Sudden worries over earnings, Greece, China and a outage on the Bloomberg terminal system before the open caused the Dow to decline -357 intraday before rebounding only slightly to -279 at the close and barely positive for the year at +0.02%. Weak earnings and a warning from Dow component American Express on the strong dollar impact caused the financial sector to plunge and take the Dow with it.
It was an ugly morning as negativity was flowing from every direction. American Express (AXP) warned that the strong dollar had hurt their earnings significantly and the impact could last for all of 2015. The company said earnings would be flat to down for the rest of the year. Earnings rose +6% to $1.48 that beat estimates of $1.37. However, total revenues declined -12% to $7.95 billion and well under the analyst estimate for $8.21 billion.
Shares of AXP declined -$3.59 to knock -27 points off the Dow.
Also dragging the Dow lower was shares of Goldman Sachs (GS) after Keefe Bruyette downgraded the firm from buy to hold. The broker said Goldman's gains from trading activity were unsustainable and the stock had already priced in the most optimistic outlook. They placed a $210 year end target on GS after the stock spiked to $203 on Thursday. Shares closed at $197 today with the -$2.86 drop knocking -22 points off the Dow.
Dow component Travelers (TRV) was downgraded from buy to hold by Barclay's on a weakened outlook for property and casualty insurers. "Commercial P&C pricing has turned negative, which means margins are likely to compress." Also, "Therefore, expect the P&C reinsurance industry as a whole to witness tough comps with commercial line and reinsurance EPS being flat to down during 2015 and 2016." Credit Suisse just initiated coverage with a hold rating. Travelers shares lost -$3.27 to knock -25 points off the Dow.
The biggest drag on the Dow came from 3M (MMM) with a -$4.18 loss or -32 Dow points. Investors were hearing warnings about losses from the dollar from almost everyone that reported earnings in the last two days and elected to exit MMM ahead of their earnings next week. 3M is highly exposed to the strong dollar with its overseas sales. I suspect we will continue to see anyone with European exposure to be hammered ahead of earnings in the coming weeks.
Other problems weighing on the markets included market changes by Chinese regulators. After China's market closed on Friday regulators put some new limits on buying stocks on margin and also relaxed the rules on short selling. China will now allow fund managers to lend stocks for short selling and expanded the number of stocks investors can short in order to increase the supply to the market. This will allow greater numbers of investors to have short positions. This is an effort by Chinese regulators to slow the ascent of the market.
Chinese investors have been borrowing record amounts of money to buy stocks on margin. Regulators warned investors that use margin to be cautious after seven weeks of gains pushed the markets to seven-year highs. Irrational exuberance is in full bloom in China after the government opened greater access to the markets several months ago. This suggests the Chinese markets will plunge at the open on Monday. H-shares futures declined more than 5% in afterhours trading.
Another market challenge was the rising potential for Greece to exit the Eurozone. Greece has run out of money and the bills are coming due. The new government is refusing to implement the required reforms to get the next tranche of aid from the Troika.
There were rumors in the market that the ECB and/or banking authorities told European banks to get rid of any sovereign Greek debt they were still holding. This could be a preliminary step ahead of a Greek exit from the eurozone. Yields on the Greek ten-year bond immediately spiked to more than 13%.
The outage in the Bloomberg Terminal network was so severe it caused the postponement of a U.K. bond offering. The Bloomberg network provides messaging, security data, analytics and news to more than 300,000 professional market participants worldwide. Many traders and investors rely on its messaging service for their main communications and to execute trades between each other. Without the terminals professional investors were left in the dark and overseas market volume was adversely impacted.
Couple all those factors above along with some high profile earnings misses and you have a reason for a market decline. Mark Tepper, CEO of Strategic Wealth Partners, agreed and said "Current market and economic conditions have created the perfect storm for a 10% market correction. We are looking at really stretched valuations right now with the forward PE of 17+ a red flag." Also, "We have deteriorating earnings, fading economic momentum, the strong dollar and looming interest rate hikes. I do think a pullback is very much in the cards."
On the economic front the Consumer Price Index had some Fed friendly news that could be negative for the market. The headline CPI rose +0.2% for the second consecutive monthly gain. The Core CPI, which does not include food and energy, also rose +0.2% and the third consecutive gain at that rate. On a year over year basis the core rate is up +1.8% and Fed Vice Chair Stanley Fischer said inflation was moving very close to the Fed target rate of +2.0%. Suddenly those rate hikes don't seem that far off if our period of disinflation has finally passed.
With oil prices rising the cost of goods everywhere is rising. Consumers are finally starting to spend their extra cash from the low fuel prices and spring has brought renewed consumer confidence. The energy CPI rose +1.1% in March.
While inflation is moving in the right direction it is still moving at a snail's pace and while the Fed would probably like to raise rates in June but they will probably wait until at least September to see if the weak economics improve. Still, the CPI did kindle some rate hike fears on Friday even though Fed heads were talking down the chances.
Atlanta Fed President Dennis Lockhart said "a move in June is not my preference, although, I don't take June off the table. I would prefer a later liftoff date. I would like to see confirming evidence" that the economy is rebounding. The stronger the evidence, the more orderly the subsequent path of policy would be."
Boston fed President Eric Rosengren said "incoming data would need to improve to fully satisfy the committee's two conditions for starting to raise rates."
Cleveland Fed President Loretta Mester said that while she expects this economic weakness to be transitory, she is looking for the evidence. "I want to see whether the data is going to be consistent with my forecast. We are going to get a lot of data between now and June."
New York Fed President William Dudley said he sees "strong arguments for being a little on the late side."
Consumer Sentiment for April rose from 93.0 to 95.9 and easily beat estimates for a rise to 94.0. The present conditions component rose from 105.0 to 108.2 and the expectations component rose from 85.3 to 88.0. Both numbers returned to the same levels seen in February suggesting the drop in March was an anomaly. The headline number was the second highest reading since 2007 with January's 98.1 the highest. Falling food prices in March probably helped to improve sentiment.
The calendar for next week is lackluster with home sales the primary interest. The two Fed surveys are not normally market movers. The worry over the FOMC meeting the following week should begin to appear by Wednesday. With most of the Fed heads now in caution mode nobody expects the meeting to produce anything but a clone of the March meeting statement.
We had a new split announced last week with PPG and a 2:1 for June. PPG is a $225 stock with no trend after a $50 gain back in Q4. It has been trading sideways in a range in 2015. PPG is not a widely followed stock so I would not expect a split run.
After the big gains in Netflix for the week I am leaning even more towards the announcement of a 10:1 split after shareholders approve the new shares on June 9th. That would give them about a $60 share price based on Friday's close at $571.
General Electric (GE) reported earnings on Friday of 31 cents compared to estimates for 30 cents. However, revenue declined -12.5% to $29.3 billion and well below estimates for $34.2 billion. GE blamed the strong dollar for part of the decline. Revenue in its oil and gas segment declined -8%. Health care revenue declined -3% to $4 billion and aviation revenue declined -2% to $5.67 billion. GE suffered a major loss on Friday when Emirates Airlines awarded Rolls-Royce a $9.2 billion contract to build engines for 50 Airbus A380 super-jumbo jets. GE and their partner United Technologies' Pratt & Whitney lost the bid. GE shares declined fractionally on the earnings news.
Honeywell (HON) reported earnings of $1.41 compared to estimates for $1.39. However, revenue declined -5% to $9.213 billion and well under estimates for $9.569 billion. Revenues were strongly impacted by the strong dollar. Aerospace revenue fell -6% to $3.607 billion. Automation and control systems revenue dropped -3.0% to $3.264 billion. Performance materials revenue fell -5% to $2.342 billion. Honeywell lowered guidance for the full year from revenue of $40.5-$41.1 billion to $39.0-$39.6 billion. However, it raised the low end of earnings guidance from $5.95-$6.15 to $6.00-$6.15 per share. Free cash flow is expected to be in the range of $4.25 billion.
Seagate Technology (STX) reported earnings of $1.08 that was in line with estimates. Revenue of $3.33 billion fell short of estimates for $3.45 billion. The disk drive maker said performance was weakened by slow PC growth and a slow economy in Europe as well as the strong dollar. The company warned that revenue in the current quarter would be down -1.5% to about $3.25 billion and below consensus of $3.4 billion. Seagate did approve a 54 cent dividend payable May 15th to holders on May 1st. Shares rose +2.6% after the report. This was a clear case of bad news already priced in and better news appeared.
Oil field service company Schlumberger (SLB) reported earnings Thursday evening that fell -12% to $1.06 but beating estimates of 89 cents. Revenue fell -9.3% to $10.25 billion and missing estimates for $10.42 billion. In January SLB said it was cutting 9,000 workers as a result of the oil crash. On Thursday the company said it was cutting 11,000 more. Schlumberger said a recovery in land drilling would be "pushed out in time." Also, "We anticipate that a recovery in activity will fall well short of reaching previous levels, hence extending the period of pricing weakness." The earnings beat and the job cut announcement lifted SLB shares on Friday in a bad market.
Nearly 25% of the S&P reports earnings next week. So far 53% of companies reporting have missed their estimates. That is not very encouraging since the early reporters are the big caps and they typically have more earnings strength.
Next week we have some big names including IBM, YHOO, YUM, BA, EBAY, KO, MCD, AMZN, GOOG, MSFT and SBUX to name a few.
The active rig count for the week ending on Friday declined -34 rigs to 954. Oil rigs declined -26 to 734 or a -54.4% decline from the high of 1,609. Active gas rigs declined -8 to 217 and a new 18-year low. Offshore rigs were unchanged at 33, but down -19 from the January high. If we lose another 89 rigs we will be at a 10 year low.
Crude oil rallied over $56 with an 11.5% gain for the week. The next challenge is the resistance at $57.50 and a move over $60 would probably slow the decline in active rigs as producers begin to speculate on a continued rise in prices. There are so many things that could go wrong with a continued crude rally but accelerating refinery utilization to 92.3% last week helped to reduce the inventory build. Refiners consumed an average of 16.21 mbpd of oil last week and the most since 2014.
The week we get the first decline in the inventory level we should get a corresponding rise in crude prices. That could happen over the next couple weeks as refiners begin to flood the distribution system with summer blend gasoline.
Friday was option expiration but I don't think that had anything to do with the decline. Option related volatility typically occurs in the week prior to expiration although there can be volatility on expiration Friday.
Friday's decline had many reasons but the one I have not mentioned yet was simply a failure at resistance. The S&P had strong resistance at 2110 and it failed at that level on Wednesday and Thursday. That failure telegraphed weakness to traders and when the headlines appeared the drop was dramatic.
I warned in my Tuesday commentary, "I would remain cautious for the rest of the week...The markets have lost momentum and without a catalyst the path of least resistance is lower."
The percentage of S&P stocks trading over their 50-day average fell to 44.4% and close to a two month low. The rally to 2110 was on the back of only a few stocks and when those were knocked for a loss the entire market fell sharply.
The market should not be at new highs when 53% of earnings to date have missed their estimates and the economic reports since early February have been weakening. We are due for some PE contraction to bring stock prices back in line with earnings.
The midcap and small cap stocks have been leading the charge higher over the last several weeks because of their lack of exposure to the dollar. The chart below is the advance/decline line on the S&P Midcap-400. The midcaps broke out to new highs in March and tested those highs again on Wednesday. However, the breadth was already shrinking. Note the A/D line fell below its uptrend line from January.
The breakdown in the mid caps and small caps was another negative for the S&P-500. It was lagging those other indexes higher and when they collapsed the S&P-500 was doomed. The S&P is losing momentum after two-years of steady upward gains. The 50-week moving average has only been touched three times in two years. We are due for a retest of the 50 that should take us back to the 1985 level.
The convergence of resistance at 2110 was too much to overcome in a headline heavy environment. Initial support remains at 2075 and 2050. The intraday low on Friday was 2072. Resistance is 2110 and 2117.
The Dow had a similar problem with resistance at 18,100. For 4 of the last 5 days the Dow tried to break through that 18,100 level and actually closed at 18,112 on Wednesday. Unfortunately it could not hold its gains when Dow components began posting weak earnings. The index declined to the middle of its recent range and tried to hold at the 17,850 support level but eventually fell through in the afternoon to test 17,750 before short covering at the close lifted it back over 17,800.
All 30 Dow components were in the red but 14 lost less than $1. The lack of a material rebound on the Dow or S&P after an early morning decline of such magnitude is an omen for Monday. With China likely to see its markets decline significantly the weakness could rub off on the rest of the global markets.
With the 17,850 support level broken the next target is 17,600. Resistance remains 18,100 and 18,200.
The Nasdaq was hampered by the decline in Apple with 10% of the Nasdaq loss due to the drop in Apple shares. However, Google, Priceline, Amazon, Biogen and Regeneron added to the -75 point decline. The Nasdaq Composite closed in the middle of its recent range with 4850 still the critical support level. The psychological 5000 level is still resistance and was tested on 3 of the last 5 days. There were two closes over that level at 5007 and 5011 before the Friday crash.
The Nasdaq 100 ($NDX) failed to return to its highs with the resistance at 4475 untouched. The lower high on the Nasdaq big cap index is just one more symptom of a weakening market. The decline to 4350 is still well over the critical support at 4300 but still in the danger zone.
The Russell 2000 declined -1.65% on Friday after setting a new closing high of 1275 on Wednesday. Friday's close at 1251 was right on uptrend support so we have not broken any critical support levels. I think we are seeing some profit taking in the small caps after the first week of big cap earnings turned out so lousy. Investors are probably afraid of what they will see in the week ahead.
So far, no harm, no foul and we have two decent support levels at 1230 and 1208 before the small caps turn ugly.
You never know when a Friday flush will turn into a Monday rally. Typically a sharp Friday decline that finishes close to the lows will be followed by a volatile Monday. Following those two days of declines there is a strong possibility of a turnaround Tuesday. However, it is hard to project this on a historical basis because of the various factors that unite to cause severely negative Fridays. Typically it is a combination of headlines that create imminent uncertainty and traders just don't want to go long into a weekend that could lead to a gap down on Monday.
The change in the Chinese market regulations is actually a good thing long term but with the Chinese futures down -5% after the close on Friday it is a pretty good bet the irrational exuberance bubble is going to lose some air on Monday. While Monday may not be the start of a correction in the Chinese markets I believe we will see one in the weeks ahead. As long as it occurs gradually it would not be a problem for the U.S. markets. Everyone knows the China market spike can't last but investors always want to see things happen in moderation over time rather than over the span of several days.
The Chinese market does not directly impact the U.S. market but a sudden sentiment change can cause instability in the global markets just because investors and portfolio managers are worry warts. They tend to sell first and ask questions later when something dramatic happens quickly.
The bigger problem is Greece. There is a growing belief that Greece is going to default on its debts and leave the Eurozone and it could happen very soon. On Saturday ECB head Mario Draghi seemed to imply that a Greek default was imminent and said "funds were sufficient to cope should Athens default on its debts," but warned that Europe would be entering "uncharted waters" that made the outcome of a default uncertain. Draghi spoke in Washington at the IMF spring meeting saying, "The short-term danger of contagion (from a Greek exit) is difficult to assess, but we have enough buffers in place. Even though they were designed for different circumstances, they are sufficient. But we are entering uncharted waters."
Greece is being obstinate in refusing to agree to the list of demands from the Troika (IMF, ECB, EU) in order to qualify for more bailout funds. Greece refuses to implement any further austerity measures and seems to feel that a Greek exit will do more harm to the eurozone than to Greece. The new administration is playing a game of chicken with the Troika and betting they won't let Greece exit. At the IMF meeting Draghi supported an earlier call to "slim down" the list of Troika demands since it appears Greece is not going to agree to the full list of demands anyway. US Treasury Secretary Jacob Lew warned at the IMF meeting that a Greek default would create an "immediate hardship" for Greece and damage the world economy. EU finance ministers will meet again in Latvia next week but they are resigned to the fact that an agreement is unlikely.
This suggests the Greek debt default and potential exit from the Eurozone could occur in the next couple of weeks and this is a prime example of market uncertainty. Nobody really knows what will happen to the Eurozone but there will be serious ripples. Greece owes somewhere in the range of 300 billion euros. Most of that is to the ECB and EU and that means loans from each of the central banks of the Eurozone countries that formed the bailout will be worthless. Greece has a payment of one billion euros due to the IMF in early May. They asked the IMF informally if they could delay that payment and the IMF said no.
A Greek default and exit will not hurt the U.S. but it creates a monster surge in uncertainty and that creates volatility in the markets. This pending uncertainty was a factor in Friday's market decline and that was just on the potential for a Greek default. I would expect more volatility as the headlines fly but it should be brief once it occurs. That is a dip that should be bought, assuming there is nothing else weighing on the markets at the time.
A Greek exit will probably occur over a weekend so many traders did not want to be long at the close on Friday.
I would continue to be cautious about holding too many positions until some of the volatility passes. Keep your stop losses in place and watch for the market to pick a direction.
Economists are rapidly moving their time frame for the first Fed rate hike farther into the future. In March 38 economists were expecting a hike in June or July. In the April survey by Bloomberg that number declined to only 10 with 44 economists now expecting a hike in September of October. That is 71% of the economists surveyed. The chart below is from Bloomberg.
Sell in April and go away? Hulbert's Financial Digest has tracked the two biggest proponents of the "sell in May and go away" strategy. Both the Almanac Investor, which came up with the strategy decades ago, and Sy Harding's Street Smart Report, have come up with modifications to the strategy that produce greater returns. The Almanac Investor has recommended an early sell in April based on the MACD indicator on the S&P. Sy Harding is also using the MACD with a slight technical twist.
Since 2002 the Almanac Investor strategy has generated annual returns of 8.0%. Sy Harding has generated annual returns of 9.2%. The tracking was done by Hulbert's Financial Digest. By utilizing the MACD indicator for a sell signal in April you avoid getting caught in the downdraft at the first of May when institutional investors using the sell in May strategy move to cash. In order to get a MACD sell signal you need a positive trend that suddenly turns negative. Based on the chart below we could get that late April sell signal in the next couple days if the decline continues.
About 300 paratroopers from the 173rd Airborne Brigade arrived in Ukraine on April 15th to begin a six-month training program with the Ukrainian National Guard forces. The training, known a "Fearless Guardian" will train three battalions of Ukrainian troops. Source article
Also last week Putin warned Russia will now target "nonnuclear powers where missile-defense installations are being installed" as objects of priority response. The Russian Defense Minister said "a drive by the U.S. to bring its allies and Kiev closer to the west was a threat to Moscow and had forced it to react." Link
Most current GDP forecast by the Atlanta Fed is +0.1% for Q1.
Global debt has increased by $35 trillion since the financial crisis. Dr. Lacy Hunt EVP of Hoisington Management said, "That is a net negative, debt is an increase in current consumption in exchange for future spending and we are not going to solve this problem by taking on more and more debt." As any family knows when you run up big balances on your credit cards it reduces your future spendable income by the amount of the debt payments. Hunt said, "This process is far from over and rates will move irregularly lower and remain depressed for several years." He pointed to the negative rates in Europe as a result of QE by the ECB and its expected continuation for at least a year. Casey Research Article
The current bull market is 2,184 days old and has gained +213.1%. That is above average in duration and magnitude. There have been 11 bull markets and 10 bear markets since 1949. The prior 10 bull markets lasted an average of 1,770 calendar days and produced gains of +161.4%. Inside those 11 bull markets were 22 corrections from 10% to 19.9% for an average of two corrections per bull market.
With the current bull market almost four years old and the fourth longest on record it is understandable that investors would be getting a little worried with the S&P trading near a forward PE of 18 but with earnings declining. The S&P has now gone 1,292 days without a correction. The long term average between corrections is 514 days. We are due. Data from JeffHirsch. Almanac Trader
The S&P is up only +0.69% over the last 75 trading days. It has been 80 days since there was a 2% move. That is the second longest streak since the financial crisis. Calm before the storm?
It has been over 250 days since U.S. forces began airstrikes on ISIS. U.S. planes have conducted 2,893 missions that have hit 5,314 targets at roughly the cost of $8.5 million per day or $2.5 billion so far. No U.S. airman has lost his life in combat. Unfortunately ISIS continues to take more land and capture more facilities.
While many of those sorties were drones there are some new complications causing trouble. Shia militants figured out a way to hack into the video feed being transmitted from the drones and back to the operators thousands of miles away. Using a $26 piece of Russian hacker software commonly sold to steal satellite TV signals, the insurgents were able to watch the same live video footage as the drone operators.
By watching what the drones were watching they were able to warn the targets that drones were searching for them. This was a tactical advantage and told them what kinds of targets the Americans were searching for and how to better conceal their activities on the ground.
Former Treasury Secretary Larry Summers penned a column last week claiming "This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system." This is a continuation of my running commentary on the future decline of the dollar as a global currency. Mohamed El-Erian wrote a similar article late last month warning of the pending decline in the U.S. dollar.
Read Summers article HERE.
Read El-Erian's article HERE.
Information on China's Asian Infrastructure Bank HERE
Conspiracy theorists this one is for you. In just the last couple weeks several high profile events occurred that were not reported by the major news sources.
First, the New York Fed decided to move a lot of its operations to Chicago on concerns that a natural disaster or other "eventuality" could shut down its market operations as it approaches an interest rate hike, and has added staff and bulked up its satellite office in Chicago. Reuters Article Some market technicians have transferred to Chicago and others were hired at that location. Officials now believe the Chicago staffers can now handle all the market operations that are done daily out of the New York Fed, which is the Fed's main conduit to Wall Street.
In all of recorded history there has never been a natural disaster in New York City that would have been bad enough to totally shut down the operations of the New York Fed.
A lot of government operations and personnel as well as private corporations are moving away from the Washington DC and New York areas. If terrorists ever get a nuclear weapon those are the top two most likely targets.
Second, The North American Aerospace Command (NORAD) is moving back into Cheyenne Mountain in Colorado. The prior home for NORAD is a bunker built 2,000 feet into the granite base of Cheyenne Mountain and is able to withstand a direct hit by a 30 megaton nuclear blast. It was decommissioned 10 years ago because the Russians were no longer considered a threat. NORAD was moved to Peterson Air Force Base in Colorado Springs.
Now NORAD is moving back into the mountain and installing all kinds of high tech communications that would be impervious to an electromagnetic pulse or EMP. When operating the bunker is home to more than 1,100 personnel and is able to operate underground for months on its supply of food and water. Officials say the shift back into Cheyenne Mountain is to safeguard the military's command and control communications from EMP attack. The military announced a $700 million contract with Raytheon to oversee the work.
If the U.S. military is suddenly worried about EMP attack again you have to wonder who they are afraid of. Russia has certainly become more aggressive and Putin hardly lets a week go by that he does not mention Russia's nuclear arsenal. China is also building out its military capacity at more than twice the rate of the prior decade. Within a couple years they will have more ships and submarines than the U.S. Navy. They have created two new intercontinental ballistic missiles that can carry nuclear weapons. As part of their military training over the last 20 years one possible scenario in their manuals has been a preemptive nuclear EMP attack on the USA. One high altitude nuclear detonation approximately 340 miles high could wipe out every electronic device and electric grid in Canada, the USA and northern Mexico.
If Iran gets a nuclear weapon they will be a huge threat. While they don't currently have ICBMs they are working on that technology. What they have tested is short range missiles that can be launched from cargo containers at sea. Russia built the Club-K containerized launch systems and demonstrated their effectiveness. Not to be out done North Korea built the No-dong-B intermediate range missile that can be launched from a container and Iran is thought to have these in inventory. Iran successfully launched a Scud-B missile from a container on a container ship in 2006. Advertising video of Russian cruise missile system in a container.
A major worry by U.S. military planners is that one of these innocent looking containers could be placed on a normal container ship and the nuclear missile launched as the ship nears our shores. Iran has tested missiles in an EMP configuration. That means they launched them into a vertical ascent mode and set them to explode at the top of their trajectory. There is no other reason to explode a test missile a couple hundred miles up unless you were practicing for an EMP attack.
Obviously North Korea would also be an EMP threat since they are farther along in missile technology than Iran, they have tested mobile launch platforms and they have nuclear weapons.
Third, the Dept of Homeland Security is now accepting bids for 62 million rounds of .223 ammo used by AR-15s and M16s. The solicitation said the bullets will be used for training purposes by the U.S. Customs and Border Protection agents. That is a huge amount of ammo to be used for training by those two agencies. Do you think maybe they are expecting some visitors from across the border?
Lastly the U.S. is conducting a joint military and Interagency (IA) Unconventional Warfare exercise throughout Texas, New Mexico, Arizona, California, Nevada, Utah and Colorado called Jade Helm (Google it) from July 15th through September 15th. Note that several of those states are border states and the other three are "pipeline" states for illegal's entering from Mexico.
Part of the press release: Multiple branches of the US military, including Green Berets, Navy Seals, and the 82nd Airborne Division, will participate in the 8-week long exercise, which may result in "increased aircraft in the area at night." Troops will be tasked with honing advanced skills in "large areas of undeveloped land with low population densities," and will work alongside "civilians to gain their trust and an understanding of the issues." The exercise, in which some participants will be "wearing civilian clothes and driving civilian vehicles," lists Texas and Utah as "hostile" territory.
All of these events may be just coincidental but it sure seems like the government is rapidly escalating our combat readiness inside the U.S. and maybe they know something we don't know.
Enter passively and exit aggressively!
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"Women will forgive anything. Otherwise, the race would have died out long ago. Women and cats will do as they please, and men and dogs should relax and get used to the idea."
Robert A. Heinlein