29 October 2018

Stocks and Precious Metals Charts - Wax On, Wax Off - In the Garden of Beasts

"The real danger comes from encouraging or inadvertently tolerating inflation and its close cousin of extreme speculation and risk taking, in effect standing by while bubbles and excesses threaten financial markets."

Paul Volcker

"Investors still seem looking for a bounce among consumers but the downturn in housing and autos will remain not only this year but all of 2019 and likely beyond; more sectors to join in slow motion decline of US economy that will evolve into recession."

Harald Malmgren

"What most occupied the attention of the State Department [in 1934] was the outstanding German debt to American creditors. It was a strange juxtaposition. In Germany there was blood, viscera, and gunfire; at the State Department in Washington, there were white shirts [of the wealthy career diplomats and career politicians], Hull's red pencils, and mounting frustration with [Ambassador] Dodd to press America's case [for full payment of the sovereign German debt]...

In Berlin, Dodd was unmoved. He thought it pointless to pursue full payment, because Germany simply did not have the money, and there were far more important issues at stake...

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 [Hitler] regime would fall, but as the days passed he saw no evidence of any such outpouring of anger...

For Dodd, a diplomat by accident, not demeanor, the whole thing was appalling. He was a scholar and a Jeffersonian democrat, a farmer who loved history and the old Germany in which he had studied as a young man. Now there was official murder on a terrifying scale. Dodd's friends and acquaintances, people who had been to his house for dinner or tea, had been shot dead.

Hitler's purge [June 30, 1934] would become known as 'The Night of the Long Knives,' and in time would be considered one of the most important episodes in his ascent, the first act in the great tragedy of appeasement...

This lack of reaction arose partly because many in Germany and elsewhere chose to believe Hitler's claim that he had suppressed an imminent rebellion that would have caused far more bloodshed. Evidence soon emerged, however, that showed that in fact Hitler's account was false...

The controlled press, not surprisingly, praised Hitler for his decisive behaviour...In a letter to Hull, Dodd forecast an even more terroristic regime... 'The people hardly notice this complete coup d'etat. It takes place in silence...I would swear that millions upon millions have no idea what a monstrous thing has occurred.'"

Erik Larson, In The Garden of Beasts

Neutron bombs kill broad swaths of human being without inflicting serious collateral explosive damage on physical infrastructure and systems.  Fed monetary policy and GOP fiscal policy are like economic neutron bombs.

The early 'risk on' trade and big acquisition by IBM of Red Hat had the bulls and their spokesmodels all giddy this morning.

Alas, it was not meant to be—  again.

Stocks gave up all their morning gains, and sold off hard, although they did come off the lows of the day as the financial TV carnies pointed out so hopefully.

'What will turn this market around?' they plaintively whined.   'The puppies aren't eating the puppy food.'

Let's see, besides hot money and bullshit, what has been the backbone and mainstay of this 'Trump rally' for a very long time.

US equities will soon be coming out of the 'blackout period' for buybacks of their own stocks, which has been a major and sustaining force of stock price gains in this latest financial asset bubble. Before they were financing these buybacks, designed to hollow out the company's value while enhancing executive option gains, with corporate debt.

 Now they also have a huge grant from the US government in the form of tax cuts in addition to the tax subsidies for executive compensation. The wealth transfers will continue until they can no longer be sustained— because it pays so well for the decisionmakers.

It's a big club—   and you aren't in it.   No matter what political party of economic school to which you proudly pledge your loyalty and proclaim your faithfulness.   You are not counted by them as among the winners.  You are cannon fodder, food for predators, a foolish chunk of meat.

The dollar was up again today, to the higher levels of its recent trading range.   Gold and silver were lower as a consequence, although gold came back a bit on a the big stock sell off.

Before the internet changed everything, people who love books used to go to actual bookstores and search the stacks for those little gems that they would read and add to their collections.

As a long time collector and reader I used to frequent the antiquarian book stores in the Pittsburgh area, where I went to graduate business school,  including a couple located in the very quaint residential Squirrel Hill section to the east of the city.

This is the site of the vicious attack on a group of worshipers in the Tree of Life Synagogue.  It must have been jarring to have this happen in such a quiet and friendly residential neighborhood.  They are all in my thoughts and prayers. 

Have a pleasant evening.