“Modern tyranny is terror management. When the terrorist attack comes, remember that authoritarians exploit such events in order to consolidate power. The sudden disaster that requires the end of checks and balances, the dissolution of opposition parties, the suspension of freedom of expression, the right to a fair trial, and so on, is the oldest trick in the Hitlerian book. Do not fall for it.”
Timothy Snyder, On Tyranny
There is an obvious but still relatively select 'flight to safety' occurring as a forward looking group of investors flees the equity markets, seeking the safe havens of the precious metals, harder currencies, and government bonds. When and if a 'rush to safety' occurs the resulting impact might be terrific.
Where this will go I cannot say. But say what you will, that is what is happening now as reflected in the markets.
Most commentary that I have read about this flight to safety in the mainstream is naive, quite often spin, and too frequently bordering on slogans, ideology, and the idiotic.
The market was walked up by the futures and the HFT bots on light volumes for a rally that largely fell apart into the close. A stiff breeze will knock this market over, but it might very well take a rather stiff one, because there is little selling, and it seems light human participation in the markets at the moment. The only volume that appears is on the downdrafts. That is a recipe for disaster.
The Conference Board confidence measure today was very low as I had expected given the Michigan result, and the markets shook it off.
Most of the economic news this week will be a prelude to Friday's Non-Farm Payrolls report. The Fed Minutes were illuminating.
I think we need to be prepared for a higher than normal chance of a 'significant dislocation' in the financial system between now and the end of the year. That is still less than even probability however. If the government continues to gridlock on divergent extremes then the probability becomes higher.
What actual shape this 'break' might take I do not know, and will not care to speculate in detail. I am judging by the obvious strains in the real economy and the markets.
"It's not a monster movie. It's a supernatural thriller."
Ed Wood
Stocks need to climb out of a hole, and in order to do this they need to get the allocations from Treasuries. Watch Treasuries and VIX to see how 'real' these light volume rallies in stocks are.
Gold and Silver are rolling with the volatility.
Keep an eye on all the 50 and 200 DMAs and see which one is on top, and where they are going.
Let us pray for those whose hearts have grown cold, and become hardened against His grace by greed, fear, and the seductive illusions of pride.
We ask to receive the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness—so that we may obtain abundant life, and the peace that surpasses all understanding.
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