SP 500 and NDX Futures Daily Charts - Air Continues To Come Out of Post-Alibaba Markets

The air continued to come out of the point men on the recent stock market bubble as the SP 500 led the markets lower today.

As you may recall, in the 1990's Robert Rubin established that one could pump up the market most efficiently by buying the SP futures, and in a sense forcing all the index followers and funds to buy stocks to keep up with that trend. It has been used any number of times, and I suspect is still in the back pocket of the Exchange Stabilization Fund, aka 'The Plunge Protection Team,' as a tool for 'saving the markets.'

As Rubin's dictum went, it was cheaper to pump up stocks in a falling market, rather than coming in after the fact and repairing the post bubble damage with a genuinely productive effort, or even a bail out.

The market makers have certainly learned that lesson and they have pumped up the US equities, at least selectively. One can see this in the first chart tonight, which shows the ratio of the SP 500 to the Russell 2000. This has been a fairly selective rally, and as you know I suggested we would see the market makers, who all have a keen interest in the success of Alibaba IPO, smoothing the way for it.

Alas, I think that the leveraged buy of the VIX I had put on for this post-Baba world worked, but I took it off a bit too quickly as VIX climbed a bit more today.  Well, I am not comfortable with these triple play derivatives which are generally designed to lose money, and ten percent is ten percent.

So what next? Now the air starts coming out, and Alibaba starts moving back down towards its original IPO price point of $68. The actual price doesn't matter all that much. It is not clear after looking over the structure just what the hell the holder of the stock actually owns if anything, except for a piece of a shell corporation in the Cayman Islands.  It is like a modern derivative, a betting vehicle, more a state of mind that a productive piece of anything when push comes to shove.  It has all the substance of a punchboard or hoop and bottle in a carny game.

I thought it was telling that the US got the IPO business because Hong Kong was too fastidious to allow an IPO on their exchange with such an odd ownership structure.  Scams 'R Us - With subsidiaries in London and Frankfurt.

None of this, and I mean absolutely none of this, is doing the public or the economy of the United States or anywhere else any good, except perhaps for small segments of Manhattan and the City of London. It is merely a vehicle for diverting even more of the central banks' stimulus directly into the pockets of the one percent.

And the world will reap yet another bubble, blood and tears.

Have a pleasant evening.

 

Gold Daily and Silver Weekly Charts - Unchanged

"For all that has been, thank you.

 For all that will be, yes."

Dag Hammarskjöld

Gold and silver finished the day largely unchanged. There were the usual overnight and early morning antics.

The mining sector was taken out behind the woodshed and beaten up a bit.

The Shanghai Gold Exchange is now open for business. Some are concerned because of the participation of the 'usual suspects' on the exchange.

I am not so concerned, because China is quick to issue some fairly draconian judgments for those that engage in non-sanctioned official and business corruption. Luckily Bill Holter speaks to this issue in his latest missive, so let him say it as he does so well.

This Thursday, 25 September, is the options settlement for October metals contracts on the Comex. October is not an active month for either gold or silver on that exchange, but they may find a more lively turn in overseas trade.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - First Day of Fall - Nature's Doxology

Today is the first day of Autumn.   This is the season to give thanks for all, our blessings and sorrows.

There was another down day on Wall Street as the post-Alibaba retrenchment set in.

Late in the trading day UK retailer Tesco's stock was knocked down on news that they have overstated their profits significantly.

"Tesco has suspended four executives, including its UK managing director, after the supermarket overstated its half-year profit guidance by £250m. That would be almost a quarter of its expected profit for the period. It has launched an investigation headed by Deloitte, and says it is now working to establish the impact of the issue on its full-year results..The news prompted a plunge in Tesco's share price, which closed 11.6% lower at 203p."

The economic news this week is the usual, and the third revision of 2Q GDP which is dead fish now, unless there is a major unexpected revision.

The dichotomy between what the leaders say the economy is doing, and what it is actually doing and where it is heading, looks to have a bit more air in it than usual, and it is increasing.

Have a pleasant evening.

Two Estimations of Chinese Gold Demand

I found it interesting that these two estimations of Chinese gold demand arrive at similar answers from two different methods and assuming two different start dates.

 

Before anyone asks, Koos Jansen has addressed the notion of 'round trips' of gold on the Shanghai Exchange in some detail.   It is not the same sort of bullion game that is the hall mark of the Comex.

 

The first chart is from the data wrangler Nick Laird at Sharelynx.

 

The second chart is from GoldSilver.com.

 

I don't think anyone knows the exact amount of physical gold that China and the BRICS are absorbing.   And how much unencumbered gold remains in many of the Western vaults either.

 

One has to chuckle at 'analysts' who just ignore what of the more significant trend changes in the international money markets.   The BRICS are buying tonnes of gold and adding them to their reserves?  Nothing to see here.  Just the usual hijinks of the uninformed and unsophisticated.

But no matter how one looks at it, there was a profound change in the metals markets around 2006, and that it is somehow involved with what has been called a 'currency war.'  As it has done in the past, the nature of the global reserve currency system is changing.

Gold is flowing from West to East.