18 December 2012

SP 500 Futures Daily Chart at Year End - Pigmen Rampant on a Field of Monetary Inflation

There is a an obvious ramping in the US equity markets into the year end that is running into fairly long term resistance.

I think 1455 is the highest this market will go without a deal on the fiscal cliff. Perhaps not even that high without an extraordinary effort.

If needed, Wall Street stands ready to pressure the Congress and the Administration in January by dumping the financial asset markets, hard, in the manner of the TARP negotiations.  We'll make them an offer they can't refuse.

Conversely, the SP 500 is in a fairly obvious inverse head and shoulders formation that has not yet activated by breaking out from its neckline, which is around 1455. If something does happen that permits such a breakout, it can run quite a bit.

There is a similar potential Inverse H&S on the NDX 100 big cap tech chart.

I suggest as always you ask the question cui bono, 'who benefits?'   Although they do happen, there are few accidents these days.

From a certain perspective the US and UK financial systems are being dominated by a set of loosely organized criminal enterprises that have captured, or at the least nullified, the regulatory functions of the markets.  This adds a significant element of uncertainty to what in theory is a discounting and price discovery mechanism.

There are rumours of a 'deal' on the fiscal cliff, in which the Republicans accept tax increases of a sort on those with incomes over $400,000 per year, and Democrats accept cuts on pensions of the elderly and veterans by using 'chained CPI' to calculate inflation rather than the current, significantly weakened, version of CPI-W.  The major feature of chained CPI is to make substitutions to cheaper products as prices increase.  As meat prices increase, for example, one can switch from beef to pork, pork to chicken, and chicken to dry cat food.

This change does so little to really 'fix' the budget problems of the next ten years, but visits such pain on the weak, that one has to wonder if there is a streak of sadism in the monied interests controlling the Beltway.   Although they will deny it, I think there is.

The plutocrats intend to resolve their debt problems generated by a corrupt financial system by inflating the currency. The benefit is that a switch to an even more distorting method of calculating price inflation will provide additional cover to their debasement of the currency.  I am not ruling out another asset bubble, this time probably in the financial asset markets.

The story for the year end seems to be inflating financial risk assets like stocks while capping precious metals and other key commodities.

As for the promised raising of taxes on the uber-wealthy, don't you believe it.  Their tax avoidance schemes are well-researched, well-funded, and intricate in ways that the average person can hardly understand.   And those educated enough to understand it won't say a word, through a mixed bag of careerism, self-interest, willful ideological blindness, and personal greed.   Its a feast of fools.

Why admit complicity in a fraud and accept the consequences when you  can double down and attempt to take it all, and write the history afterwards.

Its a win-win for the pigmen, shifting the pain to the elderly and veterans, and achieving even greater opacity to their wealth transfer schemes through monetary inflation.  If you know how to play it, asset inflation through official monetary magic, which is just another facet of that age old fraud of seigniorage,  is a wonderful way to steal from the hoi polloi without them feeling it until collapse comes, in the manner of a Ponzi scheme.

Let's see what happens.