, to be a fully functioning large-capacity magazine”. Until January 1, 2014, it was only a crime to “manufacture, import, keep for sale, offer or expose for sale, or give or lend any large-capacity magazine”. Assembly Bill 48 was signed by Governor Jerry Brown on October 11, 2013 and expanded previous prohibitions by making it illegal to buy or receive a large-capacity magazine or magazine rebuild kit. Peace officers (under Penal Code Section 830) and “person licensed pursuant to [CA Penal Code] Sections 26700 to 26915” are exempt this prohibition on the purchase and sale of large-capacity magazines for personal use. However, federal law enforcement officers are not exempt and must obtain large-capacity magazines through their agency.

Can’t be letting Federal Law Enforcement buy large capacity magazines… they might hurt somebody…

Also note, that despite a State Preemption law, local cities often pass their own tighter bans, so be careful what CITY you drive through.

It is noteworthy that mere possession of a large-capacity magazine is not, in and of itself, a violation of the California Penal Code. That said, the City of Sunnyvale (Chapter 9.44 of the Sunnyvale Municipal Code) and the City and County of San Francisco (Article 9, Section 619 of the San Francisco Police Code) have enacted ordinances that make mere possession of large-capacity magazines a misdemeanor offense within their respective city limits. The Los Angeles City Council has passed a resolution stating they want to draft an ordinance similar to those in Sunnyvale and San Francisco but no actual ordinance has been passed.

So be sure to plot your course carefully avoiding every local nutcase law fanatic…

So I own a perfectly legal pre-ban magazine for one of my guns, but I can’t drive through Sunnyvale to the shooting range with it. Nor can I drive to the North Coast via Hwy 101 as it goes through San Francisco. Routing inland adds a few hours and has no view, but works. Maybe. If there are no schools 1/5 of a mile either side of the freeway…

In Conclusion

This is just a SAMPLE of the crazy patchwork of gun laws in California. The intent is simple. Force ALL handguns and ANY gun “they” don’t like to be banned or locked up at all times. That use of “they” is not hyperbole. There is a commission that puts guns on the banned list. There really is a “they” and they really do ban what isn’t to their liking. Then layer on enough edge cases that just about anyone at just about any time can be arrested and then their guns confiscated.

Note that even in the boonies, you better have a hunting license to carry an UNLOADED gun. Say from your car to the shooting range.

Prior to January 1, 2012, it was legal to openly carry an unloaded handgun in public. In October 2011, Governor Jerry Brown signed a bill that modifies the law on openly carrying an unloaded firearm to match the restrictions for openly carrying a loaded weapon.] Legislation was later signed by Governor Brown to expand these restrictions to long guns and shotguns, except while hunting.

Note that “shooting range” is not “hunting” nor is “taking to the cabin in case of bear attack” if you don’t have a hunting license. Gotta have that locked box…

California, busy protecting people from unloaded guns…

Bill 1014 that has passed the State Senate in September 2014 would allow the police to confiscate guns from high-risk individuals for a period of 21 days without a warrant or court order. On 30 September 2014, Governor Brown signed the law which is phased in through 1 January 2016. This makes California the fourth state (behind Connecticut, Indiana, and New York) to have a weapons seizure law.

It isn’t stated what makes someone “high-risk”. Perhaps not agreeing that “Global Warming” is real? Using “hate speech” like saying marriage ought to be between a man and a woman? Who knows… but at least they don’t need to get any messy due process or warrants or courts involved…

Yet despite the most draconian set of gun bans and laws around, San Bernardino still happened, and Oakland still has shootouts in the drug turfs.

Is there really any doubt that this same set of laws is “coming soon to a State (or Feds) near you”?

Or that they will be just as ineffective at stopping gun deaths?

Do not let the phrase “assault weapon” fool you.
It includes handguns, shotguns, anything with a big magazine, and more.
Just say no.

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