EDITOR: | April 13th, 2014

Heartbleed Bug ‘contagion’ creates market malaise

| April 13, 2014 | No Comments

ContagionOur last week ended with the rumbling from the confusion that came from disruptive impact of the Heartbleed bug that had online paranoia at an all-time high. In case you have not drilled down through the endless media coverage and analysis on what happened here’s what your computer(s) and various electronics may or may not have caught: “The Heartbleed bug allows anyone on the Internet to read the memory of the systems protected by the vulnerable versions of the OpenSSL software. This compromises the secret keys used to identify the service providers and to encrypt the traffic, the names and passwords of the users and the actual content. This allows attackers to eavesdrop on communications, steal data directly from the services and users and to impersonate services and users.”

Confused? Basically, many of us were surprised to discover that two-thirds of our online security is dependent on eleven volunteers that work from a command center called the “OpenSSL Project”. Founded in 1998, this group is so poorly funded that most of these dirty dozen have other jobs because they have to. Think of it this way, the online security of most of our online universe is dependent on a well-known formula for business failure affectionately referred to by capitalists as the ‘volunteer contribution’ revenue model. Whereas, users opt-in to pay if they want to — and for how ever much they would like.

It seems that the karma of this group struck and has reminded us of the balance of nature here. I mean its the first sunny weekend of spring and many of us have been forced inside by this contagion, nearly paralyzed by dread as we try and recall all of the websites online in which we utilized our favorite passwords to change them as recommended. Believe me, if I had known I could contribute $20 a month ago to avoid this weekend’s password spring cleaning, they could have certainly counted me in to support OpenSSL’s encryption tools. The same tools that the WSJ says have “since been adopted by two-thirds of Web servers. Websites, network-equipment companies and governments use OpenSSL tools to protect personal and other sensitive information online.”

Anyways, for all of those with an eye on the NSA  – the NSA have denied possessing any pre-existing knowledge, and the person taking the fall is a sad lonely overworked programmer Robin Seggelmann. This German programmer who volunteers as a developer on the OpenSSL team said in a blog post published on Friday that he had written the code responsible for the vulnerability while working on a research project. Is it just me or does it seem painful to identify a volunteer student as the culprit for our compromised security (click here to access Google’s online updates).

I started this week-in-review with the Heartbleed bug as I am convinced that in addition to wasting our time that it is responsible for crawling into our wallets via our market. An unmemorable week overall, the REE Leader Index closed at 271.52 points, down -1.74% and for the first time in memory outperformed InvestorIntel members that closed down -4.53%. Graphite & Graphene members were down -3.05%, Agribusiness down -4.03%, Gold, Base & Precious Metals down -5.59% with the light at the end of the pipeline – Oil & Gas +1.56%.

So here’s the gist of last week, if you put out good news…and indeed some of our clients did: you did not see the market reward you as it should. According to BourneTrader who has asked that his nickname be changed out of deference to another Rockstar who apparently has his number – we should see some nice movement this week after the market moves downward on Monday AM and then moving upward for midweek. BT cites the historical performance that ties in directly to Wednesday’s tax filing in the U.S.

I told BourneTrader or BT as I prefer that Black Knight had text messaged me last night that with a message is friends last week with: “We are continuing to do some selling/hedging on the broad U.S. markets this week. Some of my analysis and indicators have turned bearish over the intermediate term.”

BT told me that traditional spring selling was happening to get into dividends and that oil is strong. He credits “Soros and Hedgies taking this market down to gains.” He then added that Putin was the Russian Heartbleed and that the strengthening of a trading block for China and Russia should remind investors to utilize caution.

Looking for good news, the team at Rivkin wrote investors on Friday that the positive news out last week on Australian unemployment means that we should not be “surprised if the ASX 200 begins to outperform the tech-infected US equity markets.” We work with a lot of Australians so we will take this upbeat note and speaking of Australia, I could not be more delighted that Robin Bromby is finally back from vacation in Europe and will be writing and posting by early tomorrow AM.

Speaking of InvestorIntel quarterbacks, London-based columnist Chris Ecclestone and Detroit-based Jack Lifton will both be on BNN this week. Catch Chris in an interview on antimony on Tuesday and Jack on rare earths on Thursday – both at 11:40 AM.

Definition of Contagion: The likelihood that significant economic changes in one country will spread to other countries. Contagion can refer to the spread of either economic booms or economic crises throughout a geographic region.

Disclaimer: The editor of this column is not a licensed investment advisor and is not providing investment advice.


Tracy Weslosky is the founder and CEO for InvestorIntel Corp. (2001-Present), a leading online source of investor information that since 2001 has provided public market ... <Read more about Tracy Weslosky>

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