Stocks and Precious Metals Charts - The Fury of the Possessed

 

"Early in 1928, the nature of the boom changed.  The mass escape into make-believe, so much a part of the true speculative orgy, started in earnest.  It was still necessary to reassure those who required some tie, however tenuous, to reality.  And, as will be seen presently, this process of reassurance eventually achieved the status of a profession.  However, the time had come, as in all periods of speculation, when men sought not to be persuaded of the reality of things but to find excuses for escaping into the new world of fantasy.

Even the most circumspect friend of the market would concede that the volume of brokers' loans—of loans collateraled by the securities purchased on margin—is a good index of the volume of speculation. Measured by this index, the amount of speculation was rising very fast in 1928. People were swarming to buy stocks on margin—in other words, to have the increase in price without the costs of ownership."

John Kenneth Galbraith, The Great Crash of 1929, 1955

"If you wish to take the measure of a society, look to how its weakest members are protected from its strongest, and its predators skulking at the fringes.  If you wish a hell on earth, do nothing for the benefit of others, for the greater good, or to inhibit those who act solely out of greed, fear, and hate.  Soon enough you will have a society that is intensely self-interested, self-concerned, superficial, destructive and self-consuming.  A free and just society is not a prize to be won or a gift that can be bestowed; it is a recurring commitment, and an enduring obligation."

Jesse, Lessons from the Panic of 1907, 5 July 2008

"But what is more than curious — indeed, piquant to a degree — is that an ancient god of storm and frenzy, the long quiescent Wotan should awake, like an extinct volcano, to new activity, in a civilized country that had long been supposed to have outgrown the Middle Ages.

For the sake of better understanding and to avoid prejudice, we could of course dispense with the name 'Wotan' and speak instead of the furor teutonicus.  But we should only be saying the same thing and not as well, for the furor in this case is a mere psychologizing of Wotan and tells us no more than that the Germans are in a state of fury.

Perhaps we may sum up this general phenomenon as Ergriffenheit — a state of being seized or possessed. The term postulates not only an Ergriffener (one who is seized) but, also, an Ergreifer (one who seizes). Wotan is an Ergreifer of men, and, unless one wishes to deify Hitler– which has indeed actually happened — he is really the only explanation.

It is above all the Germans who have an opportunity, perhaps unique in history, to look into their own hearts and to learn what those perils of the soul were from which Christianity tried to rescue mankind.  Germany is a land of spiritual catastrophes, where nature never makes more than a pretence of peace with the world-ruling reason.

The impressive thing about the German phenomenon is that one man, who is obviously 'possessed,' has infected a whole nation to such an extent that everything is set in motion and has started rolling on its course towards hell."

Carl Jung, Wotan, Neue Schweizer Rundschau (Zurich), March, 1936 


I have seen a lot of ugly, immoral, and despicable things over the last 70 years or so.  But I have not seen more conscious, sadistic acts of cruelty and systemic war crimes as we are seeing today. 

Truly, we have gone mad.

Stocks gave up a bit of their rate cut frenzy from last Friday.

VIX however opened higher, but then dropped off as the day wore on.

The Dollar took back its rate cut sympathetic decline.

Gold and silver gave something back as well.

Tomorrow is an option expiration on the Comex for the September futures contracts. 

It is not a big contract month for gold, but moreso for silver.

Still, its a good time for the wiseguys to run stops and engage in their usual shenanigans. 

Bitcoin got smacked back down to 110,000 again.  It looks like some large holders are 'diversifying' out of it.   Its a market that is easily moved, as it is founded in momentum.

If it breaks 100,000 and holds it, look out below.

Doesn't it seem like there is a touch of madness in the air.   That people have lost their grounding in principles and ideals, and are doing whatever power permits.

"The best lack all conviction, while the worst are filled with passionate intensity." 

Have a pleasant evening. 

 

Stocks and Precious Metals Charts - False Flags and Tipping Points

 

"If destruction be our lot, we must ourselves be its author and finisher.  As a nation of freemen, we must live through all time, or die by suicide."

Abraham Lincoln, Lyceum Address, 27 January 1838

"There is no calamity greater than lavish desires, there is no greater guilt than discontentment, and there is no greater disaster than greed. He who is contented with contentment is always contented."

Lao tzu, Tao Te Ching, 1,46 trans by Wing Tsit Chan, 1963

"Why did we, scholars and writers in America, in this time, we who had been warned of our danger not only by explicit threats but by explicit action, why did we not fight this danger while the weapons we used best - the weapons of ideas and words - could still be used against it?"

Archibald Macleish, The Irresponsibles, 1940

"Greed is aroused without knowing where to find ultimate foothold.  Nothing can calm it, since its goal is far beyond all it can attain.  Reality seems valueless by comparison with the dreams of fevered imaginations; reality is therefore abandoned."

Emile Durkheim, Suicide, 1897

"An inflated consciousness is always egocentric and conscious of nothing but its own existence.  It is incapable of learning from the past, incapable of understanding contemporary events, and incapable of drawing right conclusions about the future.  It is hypnotized by itself and therefore cannot be argued with.  It inevitably dooms itself to calamities that must strike it dead."

Carl Jung, Collected Works V 12, Swiss Edition, 1943

"History is a vast early warning system."

Norman Cousins, Saturday Review Magazine p 12, 28 August 1973

"Wars do not usually result from just causes but from pretexts. There probably never was a just cause why men should slaughter each other by wholesale, but there are such things as ambition, selfishness, folly, madness, in communities as in individuals, which become blind and bloodthirsty, not to be appeased save by havoc, and generally by the killing of somebody else than themselves."

William Tecumseh Sherman, address to the Michigan Military Academy, 19 June 1879


Joltin' Jay Powell made some dovish sounds from Jackson Hole this morning, as he appeared to have hitched a ride on the Cheeto Express.

So stocks and all the rate cut sensitive assets rallied strongly.

Gold and silver rocketed higher as the Dollar plunged.

 Bitcoin rallied.

VIX plunged.

The seeds of disaster are being sown, in an almost fatalistic, mechanical manner.

I hate to sound cynical, but the public, led by the media, is really out there in the k-hole now.

We don't believe in painful wars and plagues.  Or false flags and tipping points. 

Have a pleasant weekend. 

Stocks and Precious Metals Charts - Incoming, All Over Again

 

"The singular feature of the great crash of 1929 was that the worst continued to worsen.  What looked one day like the end proved on the next day to have been only the beginning.

Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune.  The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost.

The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains.  (Not only were a recorded 12,894,650 shares sold on 24 October; precisely the same number were bought.)  The bargains then suffered a ruinous fall.

Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months.

The Coolidge bull market was a remarkable phenomenon.  The ruthlessness of its liquidation was, in its own way, equally remarkable."

John Kenneth Galbraith, The Great Crash of 1929, 1955

"In the months leading up to the Black Thursday of the Crash of 1929, the markets experienced a series of terrific ups and downs that 'left everyone feeling exhausted.'

Now there is a significant amount of uncertainty with a strong undercurrent of fear. How bad will it be? Which banks are insolvent? Why aren't the normal indicators working? Why does reality feel different from what the government numbers are reporting?

At the same time, stocks are divorced from fundamentals so they are 'trading like commodities.'  The big players watch the short and long interest, and run raids against the smaller players and funds.  There is a cynical ruthlessness prevailing in the US markets that is the result of extreme lapses in regulatory oversight mixed with a surfeit of hot money with no particularly productive places to go.  So it roams the exchanges in search of a quick buck.

We're setting up for a rough time fraught with uncertainty.  This implies widening spreads and wild swings.

Asking the market to tell us what is coming now in the real economy is going to be tough, because the market doesn't know whether eat soup or jump out the window."

Jesse, Incoming, 6 September 2008


Stocks continued to wobble again, extending their declines ahead of the speech by Jay Powell tomorrow at Jackson Hole.

Bitcoin continued its decline from its recent all time high.

VIX popped up to its 50 DMA.

The Dollar rallied.

Gold was off a bit.  Silver was hanging in despite stocks and the Dollar.

Economist in general are operating on two important axioms.

First, that Volcker has proved that you can beat even a serious, pernicious inflation with high short term interest rates.

I remember that period of time very well.  There were some who made quite a good amount of future income by investing in interest rate sensitive assets such as dividend paying stocks and bonds and annuities, on the bet that 20% marked the peak of Volcker's gambit.

I can even recall a young engineer who took an ARM mortgage who interest rate fell in each subsequent year, so that merely by maintaining the same payment a 30 year mortgage was fully paid in 15.

The second axiom is that no matter how bad the crash, if the Fed floods the markets with liquidity is the right way then assets will return to their prior levels.   This is the Greenspan gambit from 1987.

There is a third axiom.  A supply shock of a key economic input, such as oil, can lead to a slump in activity as well as an increasing price spiral.   This is the oil embargo of the 1970s.   Economists don't think about this one very much, because they still don't know what to do about it from a policy standpoint, without plunging the economy into a depression.

There is a fourth  axiom.  It has not been fully formed as of yet.  In our hubris, we do not yet even recognize it's possibility.   It rests in existential matters of money.

We are well on our way to finding it.   And therein lies our uncertainty.

Have a pleasant evening. 

 

Stocks and Precious Metals Charts - Filling Jackson Hole

 

"In the history of every great catastrophe, you will find that some masterly bit of stupidity sets fire to the oil-soaked rags."

Edwin Lefèvre, The Game Got Them, Everybody’s Magazine 1908

“It appeared that the whole world was one elaborate system, opposed to justice and kindness, and set to making cruelty and pain.  And he and his father were part of that system, and must help to maintain it in spite of themselves.  Their frail human nature was subjected to a strain greater than it was made for; the fires of greed had been lighted in their hearts, and fanned to a white heat that melted every principle and every law.”

Upton Sinclair, Oil, 1926

“The euphoric episode is protected and sustained by the will of those who are involved, in order to justify the circumstances that are making them rich.  And it is equally protected by the will to ignore, exorcise, or condemn those who express doubts.”

John Kenneth Galbraith, A Short History of Financial Euphoria, 1990

"It's a small group with a lot of power.  A lot of wealth.  They don't necessarily - they're not necessarily always the names, the household names that spring to mind, in this kind of context.  But they are the people who could pull the strings.  Who have the influence.  Who call the shots.

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 fascist 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."

Simon Johnson, The Quiet Coup, May 2009

"Where are the princes of this world, and those who lorded it over the creatures of the earth?  Those who made sport of the birds of the air, and hoarded up riches in which they trusted, and for whom there is no limit to their greed, those who schemed to get wealth, and were always anxious about their possessions.  But now there is no trace left of them.  They have vanished down into the bowels of the earth, and others have risen to take their place."

Baruch 3:16-19

Gold and silver were in a sharp recovery rally today, after the protracted smackdown related to the recent stock option expiration.

They both went out near the highs of the day. 

Yeah, Friday was the time to start buying slowly, and then put the pedal to the medal yesterday after the big stops-clearing dip.

Stocks traded weakly but managed to come back a bit in the quiet afternoon trade.

VIX popped and then fell back down in the afternoon.

The Dollar just chopped around and was nominally unchanged.

The Fed heads are meeting in Wyoming once again.

Now we know how many holes it takes to fill Jackson Hole.

It will be interesting to hear what Jay Powell has to say.  

Donnie is putting quite a bit of pressure on him, and the rest of the Fed governors.

Donnie has been buying a lot of bonds for his own portfolio.   Hint.

Have a pleasant evening.