skip to main |
skip to sidebar
"Skillful accumulation is what my observation has been telling me as well. this market is trading just like I used to try and trade illiquid junk bond names that I was trying to buy - hit the market's bid side for a bit and try to shake out sellers and fill in with your own bid...feels like that's what's happening out there right now."
Denver Dave
It was option expiration on the Comex today and they hit the metals again hard, but earlier than usual.
My friend Dave made that comment above early this morning, and I thought he was right. This was not so much a real bear raid as a chance to skin the naive amongst the options traders and holders of miners and funds, and then cover shorts and get a little long.
They keep hitting the miners, probably taking gains there in addition to what they can wring out of the metal itself.
If you have to ask how and if I traded this today, then you have not been following the action. Buy strength, sell weakness, while the trend remains intact. I did add shorts on the stock indices near the top of the day at resistance as insurance, as I was picking up a few miners and higher volatility things in addition to bullion. I have an open mind on the stocks, but think it will take a 'trigger event' to really bring them down in a serious correction.
I liked the early hit, as it gave me time to go out and buy some fresh vegetables and fish. My wife usually does all the shopping but she is not feeling so well. She does scrutinize all my purchases carefully however, especially the prices paid. And if I have paid too much, oi yoi!
I do not now how many calls actually translated into new futures positions, but if there are enough it is traditional for Blythe and crew to give them at least one more 'gut check' before letting the markets return to their natural trend, whatever that might be.
As a reminder, the US will report its Non-Farm Payrolls for March on Friday April 1. The metals are typically hit on such occasion as well. We are also ending the first quarter. It could be an interesting week with quite a few cross currents.
I had an interview with Chris Martenson and it is now available here.
Weak buying from the technical trade caused stocks to rise most of the day, but a definite lack of legitimate retail and institutional buyers, indicated by low volumes, caused equities to sell off into the close, as the momentum players went flat and hit the exits.
Nothing is really broken yet support wise, but the news from Japan and the Middle East remains a drag on the stock optimists.
Europe is troubling, and although it seems to be largely in la-la land, the States are probably heading for a long, hot summer.
Timmy and Ben are under this market. Whether that will be enough is hard to say. It depends on what happens.
There is some thought that if the correction does not materialize by the end of the second quarter in June, that there will be a summer rally as fund managers sitting on the sidelines scramble to catch up.
It might be more likely that they will be sucked in first, and then taken for a ride by the hellhounds of Wall Street. The market will let us know which scenario unfolds.
The Wall Street Journal has a story that points out the dangers of ownership of the industry which they are charged to regulate.
TOKYO—Japan's nuclear regulator has amassed power while growing closer to the industry it regulates, according to former regulators and industry critics who blame the trend for lapses that may have contributed to the Fukushima Daiichi accident.
Bucking the global standard, Japan's Ministry of Economy, Trade and Industry has two distinct and often competing roles: regulating the nuclear power industry, and promoting Japanese nuclear technology at home and abroad.
The setup recalls U.S. regulation of offshore drilling before last year's oil spill in the Gulf of Mexico, in which the same agency regulated the industry and promoted offshore oil-and- gas development.
Nuclear Regulator Tied to Industry
In the States, the most powerful banking regulator is the the Fed, which is essentially OWNED by the industry which it purports to regulate. And the last time I looked, the WSJ was part of the choir singing the praises of self regulation of the various segments of the financial sector, taking every opportunity to undermine independent regulation.
And they probably do not get it. You just have to laugh at this kind of irony.
Well, derivatives are a bit like radiation, something resembling a neutron bomb. They kill off the life in a society, while leaving the buildings intact.
Speaking of the extended analogy, Radioactivity 100,000 Times Normal at Fukushima Reactor 2. The good news is that it is not 10 million times normal as reported by TEPCO earlier today.
Reminds one of the recent report on the US banks by the Fed.
There will be a sustainable recovery in the US when the median wage recovers in relation to inflation and consumer necessities, and the employment-population ratio rises to some reasonable equilibrium.
A rising employment-population ratio itself is no sign of recovery, if consumers must continue to rely on debt to finance their basic necessities. Conservsely, a falling employment-population ratio can be constructive if it is driven by a vibrant median wage, increasing industrial productivity, and excess income as savings, allowing for retirements and more people devoted to non formal employment such as charitable activities, parenting, artistic expression, and elder care, for example. The point is that these measure are not one-dimensional.
As shown by the median wage below, the 'recovery' engineered by the Fed in the aftermath of the tech bubble they created was artificial and totally supported by credit creation and a bubble in housing, with enormous amounts siphoned off the top in the form of financial fraud and corruption.
The basic economic problem in the US economy is related to international trade, currency manipulation, public policy and wage arbitrage by multinational corporations. 'Free trade' interacts with public standards of health, worker compensation, environmental, child labor, and the entire structure of public standards.
Therefore the solution is not amenable to straightforward Keynesian stimulus. This is no cyclical contraction.
It has its roots in the conflict between 'free trade' amongst nations with different standards towards their workers, and various forms of governance. A democratic republic and a autocratic dictatorship do not have the same public policies and attitudes towards the individual and their rights vis a vis the state. How then can free trade reconcile fair wages with what is by comparison virtual slavery? These are the economics of 'the camps' and the plantations, a familiar attraction for the monied interests who have an abiding love of monopolies and oligarchies.
And of course the unspoken problem in the US is the pervasive corruption in and overweighting of the financial sector in relation to the productive economy even today after so-called reforms.
On another note, there is renewed discussion of 'Modern Monetary Theory,' and some have asked me again to address this, as I have done previously. I have only this to add.
I see no inherent problem with the direct issuance of non-debt backed currency as there is sufficient evidence that it can 'work.' Indeed, my own Jacksonian bias toward central banking would suggest that.
I think the notion that the Fed is some objective judge of what is best for the public welfare without effective oversight or restraint is anti-democratic and probably un-Constitutional, at least in spirit, as it has been implemented. And this notion that the FED and the discipline of the interest markets could reliably emulate an external restraint on excessive money creation is deeply flawed.
The problem becomes then how to implement a fiat currency without the discipline of issuing debt through private markets.
This is the important point that most MMT adherents seem to ignore, but it is their greatest area of strength.
One cannot print money at will. The limitation is always and everywhere the willingness of the markets to accept it in exchange for labor and real goods without coercion. To make counter claims is to undermine your own position.
It is a tautology to say that a state that controls its own fiat currency cannot become insolvent in that currency, since they can never lack that which they can create from nothing. The state does not run out of its currency, rather, it runs out of people who will accept it at the official face value.
I would stipulate that central currency issuers can attempt to set arbitrary values, and to enforce them through things like official valuation and wage and price controls. Indeed, practical experience seems to indeed they inevitably must and will become increasingly draconian in their central planning. Dictatorships generally embrace fiat monetary systems without external discipline as policy, but rarely is this a sign of a vibrant economy or a government that respects the individual's rights to just recompense for goods and labor.
The problem with limitless issuance would first appear with necessities that the state must acquire externally, that is, outside their direct sphere of political control. In the case of the United States, for example, oil comes to mind.
I am not suggesting a retur to a gold or silver monetary standard, for that too has its weaknesses and is no panacea. But rather, I am addressing the particular overstatements being made by those who promote the Fed, and those who promote the Treasury, as infallible arbiters of monetary value.
Transparency, oversight, checks and balances are the inherent genius of of the Constitution, and anything that weakens those pillers undermines the democratic Republic.
Most fiat currencies inevitably fail, without regard to their particular mechanisms, because of the weakness and corruption of the people who manage them. This the hard truth that no amount of accounting gimmicks and Utopian central planning can overcome. Such schemes spawn tyranny from their nature, since like a Ponzi scheme they require an ever expanding sphere of absolute control over the daily transactions of the public.
If the inherent evil contained in the concentration of power in a few hands in your concern, then Modern Monetary Theory does not seem to be a viable solution, replacing the Fed with the Treasury, and potentially one form of monetary tyranny with another.
