25 January 2017

Stocks and Precious Metals Charts - Fire Burn and Cauldron Bubble

Cartoon with permission by artofmarkbryan.com
As suspected, the Dow Industrials hit their high note today, sticking a close over the 20,000 handle.

It has taken quite a few years for the Dow to double from its first foray over 10,000 in March of 1999. Remember that? I remember vividly the Dow crossing 1,000 for the first time in late 1972. And then we had the grinding bear market of the early 1970's, with no return to 1,000 until the arrival of Reagan.

I suspect we will soon be seeing the lipstick being applied, and a flurry of new IPOs hitting the market while the market is hot, full of speculative money. That will be a sign of a topping process. But until something happens to shake things up, greed springs eternal.

The Donald released his orders for The Wall today. His cabinet appointments are disturbing because they seem to place his feet in the oligarchy of the Republican establishment, moreso than fresh minds and new ideas for growth.

I had to laugh today, when some infomercial pundit suggested that Trump will bring us changes that will allow companies to permit capital formation, which will be good for employment and productivity.  Are you kidding me?

These jokers have been piling the rather healthy profits which they received after the bailouts of 2008 into stock buybacks and dividends, and were using legal gimmicks to park huge amounts of cash in tax havens offshore.

Ok, so perhaps they will be encouraged to spend that money here in different ways, but I doubt very, very much that they will be for the good for the general economy. Their model is greed, and the worst sort: short term and near sighted.   More gaming of the system is in the forecast.

This interplay between the Republican establishment and The Donald will certainly be interesting. They have their long knives out for Social Security and Medicare, and the Heritage Foundation is back in the saddle.  I wonder what Mr. Trump will do when the rubber meets the road between his goals of legacy, and the pitiless hearts of the monied interests.

Kyle Bass caught my attention with his interview on Bloomberg TV today.  He is very bearish on China, and believes that they will have to recapitalize their financial system, which will result in a profound devaluation of the yuan.  By contrast, Russia has already taken most of the pain of their economic problems and it had been reflected already in the rouble.

I wonder when America will take the consequences of many years of bad policy and political decisions that have resulted in historic imbalances and inequality.  Right now we are inclined to export it, as holding the 'reserve currency' status certainly does facilitate that sort of thing.

Gold and silver retreated a bit today, as it was another risk on fiesta. I liked the close on gold, holding above 1200, although that level is more psychological. Gold and silver have come quite a way in the past month, and a pullback is justified. Let's see where it goes and when, so we can assess its character.

Have a pleasant evening.