As he neared Damascus on his journey, suddenly a light from heaven flashed around him. He fell to the ground and heard a voice say to him, “Saul, Saul, why do you persecute me?”

“Who are you, Lord?” Saul asked.

“I am Jesus, whom you are persecuting,” he replied. “Now get up and go into the city, and you will be told what you must do.”

The men traveling with Saul stood there speechless; they heard the sound but did not see anyone. Saul got up from the ground, but when he opened his eyes he could see nothing. So they led him by the hand into Damascus.

For three days he was blind, and did not eat or drink anything.

– Acts 9: 3-9

Yesterday, it was back to school… back to work… and back to worrying about our money.

But nothing was proven yesterday – no hint of what lies ahead, unless what lies ahead is nothing.

Yesterday, the Dow was up 24 points… and gold rose to over $1,400 an ounce.

Our guess is that all the major markets have changed direction.

Gold is now going up.

Stocks and bonds are now going down.

How do we know? You can look at the charts. You can check the sentiment levels. You can study the fundamentals, examine earnings… or even gaze at the stars. You can find ‘reasons’ for a major trend change almost anywhere you want to look.

But the biggest reason is this:

The Pharisees have taken over. Their goal is neither peace nor prosperity. It is to preserve their own power and status… and their wealth… at any cost.

As to peace, you only have to read the headlines. Syria has never posed any threat to the United States of America. Few Americans can find Damascus on the map. Fewer still would care to do so. The city is best known as the place to which the Jew Saul was headed when he became the Christian Paul (allegedly in about 35 AD).

The Bible tells us that Paul was radicalized. He turned on the Pharisees. He abandoned the insiders and the zombies. He wanted real change. Revolutionary change. The kind of change you get when the system falls apart or blows up.

And now, the headlines tell us that the US may be on the road to Damascus too.

But like Saul… or Paul?

War Hounds

Syria’s sovereign government is a sworn enemy of America’s supposed enemy – terrorists.

Yet, in solemn chutzpah, the US National Security Council met to discuss ways to attack not the terrorists… but the government.

Yes, the US now plans an act of war against yet another country in the Middle East… and another intervention of unknown cost and uncertain duration.

Some would ask: “Haven’t they learned anything from Iraq and Afghanistan?” But the questioners would be those who haven’t learned anything themselves.

America’s military adventures have nothing to do with “national security.” They are the exploits of a Pharisee industry, intended to protect the system from spending cuts and radical reform.

And here, leading the war hounds’ charge is the New York Times, out in front as usual, baying for more bombs.

“Bomb Syria, even if it is illegal,” says one op-ed headline.

And the Wall Street Journal tells us that war is too important to be left to the peoples’ representatives in Congress, as the Constitution demands:

The reason to [for Congress to] authorize the use of force is not to save this President from embarrassment. It is to rescue American credibility and strategic interests from this most feckless of Presidents.

Rescue America’s credibility? Save its strategic interests? Pharisee talk, pure and simple. Empty and self-serving. Designed to preserve the status quo.

From the Financial Times: “The Moral Case for Intervention in Syria”

And here comes The Telegraph: “Syria: The moral case for military intervention is now overwhelming.”

No Credibility

The purported reason for the attack is to punish the Assad regime for using chemical weapons of mass destruction on its own people.

Not that it is by any means sure that the government did in fact gas its own voters. You know as well as we do that this sort of public information is often bogus and usually meaningless.

But even if it were true, we can’t understand why gas is worse than bullets or bombs. When you’re dead, you’re dead. Does it really make any difference if you were gassed or shot?

As for credibility, don’t make us laugh.

Oh wait… It’s not about the dead people. It’s about geopolitics. That’s what John Kerry says.

In a Labor Day conference call with 127 House Democrats, Secretary of State John Kerry invoked an apocalyptic scenario, summoning visions of American power and credibility incinerated in a terrible Middle East-wide conflagration laced with nerve gas and enriched uranium.

An aide to one of the members of Congress who participated in the call told me that Kerry warned that the failure to punish Bashar Al-Assad for using chemical weapons on Syrian civilians could lead to future chemical attacks on Israel and Turkey, emboldening Iran to forge ahead with an alleged nuclear weapons program and perhaps even enter the battlefield in support of Syria. Next, Kerry hammered on the Holocaust, declaring that the US faced a “Munich moment” on Syria.

The member of Congress, a staunch opponent of a US strike on Syria, described Kerry’s pitch as an updated rendition of the Vietnam-era domino theory, which held that if South Vietnam fell, communism would spread across Southeast Asia. “By the end Kerry was practically telling us the Earth was going to fall into the Sun,” the member of Congress commented to aides afterwards.

Munich moment? Say what?

Market Insight:

These Two Gauges Say
US Stocks Are Pricey

From the desk of Chris Hunter

Hopeful analysis on Wall Street is that US stocks are still cheap.

Most of the hopes are pinned on forward P/Es. In other words, current stock prices divided by Wall Street analysts’ estimates of 12-month earnings.

The problem is that the same analysts are incentivized to paint a rosy picture of earnings. And they often do.

An alternative value measure is the CAPE, which warned investors that stocks were pricey during the dot-com bubble and the 2003-07 rally.

CAPE stands for cyclically adjusted price-earnings ratio. It is based on average inflation-adjusted earnings from the previous 10 years. And right now, it shows the S&P 500 to be clearly overvalued.

The CAPE for the S&P 500 is 23.5 versus the historic average of 16.5 – a 42% premium.

This is broadly in line with another useful valuation measure: Tobin’s q, named after economist James Tobin.

This compares the market value and replacement value of the same asset. Or as Tobin put it, it’s the “nexus between financial markets and markets for goods and services.”

A q of above 1 indicates that the market value exceeds the replacement value of that asset. The average tends to be about 0.7.

As John Authers reports in the Financial Times, the latest q of 1.01 suggests US non-financial stocks are overvalued by 58%.

With these numbers in mind, investors are ripe for a conversion. They could become bears at any time… in any place… although perhaps on the road to Damascus.