When The Frog Pokes The Bear

France will be disemboweled if it keeps messing with Russia. [Morning Reckoning] January 25, 2024 [WEBSITE]( | [UNSUBSCRIBE]( When The Frog Pokes The Bear Asti, Northern Italy January 25, 2024 [Sean Ring] SEAN RING Hi Reader, No, this isn’t one of Aesop’s Fables. This article refers to a geopolitical game that could end disastrously for one of its players. Why are they playing the game at all? Oh, Champs-Elysses! Not since the days of Napoleon has France been a genuine world power. There are too many strikes. Too many holidays. Too many regulations. There, adultery isn’t a sin; it’s a sport. The French Revolution robbed France of its Catholicism and replaced it with a vacuous secularism that continues to fail. In fact, it’s failing for all the West, as most were stupid enough to adopt the French model. After all, Catholic historian Erik Ritter von Kuehnelt-Leddihn once wrote, “For the average person, all problems date to World War II; for the more informed, to World War I; for the genuine historian, to the French Revolution.” And that makes it easy for a potent religion like Islam to come in and rearrange the face of the place. Sure, France has world-class cuisine, fashion, and food. Its language is beautiful. But those external qualities no longer mask the internal struggle. What was left of France’s empire died in Niger. Yet, it keeps acting like it’s got much more power than it has. And that’s dangerous. Gone are the days when France can prance around the planet, doling out dictums to everyone else, especially Russia. You’d have thought France would have heeded history’s lesson when Napoleon and his Grand Armeé were sent packing from Russia’s western frontier. But Le Petit Roi - that’s what journalist Pepe Escobar calls President Macron - may still be too young to appreciate history. He still thinks he can restore France’s greatness, but that’s long gone. For the foreseeable future, France is merely an open-air museum. What was France’s indiscretion this time? It let a bunch of its Foreign Legionnaires go to Ukraine, where Russia wasted no time in eviscerating them. First, let’s make sure we know who the Legionnaires are, as the last time most of us saw one was Bugs Bunny as a “Foreign Legion Hare.” The French Foreign Legion The French Foreign Legion is a branch of the French Army that consists of foreign volunteers who serve under the French flag. Established in 1831, it allowed foreigners to join the French military and participate in France's colonial campaigns. The French Foreign Legion is known for its rigorous training, strong esprit de corps, and loyalty to France. It has a reputation for being a formidable and elite force that can operate in any environment and situation. The Legion accepts recruits worldwide if they meet the physical, mental, and legal requirements. The French Foreign Legion has a history of involvement in many wars and conflicts, such as the Crimean War, the World Wars, the Indochina War, the Algerian War, the Gulf War, and the War on Terror. Today, the Legion has about 8,000 soldiers and is often deployed to Africa, Asia, and the Middle East for peacekeeping, humanitarian, or combat missions. The French Foreign Legion has a distinctive uniform and insignia, such as the white kepi, the red and green epaulets, the blue sash, and the grenade emblem. The Legion also has its traditions, such as the marching song "Le Boudin," the celebration of Camerone Day every April 30th, and the patronage of Saint Anthony. The French Foreign Legion offers a unique opportunity for foreigners to serve France and earn French citizenship. Legionnaires sign a five-year contract and are given a new identity upon joining. They can apply for citizenship after a few years of service or immediately if wounded. And there’s the rub: about ten percent of the Legionnaires are Russian speakers, such as Russians, Ukrainians, and Belarussians. The French government gives them new identities and, if they’re good enough, new passports after roughly eight years. But the Russian government doesn’t consider them French and won’t call them “Jacques,” whatever shiny new passport they have. With that laid out, let’s get to the incident. [Biden’s 2024 Presidential Run Doomed To Fail – Thanks To New Inflation Surge?]( [Click here to learn more]( Biden has given America its worst inflation crisis in over 43 years. But if you think the worst of inflation is over, think again… [A deadly new “Second Wave” of inflation is coming – one which could send the price of food, gasoline, housing and more skyrocketing much higher than they are today.]( Will this new crisis mean Biden’s 2024 Presidential run is doomed to fail? [Click here now to see my urgent warning.]( [LEARN MORE]( Russia Bombs a Shelter Full of Legionnaires "On the evening of 16 January, the armed forces of the Russian Federation carried out a precision strike on a temporary deployment point of foreign militants in the city of Kharkiv, the core of which were French mercenaries," said the Russian defense ministry. Nice one. The Russians called them “mercenaries” and not “Legionnaires,” which gave France some breathing room and plausible deniability. Local officials in Kharkiv said two Russian missiles struck a residential area in the center of the city, injuring seventeen people, two of them seriously, and badly damaging buildings. Of course, France denied the whole thing. "France helps Ukraine with supplies of military material and military training, in full compliance with international law, in order to help Ukraine in its fight to defend its sovereignty, independence, and territorial integrity," said the French foreign ministry. "France has no mercenaries, neither in Ukraine nor elsewhere, unlike certain others," it added. Smart one, Froggie. They aren’t mercenaries, so you’re not lying. What was the real reason? According to [The Duran]( the French government sent French Foreign Legion soldiers, including intelligence officers, to Ukraine but continued to pay and coordinate them through French intelligence. They’re conducting special operations behind Russian lines, and that led to a Russian strike on the hotel where they were based. Naughty, naughty! Russia has been warning the West to stop sending drones and surveillance to Ukraine, and now they are actively targeting and hunting down foreign fighters, leading to a dangerous escalation with the West. Why is France Risking Confrontation With Russia? There are a few possible reasons. One is that France is trying to curry favor with America. For what reason, I have no idea. Another likely reason is that Europe has long opposed Russia's dominance in the energy and commodity markets, which has caused anxiety over its inability to control Russia's resources. Russia is tightening its control of the commodity trade, causing nervousness in Europe. There’s talk of potential retaliatory steps. But if the West does something stupid like confiscating Russia's frozen assets, Russia will seize Western assets in return. That could lead to Russian control of commodity markets and hinder European access. Finally, this may just be a power play. Macron's stern message to Russia is a response to the collapse of French influence in North Africa. Whatever it is, France is writing checks it can’t cash. The Russians would eat them alive. Wrap Up France needs to cool it, Monsieur Le President, most of all. Yes, he’s a WEF tool and protege of the Rothschilds. But if he pursues this course, Russia will backhand France in the mouth, escalating a conflict that should be much closer to its end than its beginning. That may be what frightens Macron’s masters most of all. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( [[Revealed!] New AI Opportunity Bigger Than The PC?]( [Click here to learn more]( Just imagine being able to turn back the clock to the 1980s – right as a new technology known as the PC was getting its start… Seeing the promise of the PC – and captivated by Microsoft’s technology – an early investor decides to put in $500 during the company’s IPO in 1986. As of today, that $500 investment would have turned into a fortune worth over $1.6 MILLION. I bring this up because we are at the dawn of a new innovation which could be even BIGGER than the PC. [I’m talking about artificial intelligence, or AI]( . According to Yahoo Finance, “we are on the cusp of a technological revolution that will fundamentally change how we live our lives.” And you have the chance to invest on the ground floor… [Click here now to see the 3 tiny AI stocks best positioned to profit]( . [LEARN MORE]( In Case You Missed It… A Real Kick in the BULLS: ATH for S&P??? Greg Guenthner, Editor [Greg Guenthner] GREG GUENTHNER Good Morning Reader, Bust out the bubbly, the S&P 500 is hitting new all-time highs! What’s that you say? Not in a partying mood? You’re not alone. In fact, there’s a large contingent of investors who aren’t dancing in the streets following Friday’s push to fresh highs. Yes, the S&P is soaring with nothing but blue skies above after teasing potential breakouts earlier this month and during the final week of 2023. But fewer than 10% of the S&P’s components shot to new highs during Friday’s push. That’s far from a strong showing on what should have been a memorable trading day. It’s not the end of the world for the bulls. But this isn’t the broad push higher many envisioned when it comes to a fresh all-time high following a grinding bear market. Unless you’ve completely ignored this year’s market action, you can probably figure out what stocks are fueling this move. Spoiler: it’s tech! Specifically, the big, bad mega-caps. The largest tech names on the market are hogging the spotlight (and the gains) as we approach the final few days of January trade. The Magnificent Seven stalwarts are, for the most part, bullying the averages and pushing toward new highs. Everything else? Not so much. Friday’s performance perfectly encapsulated the disconnect. Just look at the attention lavished on the semis… Semiconductors dominated the day as the VanEck Vectors Semiconductor ETF (SMH) soared 3.8% to stretch to yet another all-time high close. World-beater NVIDIA Corp (NVDA) jumped 4%, bringing its year-to-date gains to more than 20%. Advanced Micro Devices Inc. (AMD) continued its catch-up run, rallying 7%. Not to be outdone, upstart Super Micro Computer Inc. (SMCI) exploded higher by more than 35% after raising sales and earnings guidance. These are insane rallies – especially when you compare the combined semiconductor/big tech performance with what’s happening with some of the less popular names on the market. Unfortunately, most traders and investors will chase these extended breakouts instead of taking the time to sift through the more unloved sectors to find the next big move. That’s the choice you have today. You can sit around sulking because you didn’t grab shares of SMCI ahead of last week’s massive gap higher… Or, you can get to work searching for the next opportunity. Remember, this is the stock market! Each week brings new breakouts and breakdowns we can exploit for gains. You just have to know where to look. Recalibrated Expectations Market action outside the mega-cap winners has been weak for one main reason: rate cut expectations have fallen dramatically over the past week. Remember, markets are forward looking. Prices aren’t set by last quarter’s earnings or even today’s news. Instead, they reflect investor expectations for the weeks and months ahead. WIth that in mind, the volatility uptick and skewed sector performances over the past week make perfect sense once you learn that investors believe the chance at a March rate cut is now below 50%. Just a week earlier, consensus expectations for a rate cut at the March meeting topped 80%! This is a huge shift following some relatively warm inflation data and choice words from a couple Fed governors. Bottom line: market watchers have suddenly gotten cold feet as inflation fears heat back up. The Fed triggered the start of the November melt-up rally when Powell signaled the current rate hike cycle was finished. Now that investors are second-guessing the That’s why the growth names have suffered this month. As buyers fought to grab NVDA shares following its big breakout, the ARK Innovation ETF (ARKK) dropped more than 10% to ring in 2024. The market has ground any rate-sensitive stock into a fine paste as skittish traders have reverted back to their pre-melt up playbook: Scoop up the “safe” mega-cap, and sell the smaller growth names. Searching for a Small-cap Bounce Some of the best low-risk buying opportunities come from stocks or sectors retesting key support levels. Following a four-week decline in some of the more speculative areas of the market, we don’t have to look far to find these potentially explosive charts. In fact, small-caps are potentially flashing a tradable bounce after retreating back into their consolidation range. We saw a preview of just how strong these small-cap rallies could be during the Q4 melt up. The iShares Russell 2000 went from breaking to three-year lows in late October to a 25% gain and fresh 52-week highs in less than two months. Obviously, this rally has cooled and IWM has underperformed its large-cap cousins by a wide market so far this year. But the small-cap index is quietly catching a bid, logging its third straight positive day with a gain of 1.5% to start the week. More importantly, IWM might have closed that pesky mid-December gap while successfully tagging a former pivot area in the $190 range that we can trace all the way back to the 2022 bear market. A strong move back toward $200 would mean the furious rally that began just a few short months ago isn’t quite out of steam just yet. The contrarian-minded investor might also be glad to see that the financial media has already soured on the idea of a small-cap renaissance. The Wall Street Journal has declared small-caps dead in the water, citing the recent momentum reset, hotter inflation data, and adjusted rate-cut expectations. “The moment for small-caps might already be over,” the WSJ proclaimed on Monday. If IWM can remain above last week’s lows, I’m giving the bulls the benefit of the doubt. I’d much rather go long IWM here than chase the extended semiconductors into the nosebleed seats… Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Sean Ring] [Sean Ring, CAIA, FRM and CMT]( is a former banker and financial educator and is the editor of the Rude Awakening. Sean has trained interns and graduates from Goldman Sachs, Morgan Stanley, Citi, Bank of America, Standard Chartered Bank, DBS (Singapore), the Abu Dhabi Investment Authority (ADIA), Bank Indonesia (the central bank), HSBC, Barclays, RBS, and BlackRock. He knows the global economy is being corrupted by forces that most people can't understand and has used his unique and worldly experiences to help people navigate the markets. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your The Daily Reckoning subscription, you can ensure its arrival in your mailbox by [whitelisting The Daily Reckoning.](