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Another weak day on stocks.
They are pressing on the pivots, wherein this starts changing from a correction to a new downtrend.
The techs were leading the way down today, followed by consumer discretionaries.
The markets were shocked a bit today by the startling events in NYC, as IMF chief Dominique Strauss-Kahn was arrested on very serious sexual assault charges. DSK was one of the leading candidates for French political office, and was in the midst of critical meetings at the IMF on global currency and European solvency issues.
Strauss-Kahn's position at the IMF will be filled for the time being by John Lipsky.
John Lipsky assumed the position of First Deputy Managing Director of the International Monetary Fund on September 1, 2006. Before coming to the Fund, Mr. Lipsky was Vice Chairman of the JPMorgan Investment Bank. Previously, Mr. Lipsky served as JPMorgan's Chief Economist, and as Chase Manhattan Bank's Chief Economist and Director of Research. He served as Chief Economist of Salomon Brothers, Inc. from 1992 until 1997. From 1989 to 1992, Mr. Lipsky was based in London, where he directed Salomon Brothers' European Economic and Market Analysis Group.
Here is some general knowledge on Fibonacci Retracements
The placement of the pattern on the chart is given to some subjectivity. I prefer to do it according to the patterns I am attempting to analyze. Obvoiusly there are other ways of doing it.
This is by way of saying that these are my own calculations. There are others.
The Anglo-American banking cartel will resist change with increasing determination, and at times bitter opposition.
It is easy to be misled by short term trending in money supply charts, especially those showing year over year growth as a percentage. Money supply changes are seasonal and often very volatile, but nevermoreso during a credit collapse and quantitative easing.
A look at the longer term trends is most useful. And if necessary a review of Money Supply: A Primer.
The last chart is an index where 100 equals the M2 supply around the end of 2007, and the onset of the credit crisis. Since then it has grown almost twenty percent.
Has GDP or the population grown 20 percent? So money per capita or per unit of productive effort is growing. All one has to do is look at some reality based metric of money supply growth and negative real interest rates to understand the ten year bull market in gold and silver, and commodities in terms of US dollars.
I understand people like to look at the various independent M3 estimates, but since the Fed no longer reports Eurodollars I have not seen what I could consider a credible recent estimate. And I doubt VERY much that M3 is underrunning M2 given the dollars that the Fed has been spreading around the world's banks.
Can the Fed keep this QE up? Will deflation set in, finally? It is a policy decision in a purely fiat currency. That could change, and I will know what to look for when it does. The Fed could be subjected to some external force, either from foreign creditors or domestic politics. I expect that foreign shock to be inflationary rather than deflationary however. As for the domestic forces, a choice for third world status is always an option.
The top five percent of Americans hold by far most of the country's wealth. And deflation may be in their short term interests, as in the case in the UK which seems to be going down that path. These policy decisions bring up a different set of considerations, many of which will stress the social fabric to the breaking point. But a people grown coarse by war and ideology have done much odder things before.
But for now the trend has not changed, and it would probably take a global economic collapse to change it. That is possible. And in such an event everything will get sold, for a time, as they were in the market crash of 2008.
Those who have been betting on deflation for the past five or ten years have been wrong. They could be right some time in the future. But one can be wrong on a mistaken principle for a very long, long time.
US Bonds have been in a long term disinflationary rally. There seem to be a number of 'name' people now looking for a trend change. That is the crux of Bernanke's short term focus, and the target of QE^n.
Here is a human face on the flooding in Louisiana and some economic implications. I have edited out the personal references and details of his mail order business.
Here in Louisiana, there is palpable concern about the flood. I am 68 miles away from Vicksburg, due West on I-20. My effort to continue on working is one amongst many. But in the background there is the bated breath of trepidation for the economy as a whole, and for our own situation in particular.
Vicksburg crests May 19. The levees are expected to hold, but then Pemberton assured Davis he could hold Vicksburg. If I delay one week I will know for sure as the crisis should have passed. I don't want to find myself surrounded by flood waters which could reach more than two and maybe four feet here in Monroe. The lip of the Mississippi Delta is about 15 miles East of here. An extremis situation could be devastating.
Then downstream, south of here, when they open the Morganza Spillway much suffering will happen. Of course, their hope is to avoid wiping out no less than nine refineries, a plugged port facility, and the movement of commerce upriver.
What's the point of all this? No matter what, much sugar, cotton, etc will be wiped out, and already has been by the rain, floods, and now the intentional man made act of opening the spillway.
Sugar is about a twenty four month cycle. When they cover the thousands of hectares of cane a significant percentage of the years crop will vanish. Next year will be a recovery year with a more stable situation in sugar not before 2013. So much for the knock on effects of opening the spillway.
Not being reported much is the fact there are three nuclear power plants threatened by the rising waters. This poses some threat to compound the situation. Of course we aren't Japan, we're better and all that happy delusion. Of course, the same people built these reactors, so who's to say what may be?
I am suggesting the optimistic outcome, after a stiff market reaction. By late summer, maybe July, we'll all be taking a long sigh of relief. Meantime, the rails and trucks should be straining at their capacity to replace the disrupted flow of commerce caused by the stoppage of river traffic.
Even now, when you cross the bridge at Vicksburg, one can read the headlines of the newspaper the Northbound barge pilot is reading as he barely clears the undercarriage of the bridge. Whatever they're paying him, he should get a raise.
I don't even try to play these things. I am simply shedding some light on a situation for your consideration. Me, Imagonna get me some likker, maybe a gal named Sookie, and hope for the best.
I would be careful about playing these things. There is the market, and then there is the paper market in the States. And the paper market is dominated by a few financial monstrosities and a ravening pack of hedgehogs.
