Stocks and Precious Metals Charts - Dreams and Delusions Flambé - A Pandemic of Goofiness Variant

 

"A synthetic instrument has no real assets. It is simply a bet on the performance of the assets it references.  That means the number of synthetic instruments is limitless, and so is the risk they present to the economy.  Synthetic structures referencing high-risk mortgages garnered hefty fees for Goldman Sachs and other investment banks.  They assumed an ever-larger share of the financial markets, and contributed greatly to the severity of the crisis by magnifying the amount of risk in the system.

Increasingly, synthetics became bets made by people who had no interest in the referenced assets.  Synthetics became the chips in a giant casino, one that created no economic growth even when it thrived, and then helped throttle the economy when the casino collapsed."

Senator Carl Levin, Wall Street and the Financial Crisis, April 27, 2010


“The greatest evil is not done now in sordid dens of crime. It is not even done in concentration camps and labor camps. In those we see its final result. But it is conceived and ordered in clear, carpeted, warmed, and well-lighted offices by quiet men, with white collars and cut fingernails and smooth-shaven cheeks, who do not need to raise their voice.”

C. S. Lewis, The Screwtape Letters


“Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury,” recalled Alan S. Blinder, a former Federal Reserve board member and an economist at Princeton University. “I think of him as consistently cheerleading on derivatives.”

Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, said that Mr. Greenspan’s authority and grasp of global finance consistently persuaded less financially sophisticated lawmakers to follow his lead.”

Peter S. Goodman, Taking Hard New Look at a Greenspan Legacy, Oct. 8, 2008


"The Federal Reserve is considering arguments that Wall Street banks provide hard-to-replace services in some of these areas. The separation between banking and commerce has served markets and our economy quite well for decades.  And the erosion of that barrier is clearly doing harm today.  Any discussion of these physical commodities activities must begin and end with the need to protect our economy from risk, our markets from abuse and our consumers from the effects of both.

Wall Street banks with near-zero borrowing costs, thanks to easy access to Fed-provided capital, have used that advantage to elbow their way into commodities markets.  Bad enough that this competitive advantage hurts traditional commercial businesses; worse that it opens the door to price and market manipulation and abusive trading based on nonpublic information."

Senator Carl Levin, Wall St Banks and Physical Commodities, Nov 2014


"The crash has laid bare many unpleasant truths about the United States.  Recovery will fail unless we break the financial oligarchy that is blocking essential reform."

Simon Johnson, The Quiet Coup, May 2009


“The larger the bank, the greater the potential spillover if it defaults; the higher its leverage, the more prone it is to default under stress; and the greater its connectivity index, the greater is the share of the default that cascades onto the banking system. The product of these three factors provides an overall measure of the contagion risk that the bank poses for the financial system. Five of the U.S. banks had particularly high contagion index values — Citigroup, JPMorgan, Morgan Stanley, Bank of America, and Goldman Sachs.”

Office of Financial Research, Systemic Importance Indicators, February 2015


“The essence of a speculative bubble is a sort of feedback, from price increases, to increased investor enthusiasm, to increased demand, and hence further price increases.  Major speculative bubbles, as I argued in Irrational Exuberance, are always supported by some superficially-plausible popular theory that justifies them, and that is widely viewed as having sanction from some authority figures.  These may be called new-era theories.”

Robert Shiller

 

After hours some of the new era stocks, and in particular the alternative dimension of the crypto-sphere, were going up in flames.

The elections did not have a large effect so far because the crux of the matter is still undecided, although the big red wave has clearly not materialized.

Stocks slumped hard.   New era, child-of-the-bubble stocks were being pummeled after hours.

The spokesmodels were wringing their hands and clutching their pearls over the implosion ongoing in the crypto bubble. 

Fraud?  We are shocked, shocked.  

The Dollar rose, and gold and silver pulled back a bit from Friday's moonshot.

Let's keep an eye on that one.  

Volatility remains in the forecast.

CPI information tomorrow.

Have a pleasant evening.

Stocks and Precious Metals Charts - Jeepers Creepers - Gold and Silver Break Out

 

"He has shown you what is good.  The Lord requires you to act justly, and to love kindness and mercy, and to walk humbly with your God."

Micah 6:8


"Love does not make you weak, because it is the source of all strength— but it makes you see the nothingness of the illusory strength on which you depended before you knew it."

Léon Bloy


"It seems that under the overwhelming impact of rising power, humans are deprived of their inner independence and, more or less consciously, give up establishing an autonomous position toward the emerging circumstances.   The fact that the foolish person is often stubborn must not blind us to the fact that he is not independent.

In conversation with him, one virtually feels that one is dealing not at all with him as a person, but with slogans, catchwords, and the like that have taken possession of him.   He is under a spell, blinded, misused, and abused in his very being.

Having thus become a mindless tool, the foolish person will also be capable of any evil and at the same time incapable of seeing that it is evil.  This is where the danger of diabolical misuse lurks, for it is this that can once and for all destroy human beings."

Dietrich Bonhoeffer


“May the God of hope fill you with all joy and peace in your faith, so that in the power of the Holy Spirit you may be rich in hope.”

Romans 15:13

Stocks rose in the morning but then fall back as the day wore on, but man aged to gain back a bit closing higher.

Gold and silver continued to rally breaking out of the overhead resistance that had held them in a short term trading range.

The next level of resistance is just overhead.

The Dollar continued to slide.

Have a pleasant evening.

Stocks and Precious Metals Charts - Loud Voices, Hollow Hearts

 

"For it is impossible to bring back to repentance those who were once enlightened— those who have experienced the good things of heaven and shared in the Holy Spirit, who have tasted the goodness of the word of God and the power of the age to come— and who then turn away from God.

It is impossible to bring such people who were given the grace to see and then fallen away, back again to true forgiveness— for by accepting Him with their words, and then rejecting Him with their actions and in their hearts, they themselves have nailed him back on to His cross, and held Him publicly to shame."

Hebrews 6: 4-6

"You want to distance yourself to the degree possible from conflict entrepreneurs. These are people or pundits or platforms that intentionally exploit conflict for their own ends.   People who really delight in every twist and turn of the conflict.   And right now we tend to amplify those voices.  On social media and other places."

Amanda Ripley

"They will be unloving and unforgiving; they will slander others and have no self-control. They will be cruel and hate what is good.  They will betray their friends, be reckless, be puffed up with pride, and love pleasure rather than God.  They will act religious, but they will refuse the grace that could make them righteous."

2 Timothy 3:3-5


The emptier the hearts and minds, the louder the voice, the more elaborate the rules and ceremony.

The Fed released their Financial Stability Report late on Friday.

Not exactly prime time for the news media.

The Stability Report asks insiders about their concerns, which are general macro and exogenous.  It never touches on this concern that Wall Street On Parade highlighted from a US Office of Financial Research 2015 report:

“The larger the bank, the greater the potential spillover if it defaults; the higher its leverage, the more prone it is to default under stress; and the greater its connectivity index, the greater is the share of the default that cascades onto the banking system.  The product of these three factors provides an overall measure of the contagion risk that the bank poses for the financial system.  Five of the U.S. banks had particularly high contagion index values — Citigroup, JPMorgan, Morgan Stanley, Bank of America, and Goldman Sachs.”

One might assume from the report that the massive leverage in the system was no longer a concern. 

If only we had some regulator which had the power and capability to directly address and temper the systemic risk of these overleveraged, derivative monstrosities of a national banking system. 

Oh yeah we do.  

It's called the Fed. 

And they have been serving the Banks, at the expense of the public, since 1913.

Stocks continued their bounce higher.

The US Dollar continued its recent decline, down to the 110 handle, which is still at high levels historically.

Gold and silver mostly marched in place.

The US will have its midterm elections tomorrow.

They may move markets, when the results are finally tallied.

Have a pleasant evening.