Stocks and Precious Metals Charts - The Crumbling Edifice

 

"The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revival, but finally giving up in the final collapse."

Charles Kindleberger, Manias, Panics, and Crashes, 1978

"It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers.”

Nassim Taleb, The Black Swan, April 17, 2007

"The whole edifice of modern financial theory is, as described earlier, founded on a few simplifying assumptions.  It presumes that homo economicus is rational and self-interested.  Wrong, suggests the experience of the irrational, mob-psychology bubble and burst of the 1990's.  A further assumption: that price variations follow the bell curve.  Wrong, suggests the by-now widely accepted research of me and many others since the 1960's. Well, the Efficient Market Hypothesis is no more than that, a hypothesis. Many a grand theory has died under the onslaught of real data.”

Benoît B. Mandelbrot, The (Mis)Behavior of Markets, 1997

"And such was the attitude of their minds that a shocking crime was dared by a few, with the blessing of more, and the passive acquiescence of all."

Tacitus, The Murder of Galba, Histories: Book I, XXVIII

"Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface. These artificially constrained systems become prone to 'Black Swans' — that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.  Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems."

Nassim Taleb, The Black Swan of Cairo, Foreign Affairs 1 June 2012


Stocks were in rally mode today.  

VIX fell sharply.

The Dollar dropped.

Gold and silver rallied.

Bitcoin bounced.

SpaceX is flopping around after a long distributional decline.

Crude oil back off a bit.

The wars in the Middle East and the Ukraine continue to worsen, badly.   If these do not concern you greatly your probably need to change your news habits.

We are heading to a major conflagration.  And it will leave a mark.  

The global impact of energy disruption in petroleum products and natural gas is going to impact the world economies very hard later this year.

US GDP came in light of expectations in the second quarter.

Inflation is looking more pernicious, and will probably continue to build.

This is the unlikely outcome of stagflation, which is the product of bad governance and inept policy blowback.

Today was a 'technical rally.'   We will be getting snap back rallies like this going forward. 

But I am afraid that the markets are skidding on a slippery slope that is going to hit us all very hard.

If the power elite come back to the public with their hands outstretched for yet another bailout, just saying 'no' is probably not going to be enough to correct this appalling state of moral hazard. 

As Hermann Hesse wrote in Journey to the East, "His suffering became too great, and you know that when the suffering becomes acute enough, one moves forward." 

We are heading for the killing floor.  And it will try our hearts and our minds— and perhaps put steel in our hearts for meaningful reforms, equality under law, and for justice.

Have a pleasant evening.  

"Hard times is here and everywhere you go,
Times are harder than ever been before.

You know that people they are driftin' from door to door
But they can't find no heaven, I don't care where they go.

People, if I ever can get up off a-this old hard killin' floor,
Lord, I'll never get down this low no more. 

You know you'll say you had money, you better be sure,
'Cause these hard times goin' kill you, just drag on slow."

Skip James, Hard Time Killin' Floor Blues, 1931

Stocks and Precious Metals Charts - Snakes and Ladders and Beasts

 

“Every single empire in its official discourse has said that it is not like all the others, that its circumstances are special, that it has a mission to enlighten, civilize, bring order and democracy, and that it uses force only as a last resort.  And, sadder still, there always is a chorus of willing intellectuals to say calming words about benign or altruistic empires, as if one shouldn't trust the evidence of one's eyes watching the destruction and the misery and death brought by the latest 'mission civilisatrice.'”

Edward W. Said, Orientalism: Preface, 2003

"The tongue of the little one sticks
       to the roof of its mouth with thirst;
the children beg for bread,
       but no one will feed them."

Lamentations 4:4

"Through his first year in Germany [1933], Dodd had been struck again and again by the strange indifference to atrocity that had settled over the nation, the willingness of the populace and the moderate elements in the government to accept each new oppressive decree, each new act of violence, without protest.  Dodd continued to hope that the murders would so outrage the German public that the regime would fall, but as the days passed he saw no evidence of any such outpouring of anger.  The controlled press, not surprisingly, praised Hitler for his decisive behaviour."

Erik Larson, In The Garden of Beasts, 2011

"It can only be hoped that American democracy will thoroughly realize, before it is too late, that fascism is not confined to any one nation or any one party; and it is to be hoped that it will succeed in overcoming the tendency toward dictatorial forms in the people themselves.  Only time will tell whether the Americans will be able to resist the compulsion of irrationality, or whether they will succumb to it.”

Wilhelm Reich, The Mass Psychology of Fascism, 1933

“Daughters of Jerusalem, do not weep for me.  Weep for yourselves and your children."

Luke 23:28

"I am not so optimistic that this reform is possible, because there has in fact been a soft coup d'etat in the US, which now exists in a state of crony corporatism that wields enormous influence over the media and within the government.  To be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own ends and unslakable will to power.

This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price.  And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill gotten gains.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake up call, and the tide then turns to genuine reform."

Jesse, The Fall of the American Republic, 8 August 2010

"You believe in the one God, and that is good. But even the demons believe this, and tremble."

James 2:18-19

"Our addiction make us cling to what the world proclaims as the keys to self-fulfillment: accumulation of wealth and power; attainment of status and admiration; lavish consumption of food and drink, and sexual gratification without distinguishing between lust and love.  These addictions create expectations that cannot but fail to satisfy our deepest needs.  As long as we live within the world's delusions, our addictions condemn us to futile quests leaving us to face an endless series of disillusionments while our sense of self remains unfulfilled.”

Henri J.M. Nouwen, The Return of the Prodigal Son, 1991

“Each day we are becoming a creature of splendid glory, or one of unthinkable horror.”

C. S. Lewis, Mere Christianity, London 1952

The conflict in the Middle East turned hot last night, and an effort to pump the futures higher in a rather deliberate attempt at the mispricing of risk failed— badly.

The FOMC left interest rates unchanged.  

There was a significantly larger drawdown of over 7 million barrels in US oil reserves reported by the EIA this morning. 

Stocks flopped badly and went out near the lows.

We have set a series of failed rallies that are putting us on 'crash trak' to see if the rest of the dominoes fall. It is a system I developed some years ago.  It was pretty good in calling the 2002 and 2008 declines.

Gold and silver rallied quite a bit, but then were smacked down ruthlessly into the close.

The premiums being paid for physical bullion are becoming rather large in some parts of the world.

The gold and silver 'pool' being used to manipulate the price is going to collapse.   It has been a long time coming. 

Keep an eye on the bonds.   The Dollar not so much because the DXY index is a bit of a joke, since it is primarily the obverse of the Euro and the Pound.  No value safe havens there.

No, the canary in the coal mine is gold, and they keep throwing a blanket over its cage.  But cutting off the alarm does not put out the fire.

Oil was smacked lower to a ludicrous level by very heavy-handed short selling the other day.  It was a screaming buy at 80.   Almost shocking.

So I stepped into the oil patch. Years ago I played oil and natural gas quite a bit in the futures.  Now I just putter around looking for big fat targets.  Voila.

There is a remarkable seasonality in natural gas.  I think this year it could be rather pronounced.

Need little, want less, love more.  For those who abide in love abide in God, and God in them.

Have a pleasant evening.

Stocks and Precious Metals Charts - In Dark and Pathological Times

 

"In a dark and pathological times, when the better parts of the human spirit are on the wane and love grows cold, everyone wants to have power.  Power becomes the standard of value, the coin of the realm in a deeply fallen world.  And in such a perverse world the only virtue is greed. 

Those who serve the world want to be tough guys, unafraid, quick and intemperate on the attack, harsh.  Yes that is the mark of power, the formidable wielders of weapons not for a higher purpose, but for their own ends and pleasures.  As if there can be any just weapon that we may take up on our own, that is not given to us by the Lord.

Those who seeks power may desire to take up the sword like an avenging angel, and smite their enemies, who are all too often those who merely annoy and offend them. This is because their idea of what it is to be a human being has been subtly poisoned by the times; in their brokenness they exalt themselves.

Too often that feeling of offense simply becomes a blind hatred of 'the other.'  The other may merely be the different, and often the weak.  The will to power despises weakness.  Those who take up the sword for their own purposes, even in God's name, will die by it in a death without redemption.

This desire to be among the avenging angels is not service, or greatness.  This is a willfulness and a destruction of the self that comes from sin, but that in its own insidious way may encompass many of the trappings of a religion: the ornaments of ritual, and symbols, the language and initiation into the mysteries, the noise and pomp of human office — but remarkably devoid of God's love.

Worldly power in excess is a perversion of heavenly power in that it expresses itself in the ability not to create and fulfill life, but to diminish and destroy it.  And it exults in what it thinks is its power over life, which is death.

How much money, how much power is enough?  The will to power is a pathological sickness, that becomes insatiable and all consuming.  And thereby it anoints its own angels of death.  Be on your guard, and do not allow yourselves to be among those simple ones who will be taken in during the dark times, as the love of many grows cold.  Stand humbly, but firmly, to the end.  And you will have your greatness."

Jesse, Preserving Sanctity in Times of Darkness, 6 July 2017

"Leur aveuglement est le châtiment du crime d'idolâtrie.”

Simone Weil, L'enracinement 1943

Typically I start working on the theme for my blog either in the early morning or even the night before.  But I was sidetracked with a few personal tasks, and after a few false starts after lunch I just decided to leave it up to God.

So about three PM I put a general search for the word 'sanctity' on my site, and voilà, the quote from my site above appeared.

It gave me a chill, and I almost didn't use it.  I realized that I had written this sitting in my chair while I kept watch over my wife as she slowly approached her passing at the end of August.  

This was indeed the darkest time of my life.  And I was struggling with the notion of standing firm in the faith during times of extreme hardship and trial, and found some comfort in reading and writing.  After she passed I fell apart from exhaustion, and when I stopped moving, a tidal wave of grief rolled over me.  

Big cap tech flopped today.  It is surprising that tech keeps leading the markets lower while the rest of the markets seem to be holding up in the form of the SP 500 and Russell.  This is the lull before the storm.  I suspect that the powers that be are pouring oil, made of paper, on troubled waters, as it were, to continue the collection of their booty.

Gold and silver were slammed lower in observance of their August futures contract option expiration on the Comex.  It is customary to give the new holders of positions a gut check.  

Tomorrow is an FOMC rate decision.   

VIX fell as the bulk of the market felt buoyed that Armageddon has been kicked like a can down the road. 

The Dollar declined a bit.

When the reckoning comes, the crème de la crème will jet off to their bunkers with a vanguard of lawyers and private security.  But the lower echelons of the power elite are going to hit the wall, and fairly hard.  They have given themselves up to a blind faith in the world, and their reckoning is going to be biblical.  

"And at this point they exceed the measure of the force that is actually at their disposal. Inevitably they exceed it, since they are not aware that it is limited. And now we see them committed irretrievably to chance; suddenly things cease to obey them. Sometimes chance is kind to them, sometimes cruel. But in any case there they are, exposed, open to misfortune; gone is the armor of power that formerly protected their naked souls; nothing, no shield, stands between them and tears."   Simone Weil, L'Iliade ou le poème de la force, 1939

Keep the faith.  The loving kindness and tender mercies of the Lord make all things new — and sin turns even the most extravagant luxuries to bitter ashes.

Have a pleasant evening. 

Stocks and Precious Metals Charts - Incoming

 

"There is a certain madness in crowds. But the genesis of the madness is in those who assemble the crowds, give them weapons, and walk among them whispering: madness, madness!"

Jesse, Housing Madness, 15 April 2008

"If history is what is recorded, then deep history is the sum of events which tend to be officially obscured or even suppressed in traditional books and media.  Important recent deep events include the political assassinations of the 1960s, Watergate, Iran-Contra, and now 9/11.  All these deep events have involved what I call the deep state, that part of the state which is not publicly accountable, and pursues its goals by means which will not be approved by a public examination."

Peter Dale Scott, 9/11, JFK, and War: Recurring Patterns, 2013

"I am on your side.  But you have no way of knowing it, because your heart is blind."

Albert Camus, The Stranger, 1942

"The reality is that the repeal of Glass-Steagall ushered in the greatest wealth transfer scheme in the history of America, allowing six mega banks in America to control the vast majority of insured deposits, use those taxpayer-backed deposits to gamble for the house, loot the bank from the inside by paying billions of dollars to select employees and customers and then hand the gambling tab to the taxpayer when the casino burns down.  This model is a staggering headwind on both U.S. and global growth because it has created the greatest wealth and income inequality since the Great Depression."

Pam and Russ Martens, The Real Reason Global Stocks Are Flashing Red, 2015

"The world is ours, we are its lords, and ours it shall remain.  As for the host of labor, it has been in the dirt since history began, and I read history aright.  And in the dirt it shall remain so long as I and mine and those that come after us have the power.

There is the word. It is the king of words— Power.  Not God, not Mammon, but Power.  Pour it over your tongue till it tingles with it.  Power.”

Jack London, The Iron Heel, 1907


The announcement came out over the weekend that the US was open to negotiating a peace with Iran, again.

And they were pumping the futures on Sunday night into Monday morning.

But alas, the rally quickly flopped and stocks sold off.

They did manage to gain a little back into the close as hope beats eternal.

There will be a precious metals futures option expiration tomorrow on the Comex.

The August contract is significant for gold, less so for silver.

VIX rose.

There will be a Federal Reserve interest rate decision on Wednesday afternoon. 

The energy situation is looking increasingly dire.   The manner in which it is being papered over is just going to make the ultimate impact of it on the economy all the worse. 

The situation in the private credit markets is also looking very potentially kinetic, as they say. 

Think of a few, over-sized dominoes falling down as they tip each other over, while smashing hundreds of smaller dominoes flat all around them.

It will not be pretty.   It will be more comprehensive than the talking heads will allow.

What makes it even more vile is that it is brazenly conscious and deliberate, a part of an ongoing scam by insiders to become fabulously wealthy.

This is the legacy of the last two bubbles and the failure to correct the arc of the civic and financial morality in the US.  

Across all three branches of government, this is the most ineffective and self-serving group of individuals that we have seen in power since the period after the Civil War and the Gilded Age. 

Have a pleasant evening.