Stocks and Precious Metals Charts - Seeking Safe Harbors

"A fair amount of the earnings growth the S&P 500 has exhibited in recent years might be ephemeral, related to gains in the value of companies’ investments rather than the underlying strength of their operations.   Under the hood, then, profit margins aren’t as good as they appear.   If business starts to falter, companies’ may take an ax to costs, with bad repercussions for the economy."

Justin Lahart, Wall Street Journal, Squeeze on U.S. Companies May Be Worse Than It Seems


"Every bubble rests on two pillars: a) it’s different this time; b) some other sucker will buy this worthless asset from me at a higher price, so I should hold on against my better judgment."

Louis-Vincent Gave

Today was clearly a 'risk off' day as stocks were sold steadily all day, and bearishly going out on the lows.

There was a corresponding bid of money seeking safer havens in gold, silver, and the Dollar.

The purported reason was the war of words that continues between the US and China.

As I noted several times in the past, this roller coaster action, this bipolar viewpoint towards risk in the markets, is not constructive, and may signal some inherent instability that seeks its level.

And that level may be about 20-30% lower, given the right sort of trigger event.

But as I have noted many times before, forecasting a significant market decline is something that people like to do, in order to grab headlines and subscribers.  But it can make you go broke if you try to front run the markets on the bearish side.

I will only urge caution, and note that markets are still near to all time highs.

Jay Powell provoked a little market rally today with some expansively dovish words about the Fed's Balance Sheet.

It did not last.

Gold and silver caught a definite safe haven bid.

Gold may be forming up a bull flag.  I have marked it on the chart, and took an estimate on the initial measuring objective.  

Obviously this means nothing until the formation goes active with a confirmed breakout.   But it's still nice to see that messy price action we saw into the October contracts option expiration start to clarify.

Silver is a a hot item, as they say.  Hard to predict, sometimes hard to hold.  But when it goes, it can ride.

Have a pleasant evening.

Stocks and Precious Metals Charts - Sleepwalking Into the Abyss

"As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I’ve done before!)"

Donald J. Trump


"China uses a host of monopolizing strategies to extend its geopolitical and commercial power, everything from below cost pricing to grab market share, patent trolling, espionage, mergers, and financial manipulation. In fact, the CCP is best understood as a giant monopoly that also controls a nation of 1.4 billion people and a large military apparatus...

China’s biggest asset in gaining power was how most people in the West just didn’t realize that the CCP aimed to use it. Now China’s cover is blown. The raw exercise of power to censor a random Houston Rockets basketball executive has made millions of people take notice. Everyone knows, the Chinese government isn’t content to control its own nation, it must have all bow down to its power and authority.

Matt Stoller, How Joe Biden Empowered China's Censorship of the NBA

Matt overstates the headline I think.  The empowerment of China may have gone into higher gear with Bill Clinton perhaps, but has been fully supported by every President, both parties, and especially the moneyed interests in the US, who place their short term greed first and foremost.

Follow the money.  China is certainly not alone among organizations, and even nations, in playing on the personal greed, divided loyalties, and lust for power of our political and financial class. 

This in itself is nothing new.  But the extent of it, and the fashionable acceptance of it amongst our society's elites, the industrialization of political corruption and big money in politics, has been breathtaking.

Stocks were wobbly for much of today.

Trading volume was lackluster and the market action for the most part was 'dull.'

There was a brief rally around the middle of the day, when Larry Kudlow lit up the trading algos with talk about the progress being made in a trade deal with China.

That wore off fairly quickly, as the human beings quickly realized this was just another story designed to pump up the markets, and that there was no substance to it.

Gold and silver were off a bit and the Dollar was marginally higher in a seesaw session.

Have a pleasant evening.

Precious Metal Holdings and Commitments of Traders

Thanks to Nick Laird the data wrangler at goldchartsrus.com as always.

Stocks and Precious Metals Charts - RISK ON! - Sitting on Top of the World

"I have hitherto been assuming that such teachers...do not fully realize what they are doing and do not intend the far-reaching consequences it will actually have.  There is, of course, another possibility.  What I have called the trousered ape and the urban blockhead may be precisely the kind of man they really wish to produce.

The differences between us may go all the way down.  They may really hold that the ordinary human feelings about the past or animals or large waterfalls are contrary to reason and contemptible and ought to be eradicated.  They may be intending to make a clean sweep of traditional values and start with a new set."

C.S. Lewis, The Abolition of Man


"This explains much about how Trump — whose company has been linked with everything from housing discrimination to outright fraud — has gotten away with so much.  His standards are low; his ethics, nonexistent.  And yet he is adored by millions.  This says as much about him as it does about us."

Paul Brandus, The Real Reason Behind Trump's Meltdown


‘The banks are circling the wagons.  Somebody’s got a problem.’

Charles R. Geisst,  as quoted in There’s Nothing Normal About the Fed Pumping Hundreds of Billions Weekly to Unnamed Banks on Wall Street

Today's Non-Farm Payrolls Report missed to the downside, and the growth of wages was nil.

And so it was time for a rally!

Stocks were propelled higher. Gold and silver were off a bit, and the Dollar was also lower.

The Street was piling into risk, on the assumption that if they are bold enough in denying what is expected of them, that the Fed will be compelled to bail them out once again.

On one hand the recent reliance on daily Fed repos to balance the banking systems cash on hand could be argued to be a return to what was more commonplace in the 1980's. Of course, those were times of tremendous economic strain, now long forgotten, in the aftermath of the Volcker interest rate gambit, and the oil shocks to the economy.

But we are in some golden recovery now, right?  Jobs and the economy and booming!   And yet our financiers are clamoring for rate cuts, with rates already at historically low levels.

But then there are the deficits, which seem to be a hallmark of Republican governance.  All that debt issuance by the Treasury to finance the tax cuts for the wealthiest and corporations must surely require something extraordinary to support it.

It is the mark of our genius to hold several contradictory assumptions and observations at the same time, and blithely push on as though they were all tied together by impeccable reason.

Like the recent weather, that flashes from hot humid summer to the crisp coolness of autumn overnight, we seem to be finding our balance in the extremes.  The madness of one side is answered with the obsessive madness of the other.  Madness abounding, and so it all seems chaotic, but normal—  the new normal, thoroughly modern, so climb on board.

But still, there is that nagging feeling that something behind the scenes is going extraordinarily wrong, and that our complacency and confidence are at best bravado, but at worst a kind of madness.  And who can call it madness if all our best and brightest deny it?  What happens if we declare madness to be common sense, a sign of proper belonging, or even a patriotic duty?

As Sir John Harington once noted, 'Treason doth never prosper.  What's the reason?  Why if it prosper, none dare call it treason.'  And say we same the same for madness?  If we are all mad together, who but the mad would call it madness?

There is a feeling that despite all the talk of our exceptionalism and glorious excellence, that something very wicked this way comes.  That one cannot make their deal with the devil without paying, at long last, some terrible price.

Quid pro quo, Clarice?

Do not be deceived, for God is not mocked. Whatever a man sows, so shall he reap.

Need little, want less, love more.  For those who abide in love abide in God, and God in them.

Have a pleasant weekend.