SP 500 and NDX Futures Daily Charts - Flashbangs, Smoke and Mirrors

The markets took off after the 'great' Jobs Number came out.

I provided some significant intraday commentary here, and have added to it at the end of day as well, including a response to the Labor Participation Rate issue and an actual comparison of the pre and post revision numbers.

The bottom line is that looking at month over month changes like this is ludicrous, and almost always in support of some PR or Sales campaign. And in this case it was both: PR for Obama and Sales for the paper pushers. 

Only the trends matter, and certain key data like the median wage, because there is so much 'noise' in the data, much of it self-induced. But you will rarely hear a serious discussion about this from the spokesmodels and the used car salesmen that appear on their shows.  In this at least the financial media in the UK is head and shoulders above the extended infomercials in the States.

The more serious issue is the lack of thoughtful policy discussion that occurs in the US and the way in which the statistics are abused. No wonder the problems linger on and fester.

Another Look at What 'Worked' in the Great Depression

Here is a fairly simple picture of some of the major metrics during the Great Depression.  Too simple yes, but it tracks most of the major indicators.

Hoover followed a policy of 'deleveraging,' that is, allowing for the economy to liquidate its prior excesses without changing much else. The Fed did respond to this crisis by expanding the monetary base fairly significantly as you can see.

The recovery began under Roosevelt, who declared a 'bank holidy' and struck at the heart of the problem, clearing the banking system. But he also followed through with a major currency devaluation, stimulus programs, and significant financial reform.

And that last point is the most important. Hoover's Fed supplied stimulus, but there was really nothing done to fix the system that had caused the Great Crash of 1929 in the first place. And I suspect that if Roosevelt had not taken strong steps to clean up the fraud in the stock market and the banking system, his own stimulus would have fluttered and failed.

Now the common knee jerk reaction to this from those who study the schoolbook given by the monied interests is twofold.

First, that Hoover simply did not go far enough, and if they had only allowed the Depression to continue to deepen, eventually it would have bottomed and things would have improved. I think the answer is clear, in the examples of Italy, Germany and Japan. When an economy is tortured to that extent, the people do not continue to endlessly suffer in silence. They react, badly, and take matters into hand one way or the other.

They say you cannot fix debt with debt. And I say that like most simplistic slogans it is intended to mislead. The real issue is reform and how the debt is used and the gains distributed.

Secondly, they say that the Roosevelt recovery did not last. And it did not continue on a steady trajectory. The Fed engaged in some policy errors and caused a secondary slump in the late 1930s. And the world economy remained troubled. Roosevelt also faced an obstructionist Congress, and a Supreme Court that overturned many of his New Deal programs.

He also faced an attempted military coup d'etat funded by a few of the monied interests who also busy doing business with Mussolini and Hitler, as testified by one of its more decorated war heroes, but the history books don't like to talk about that.  Just another nut job.

Globally, the monied interests seemed to have choose amongst three options: 1.  Go along grudgingly with reform and accept a smaller percentage of the overall economy (Roosevelt), 2. Fund an oligarchic takeover of the government and seek to control it (Hitler), 3.  Sew your wealth into the dresses of your children, and die with them in a basement (Russia).

The US, like all other nations, has plenty of its own dirty little secrets that no one likes to talk about.

The point of this is that austerity following a financial collapse based on fraudulent imbalances does not work and almost always leads to civil disorder. And that stimulus alone does not heal the damage, although it does help to ease the pain if applied correctly.

No, the most important ingredient for a sustained recovery is to reform the abuses that allowed for such a spectacular bubble of excess to exist in the first place. It was all about the misallocation of productive capital and the negative effects of monopolies and financial frauds on the real economy.

At some point this lesson will be burned into our minds by the continuing stagnation of the unreformed economy, even if it is sold as 'the new normal' and not so bad on paper.  It will be a living hell for many, and they will eventually push back, and then things will be resolved, one way or the other.

I hope that the new school of economic thought that rises out of the ashes of what we have now is more serious and mature and thoughtful, if not wise.  But I have not found many economists capable of such original thinking, even among those who claim to carry the progressive banner.  

And certainly not among the ideological schools, who start with an a priori set of premises and then beat reality and torture the market participants to death with them and their supporting statistical and logical fallacies.  Since these schools are based on top down principles and assumptions, they are notoriously slow to change and adapt, but often most vociferous and extreme in their arguments, with adherents whose allegiance is less informed by the intellect and an actual understanding of things, and more like a belief system based on stubbornly held slogans and prejudices. 

The Non-Farm Payrolls Report: Air Brushing History - Nominal Work Force for Nominal GDP

Back in Stalinist Russia, they had whole departments of people that were responsible for rewriting history and documents in order to support the latest Party lines.

When a particular person fell out of favor, for example, they not only altered the documents, but even went so far as to air brush them out of important historical photographs.

Today the US reported a remarkably high Non-Farm Payrolls number, well in excess of even the most optimistic estimates. 243,000 jobs added, and unemployment has dropped to only 8.3 percent. Isn't that good news indeed.

If one tracks the data closely, and keeps their own copies of the records, what we see instead are revisions, sometimes going back as far as ten years, that most greatly affect the 'seasonally adjusted' numbers, but also affect the raw numbers as well.

The Obama Administration, as well as the previous Administration, have been going back and tinkering with history, rewriting the numbers here and there, in most cases 'rolling jobs forward' to the current months to make the current headlines look better.

The BLS keeps the digital copies of this and they are duly adjusted of course. But what was surprising in this latest round is that for the first time in my memory they went back and adjusted the Birth-Deal Model, which are imaginary jobs in the first place! And on the web site that I usually check they have stopped providing all the historical data, limiting it to what looks like a year or two of data.

What can one do when the statistics are questionable like this? One common touchstone for those who rely on data is to compare one set of numbers with another, or even with 'real things.' If the sales numbers look great, but unsold inventory is piling up, chances are pretty good that somewhere those sales reports might be disconnected from reality.

One real check I prefer is the Labor Participation Rate. The Census is pretty good about counting the number of people and estimating their growth within some reasonable statistical error. And people do not tend to disappear in large numbers, at least not yet.

Labor Participation is simply the number of people who are working or are unemployed as a percentage of the civilian non-institutionalized population over the age of 16, or simply number of people of working age who are not in prison, etc.

So if the number of people working is increasing and the number of unemployed are decreasing the participation rate *should be increasing* one would think, given the relatively stable growth of the population.

But we instead see that the Labor Participation Rate continues to decline. I am sure the spokesmodels will find some way to try to gloss over this.

Note: The spokemodels and the uninformed parrots quite predictably are tut-tutting this using misdirection by saying that the most recent drop for January alone is attributable to a revision in the Labor Force, the denominator in this case, by the Census Bureau. And I accept that. No problem. But my point again is not to look at a single month, but at the trend, even for this. And from a technical standpoint, the trend here undeniably 'blows.'

If the Fed can target a Nominal GDP, that is, economic growth targets that do not care how much is real and how much is paper manipulation, then I am sure it is only fair for the government to target a Nominal Work Force.

As you know, I do not like to look at these monthly numbers in the first, place, but they are integral to the Wall Street shell game, and the politicians love to play it for the headlines as well.

A more rational approach is to watch the trending average over some reasonable period of time, and to look at multiple sources of data, given the propensity for politicians to stick their fingers in the process.

The problem I have with painting the tape, accounting fraud, and the statistical manipulation of the numbers is that these numbers are the foundation for serious policy decisions. Making January 'look good' is going to make it all the more difficult to take the appropriate political steps to reform the economy and get it working again.

But the Yanks are notoriously short term oriented in their thinking. And this is an election year, and emotions are running high.

I cannot help but think that if the government is finally able to fully digitize money and other assets, all this airbrushing can become so much more simple. Just ask the customers of MF Global. One day you own Treasuries, and even solid bars of gold and silver in your own name, and the next day, poof, they're vaporized. Sorry don't know where they went. Go stand over there in line by the Lost and Found and see what happens.

And so I think we are not in Kansas anymore, Toto. It is looking more like Moscow on the Potomac every day.

Here is a comparison of the Seasonally Adjusted Jobs Numbers before and after the Revisions. Keep in mind that each square represents 100,000 jobs, so even slight changes make a big difference in the headline number which just shows the month over month change.

Again, the point is not that there is some conspiracy, which is how many easily dismiss this, especially the uninformed who want to appear to be 'sophisticates.' Rather it is mean to show that one months data is relatively useless and often misleading, and subject to significant revisions sometimes much later. It is the TREND that matters.

Byron Dorgan and Bill Moyers: Making the Banks Play By the Rules

There was a lot of money thrown around Washington in the 1990's to make this happen, and the effort was shephered by a number of prominent financiers, regulators and politicians. Prominent among them are Phil Gramm, Alan Greenspan, Robert Rubin, Larry Summers, and Sandy Weill. And of course a willing President in Bill Clinton.

And the sad, sad truth is that nothing has really changed. The Banks were able to seriously weaken, if not cripple, the Dodd-Frank financial reform bill with a generous application of money and influece.

The people of the US need to find and elect an honest and effective President, and a Congress with a conscience and some balls to serve the public. Let's see, Mitt Romney or Barack Obama...

Oops, there's the problem. Time for Plan B? Or should I say Plan P?

Maybe voting all of the non-Progressive incumbents out of the Congress would be a way to send a message.



Byron Dorgan on Making Banks Play by the Rules


See also Mr. Weill Goes to Washington: The Long Demise of Glass-Steagall

Gold Daily and Silver Weekly Charts - Clawing Up the Wall of Worry One Brick at a Time

Gold and silver continued to claw their way higher through tough resistance.

When I hear the spokesmodels on financial television talking about the need for austerity and 'tough love' for the rest, I always listen carefully to see if I can hear one word about reform, and the curtailing of the financial sector imbalances, excesses, and fraud that actually brought the world economy to where it is today.

And if I do not hear it, then I know they are just spinning out more propaganda for the monied interests, who have taken their loot, privatized the gains, and now wish to continue to socialize the losses, the public and the country be damned.

One way to protect your wealth from this ongoing plunder and confiscation is to stay as far away as is possible from the Wall Street and London money centers, the heart of the Anglo-American banking cartel, and to keep some portion of it safely in hard assets with high liquidity.

This course is not without its own concerns. As we can see clearly from the chart, the precious metals are subject to wide swings of price manipulation by the hedge funds and the banks when it suits their interests. Such is the state of the paper markets and slack regulation we have today.

These much abused markets and exchanges may fail, and possibly quite spectacularly, and the Wall Street bankers and their politicians will look around and say once again, 'We did not know, who could have predicted it? Don't worry, we have a plan. But it will require your sacrifice.'

Why not? It has worked every time so far.

The Banks must be restrained, and the financial system reformed, with balance between individuals and the corporations restored to the economy, before there can be any sustained recovery.

SP 500 and NDX Futures Daily Charts - Benign VIX - Goat Rodeo

"My concern is that an improbably large number of things will have to go right in order to avoid a major decline in stock market value in the months ahead. We presently estimate that the S&P 500 is likely to achieve a 10-year total return (nominal) of only about 4.7% annually, which reduces the likelihood that further gains will be durable even if they persist for a while longer. In the context of present valuations and a probable Goat Rodeo in the months ahead, my impression is that the recent market advance may be a transitory gift...

If we think in terms of "exhaustion rallies," the syndrome we're observing here is a multiple indicator version of signals like the Coppock "killer wave" - which occurs when the Coppock Curve reaches a peak, declines, and the market then recruits an advance large enough to establish a second wave higher. Some technicians have debated how best to define the signal (e.g. the decline required to define a negative shift) - in our view, it's not a good idea to use a single indicator in the first place - but in any event, the selloffs from those exhaustion waves have often been brutal, and a few overlap the syndrome outlined here.

In short, market action is presently showing features associated with "exhaustion rallies", which have often been followed by deep losses over the following 6-7 month period.

John Hussman, Goat Rodeo

The markets may very well decline at some point. Perhaps after Romney sews up the nomination.

But do not try and get in front of it. Wait for it.

Never underestimate the willingness of the Fed to puff up an asset bubble that benfits Wall Street. And never underestimate the willingness of the sociopaths in the financial sector to hold the nation hostage to get their way.

In Honor of the 70th Anniversary of the Munich Students Movement - Die Weiße Rose - 2nd Leaflet

Someone asked me, why bring this up now?  Why remind ourselves of things better forgotten? Why be gloomy or sad, and burden our beautiful minds?

First, because it is after all, the 70th anniversary of an heroic event, a moment when several people laid down their lives for their fellow men and for the truth. And what we remember makes us who we are, makes us the people we wish to be, whether we intend it or not.   

Secondly, of course, it is because throughout history there are lights, great beacons in the dark seas of time, that stand out for us as examples of what it is to be human. Such examples are frequently not 'successful' in the estimation of the world. Winners.  More often than not they give up their lives, one way or the other, quietly or perhaps with some notice, but almost always for the sake of their conscience.  Sometimes they even die ignobly, flanked on the right and left by common thieves. 

We are so low and perverse in our thinking these days, in our expectations for ourselves, that if Mother Theresa or Dorothy Day had given up their great work for the poor and the dying, and left to become actresses in Hollywood, we would smugly say, 'oh, well that is only human.' Why didn't Sophie Scholl forget her calling and her conscience, and aspire to be the girlfriend of a wealthy banker living extravagantly on the misery of slave labor? As if such a selfish and shallow choice is the epitome and meaning of our lives.

And thirdly, because there is compelling evidence and advice in these pamphlets for our world of today, although we can hope it is quite early and still innocent. If you think these things cannot happen here or ever again, amongst a free and educated people, you are under that most arrogant of delusions, exceptionalism.  Every people, every would be empire, that goes badly first considers themselves to be different, better than the rest, above history and even God, uber mensch.

Then they came with clubs, bullets, and gas.  But sometimes it is with finance,  fraud, and official corruption.  If they come for the weakest,  to rob and even murder them, and the people allow it by saying nothing at all, then the hour will be late, and the die may be cast.

And if you cannot see this, see this tendency to rationalize even the injustice and repression in our own time, torture, confiscation, and murder, then perhaps you are in denial, or willfully asleep.

But who am I? What can I do? The whole of the law is this: to love God and to love your neighbor as yourself, to reject greed and fear and the hatred and envy that they bring, and to keep ourselves well for He who has a triple claim on us, through creation, through redemption, and through His own, to us at least, incomprehensible love. He has allowed us to go out into the world and to be free, and our duty is to bring ourselves home safely again at the last.

“The real damage is done by those millions who want to 'get by.' The ordinary men who just want to be left in peace. Those who don’t want their little lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those who don’t like to make waves—or enemies.

Those for whom freedom, honour, truth, and principles are only literature. Those who live small, love small, die small. It’s the reductionist approach to life: if you keep it small, you’ll keep it under control. If you don’t make any noise, the bogeyman won’t find you.

But it’s all an illusion, because they die too, those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what? Life is always on the edge of death; narrow streets lead to the same place as wide avenues, and a little candle burns itself out just like a flaming torch does.

I choose my own way to burn.”

Sophie Scholl

The White Rose
Second Leaflet
Munich, 1942

We will not be silent.

It is impossible to engage in intellectual discourse with National Socialist Philosophy, for if there were such an entity, one would have to try by means of analysis and discussion either to prove its validity or to combat it. In actuality, however, we face a totally different situation.

At its very inception this movement depended on the deception and betrayal of one's fellow man; even at that time it was inwardly corrupt and could support itself only by constant lies. After all, Hitler states in an early edition of "his" book (a book written in the worst German I have ever read, in spite of the fact that it has been elevated to the position of the Bible in this nation of poets and thinkers): "It is unbelievable, to what extent one must betray a people in order to rule it."

If at the start this cancerous growth in the nation was not particularly noticeable, it was only because there were still enough forces at work that operated for the good, so that it was kept under control. As it grew larger, however, and finally in an ultimate spurt of growth attained ruling power, the tumor broke open, as it were, and infected the whole body.

The greater part of its former opponents went into hiding. The German intellectuals fled to their cellars, there, like plants struggling in the dark, away from light and sun, gradually to choke to death.

Now the end is at hand. Now it is our task to find one another again, to spread information from person to person, to keep a steady purpose, and to allow ourselves no rest until the last man is persuaded of the urgent need of his struggle against this system. When thus a wave of unrest goes through the land, when "it is in the air," when many join the cause, then in a great final effort this system can be shaken off.

After all, an end in terror is preferable to terror without end.

We are not in a position to draw up a final judgment about the meaning of our history. But if this catastrophe can be used to further the public welfare, it will be only by virtue of the fact that we are cleansed by suffering; that we yearn for the light in the midst of deepest night, summon our strength, and finally help in shaking off the yoke which weighs on our world.

We do not want to discuss here the question of the Jews, nor do we want in this leaflet to compose a defense or apology. No, only by way of example do we want to cite the fact that since the conquest of Poland three hundred thousand Jews have been murdered in this country in the most bestial way.

Here we see the most frightful crime against human dignity, a crime that is unparalleled in the whole of history. For Jews, too, are human beings - no matter what position we take with respect to the Jewish question - and a crime of this dimension has been perpetrated against human beings.

Someone may say that the Jews deserve their fate. This assertion would be a monstrous impertinence; but let us assume that someone said this - what position has he then taken toward the fact that the entire Polish aristocratic youth is being annihilated? (May God grant that this program has not yet fully achieved its aim as yet!)

All male offspring of the houses of the nobility between the ages of fifteen and twenty were transported to concentration camps in Germany and sentenced to forced labor, and all the girls of this age group were sent to Norway, into the bordellos of the SS!

Why tell you these things, since you are fully aware of them - or if not of these, then of other equally grave crimes committed by this frightful sub- humanity? Because here we touch on a problem which involves us deeply and forces us all to take thought.

Why do German people behave so apathetically in the face of all these abominable crimes, crimes so unworthy of the human race? Hardly anyone thinks about that.

It is accepted as fact and put out of mind. The German people slumber on in their dull, stupid sleep and encourage these fascist criminals; they give them the opportunity to carry on their depredations; and of course they do so.

Is this a sign that the Germans are brutalized in their simplest human feelings, that no chord within them cries out at the sight of such deeds, that they have sunk into a fatal consciencelessness from which they will never, never awake?

It seems to be so, and will certainly be so, if the German does not at last start up out of his stupor, if he does not protest wherever and whenever he can against this clique of criminals, if he shows no sympathy for these hundreds of thousands of victims. He must evidence not only sympathy; no, much more: a sense of complicity in guilt.

For through his apathetic behavior he gives these evil men the opportunity to act as they do; he tolerates this "government" which has taken upon itself such an infinitely great burden of guilt; indeed, he himself is to blame for the fact that it came about at all...

Please make as many copies of this leaflet as you can and distribute them.

"When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle."

Edmund Burke

See also The White Rose, First Leaflet

Commodity Wars: Why Just Trade Milk When You Can Buy the Cow (Cheaply)?

As you may recall, I was speaking about the Currency War long before it became a recognized issue. From my analysis of history and the major monetary trends it seemed inevitable even in 1999, and events shortly after that confirmed it.

Those who see what is going on behind the scenes are securing supplies of key commodities and hard assets. And this is not limited to the large national banks and financial firms.

Consolidation in the mining sector is going to happen in a rush when the panic for supply ensues. But it will be the same for several key sectors.

This is a recurring macro theme and major trend, an extension of the Currency Wars as the US dollar regime that has existed since the end of World War II shifts and changes.

Since the outcome is uncertain, the major players are grabbing assets now that will likely be playable chips no matter what the eventual resolution.

The status quo will continue to posture, running their bluffs and trying to hide the facts, while lining their own pockets I might add, as they are untrue, frightened, and unworthy.

So do not be fooled if the path continues to twist and wind with bumps along the way. These things happen slowly over a long period of time, but then often seem to come at you all in a rush.

"In the days that were before the flood they were eating and drinking, marrying and giving in marriage, until the day that Noah entered into the ark, And knew not until the flood came, and swept them all away."

Secure your wealth, look to your family and especially remember whom you chosen to serve, and hold your own self tight in your fingers, hoping for the best with a steady faith, a good conscience, and a loving heart.

I still believe that serious stagflation is the more likely outcome, as compared to the less likely hyperinflation or protracted deflation. However we may see a significant devaluing of the euro and the dollar against 'hard assets' that may or may not include the Asian currencies.

Batten down the hatches. Rough waters ahead.

Guardian
Glencore and Xstrata in talks over $82bn 'merger of equals'
By Rupert Neate
2 February 2012 04.13 EST

Commodities trader Glencore and mining giant Xstrata are in discussions on an $82bn (£50bn) merger to create a company that would dominate the global mining industry.

Xstrata, already one of the world's largest mining companies, confirmed on Thursday morning that Glencore, the world's biggest commodity trading company, had formally approached it with plans for a "merger of equals". The announcement sent shares in Xstrata rocketing 12% in early trading to £12.56. Glencore shares were up almost 4% at 448.6p.

"Xstrata confirms that it has received an approach from and is in discussions with Glencore International regarding an all-share merger of equals which may or may not lead to an offer being made by Glencore for Xstrata. There can be no certainty that any offer will be made," the company said in the statement that follows a flurry on speculation.

UK "put up or shut up" takeover rules mean Glencore has until 1 March to make a formal offer...

Gold Daily and Silver Weekly Charts

"When a man takes an oath, he's holding his very self in his own hands, like water. And if he opens his fingers then, he needn't hope to find himself again."

Thomas More, A Man For All Seasons

The metals are right up against key resistance, and the bear are trying to make a goal line stand.

I have shorts back on the stocks after today's rally. I am balancing those with some metals longs.

SP 500 and NDX Futures Daily Charts - Facebook Cometh, Some Day

A bounce higher broke the four day downtrend in equities. But they are still moving in a fairly narrow range and on light volumes.

Facebook is the big tickle du jour. See the intraday comments on that topic as well as the role of risk in the markets, the Commodity Wars, and MF Global.

Bubble Watch: The Facebook IPO Is Rumoured to Be Coming Out

Morgan Stanley is taking the lead.

Will it be NAS: FB or NYS: FB?

The filing is said to be coming this afternoon.

If it does come out at $100 Billion I think it is more than fully valued. You would have to go back to the tech bubble for growth comps in that range.

And Facebook is certainly no Google or Apple.

But it is a mistake to underestimate the greed and gullibility of people determined to become rich without working for it, and their willingness to risk hot money that they view as an overvalued, depreciating asset class.

Still if it comes out that high, and then pops and flops, stick a fork in this phase of the stock bubble. Sometimes they do ring a bell, and often right after ripping off your Facebook.

But if it comes out that high and then rallies, we might be looking at a return to a familiar theme.

As one corporate CEO said privately to incredulous staff at the height of the internet bubble while paying an enormous premium for a major acquisition, 'I am paying with stock, and my currency is cheap.' His currency was indeed cheap, and within a year or two it was about 95 percent cheaper. But by then he had already departed for greener pastures and the golf links.

How low can the dollar go? How much cheaper can it get? That may help in pricing this oinker out. It might even look pretty after a few rounds of print goggles.

But on the other non-real recovery hand, how many ads can a national economy sell to people with no jobs and no money?

Stay tuned...

Note: This card can be played by Insiders only. Collect the funds from the players around the table.

It's All About Controlling the Risk... and the Fear That Leads to Destruction

Capitalism contains the impulse for self-destruction in the aversion to risk and the desire to control it. Risk is uncertainty, and uncertainty can engender fear.

By obsessing with what one fears, one brings about their eventual demise. I have seen this repeated in human institutions over and over again, both in direct experience and in the study of history.

We fear that freedom will be undermined by some exterior force, so we kill it first to save it. We fear that risk will erode our profits, so we ensure our profit by controlling risk and destroying the efficiency of the markets, thereby eliminating any real growth. But we have maintained the profits, for at least a short time, and in the end there is a furious struggle among the insiders to divvy up the remains and feed on the corpse.

Fear surrenders itself to control by dark powers, often precipitated by a traumatic event. Fear provides the rationale, the excuse, to suspend reason and conscience, and then the madness has its way with us.

Faced with the risk and rigor of 'free markets' and the drive to zero economic profit through increasing competition, there is the impulse to create monopolies, manipulate prices, and control information to line one's pockets.

It is the natural tendency for clever people to stretch the rules and even break them to gain an advantage over other participants. This is what makes the idea of the natural efficiency of free market systems so laughable. They work fine as long as there are no people involved in them. Freedom and justice take hard work and dedication, and are not the natural state of the world.

This is a basic principle of transactional systems, whether ownership resides in the capital or the labor end of the equation. It explains the quicker failure of state communism since it concentrated power in the corruptible few from the start rather than dispersing it more widely in 'the market.' It is the government of the few versus the government of the many. The one percent are the one percent, no matter the color of their flags.

Even better for the powerful is when the government can be subverted and brought into the picture to create the opportunities to obtain a license to collect rents.

This 'partnership' between corporations and the government is what is called 'crony capitalism' or corporatism. The power base shifts back and forth between the participants, but always it is based on the monopoly control of markets.

This is what Simon Johnson referred to when he said that a coup d'etat had occurred in the States. And it is where we are today.

The US has encountered this problem many times in its relatively short existence, under various names and characters. The 'Trusts' at the beginning of the 20th century were an example of this. They were reborn as the Trading Pools and Financial Trusts, the funds of funds, of the 1920s.

So, is the solution to eliminate government, the law? Destroy it so it can be reborn again, naturally better? What a romantic notion. This only eliminates the middle men, and puts the powerful directly in charge in the manner of an oligarchy. This was the solution chosen by Italy, Germany and Japan in the aftermath of the last Great Depression.

The US can recover from this current impasse as well. But it will take something to change it, because the impulse for change is not likely to come from the status quo. They are not that wise.

Commodity Wars: JP Morgan Stockpiling Inventory to Influence Prices, the Flow of Goods, and Rents

"We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time."

Bill Gross

Crony capitalists are never interested in the risk and rigor of 'free markets,' only in the surety of monopolies and obtaining a license from the authorities for extracting rents from them. They alternately create artificial abundance and scarcity to influence prices, with the objective of lining their pockets.

This move by JP Morgan to enlarge their warehouses and stockpile key commodities helps to demonstrate the growing scramble for resources which is a recurrent theme, and at the same time it shows the pernicious influence of mingling government guaranteed customer money and subsidized Federal Reserve funds with what is essentially private speculation.

JP Morgan is a bank that was rescued by public funds, and that exists at the sufferance of the US government and their money. Some of the pampered princes of the Republic would like to turn the financial sector into a new House of Lords.

Still, there may be a mutual interest between the government and their bankers in influencing the world's flow of key commodities. And if a few friends become wealthy in the process, well, so much the better.

Reuters
JP Morgan adds muscle to metal warehousing money
By Josephine Mason and Susan Thomas

NEW YORK/LONDON (Reuters) - Investment bank JP Morgan (NYSE:JPM - News) is bulking up its metal warehousing facilities in Rotterdam and Chicago, industry sources say, in a business that consumers complain deliberately delays delivery of metals to boost revenues from rent.

London Metal Exchange rules allow warehouse companies to release only a fraction of their inventories per day, much less than is regularly taken in for storage, creating long queues to get metal out and guaranteeing rental income.

JP Morgan's aim is to fill its Henry Bath warehousing arm with inventory in the two port cities large enough to rival trading house Glencore's Pacorini and U.S. bank Goldman Sachs'(NYSE:GS - News) Metro.

The Pacorini and Metro facilities in Vlissingen, Netherlands and Detroit combined are estimated to hold around half of the global London Metal Exchange (LME) aluminium stocks which stand at just under 5 million tonnes.

Sources at JPM say the bank is pursuing a strategy to consolidate warehousing in the two locations to create the next Detroit or Vlissingen. A JPMorgan spokesman declined to comment.

"They (JPMorgan) are rebuilding stocks again," a high-level industry source in the Netherlands said.

Complaints about long queues, particularly in Detroit, prompted the LME to raise minimum delivery rates - 3,000 tonnes a day for operators with stocks of over 900,000 tonnes in one city - but traders and analysts say the new rules will make little difference when they come into effect in April.

The JPM strategy is likely to inflame consumers and traders already angry about the influence of warehousing companies on the flow of metal.

J.P. Morgan is already preparing to store aluminium in Europe's largest port, Rotterdam, where it has over 30 sheds.

The bank, the largest by assets in the United States, was behind the cancellation of 500,000 tonnes of LME aluminium warrants in Vlissingen, just 50 miles away from Rotterdam, on December 21, traders and warehousing sources told Reuters. Cancelled warrants show metal is earmarked for delivery.

"They are taking material from producers or traders, or trying to get it out of the market place - they were lucky to get 500,000 tonnes out of Vlissingen -- and moving it to Rotterdam," said the industry source.

Citigroup analyst David Wilson said there had been a large number of copper cancelled warrants in St Louis and New Orleans, many carried out by JP Morgan.

"It wouldn't be a surprise if they wanted to move metal into their own warehouses," Wilson said. "The cancellations don't fit in with the underlying demand picture."

It is unclear how much metal JPM wants to eventually hold in the two locations, but to compete with its two closest rivals, it will require millions of tonnes, most likely aluminium which has the most ideal characteristics for long-term storage deals.

Glencore drove Pacorini's emergence as a dominant force in New Orleans and Vlissingen. The Dutch port holds nearly one million tonnes of aluminium.

Traders said Metro holds most of Detroit's 1.4 million tonnes of aluminium stocks, and is ideally located to attract surplus aluminium in North America.

There were other signs in recent weeks that the bank's focus has shifted after traders reported JPM sold a large number of warrants, or ownership titles to metal, to release funds.

"JPM have dumped a large amount of warrants or sold very cheaply," a senior source at a warehousing company said. "They've let go of a lot of warrants they were holding onto."

Read the rest here.

MF Global: Oops, They DID Find the Money After All As We Had Said, But...

You have to read this latest news item with a discerning eye, and in the context of what has gone on so far including the piece the other day from the Wall Street mouthpiece that the money simply 'vaporized.'

It is a variation of the spin. No the money is not vaporized, but its complicated. There are lots of possibilities just too complicated to explain to the public, and you have to be patient, little customers, while a pile of creditors' lawyers sit on your money until you hopefully go away.

Real journalism and critical news analysis is apparently dead. The mainstream media outlets merely repeat sound bites supplied to them.

But one has to ask themselves, could this situation become more ludicrous? Does anyone actually buy this clumsy handling of serious wrongdoing and gross seizure of customer assets? The professionals and those in the know do not, and it is putting a chill on the markets, and people are afraid to talk about it above a whisper. It's an old story, of droit du seigneur, of the lord of the manor drunk with power doing something unspeakable.

Why are these people so afraid to tell the simple story of what actually happened? Because they are falling all over themselves to avoid talking about 'he who must not be named.'

Still, it is as I forecast the case would progress all the way back in November.

NY Times
After a Delay, MF Global’s Missing Money Is Traced
By BEN PROTESS and AZAM AHMED
January 31, 2012, 9:42 PM

Investigators have determined what happened to nearly all of the customer money that disappeared from MF Global around the time of its bankruptcy last Oct. 31, but have not publicly disclosed their progress, fearing that doing so might cripple efforts to recover the cash and pursue potential wrongdoing, people briefed on the investigation said.

While authorities have traced hundreds of millions of dollars to banks, MF Global’s trading partners and even the firm’s securities customers, investigators remain uncertain about whether they can retrieve the money.

Some recipients were entitled to payouts from MF Global, which could make clawing back the money difficult. For instance, securities customers withdrawing their money as MF Global began to collapse were paid from accounts that belonged to futures clients, according to other people briefed on the matter.

But the Commodity Futures Trading Commission, the regulator leading the investigation, will examine whether anyone accepted customer cash without verifying the source of the money, one of the people briefed on the matter said.

This person and others who discussed the case did so on the condition of anonymity because the investigation is not public.

The findings shift the pressing question surrounding the collapse of MF Global from what happened to the money to how to recover it and who is at fault.

Answers will not come easy. A significant impediment has been clashes among the parties trying to resolve the MF Global mess: three federal agencies and two bankruptcy trustees.

At the center of the squabbling are e-mails sent by top executives at MF Global — communications that have been withheld from federal authorities, according to the people briefed on the matter. Investigators suspect the e-mails, sent just before the firm collapsed, contain clues about who transferred the money from protected customer accounts.

The clashes stem from the conflicting interests of those involved. James W. Giddens, the trustee overseeing the liquidation of the brokerage unit, is charged with returning money to wronged customers. That mission is at odds with the interests of Louis J. Freeh, the trustee overseeing the liquidation of the firm, who is seeking to recover money for MF Global’s creditors. (JP Morgan at the head of them - Jesse)...

“We understand the frustration of customers, but the C.F.T.C. must take the necessary time — however long it takes — to get to the bottom of what happened at MF Global and take appropriate actions,” the agency said in a statement on Tuesday.  (That could be a while.  They have been sitting on their investigation of the silver market for over three years - Jesse)

Customers, including farmers, hedge funds and other small traders, have been very frustrated with the pace of the investigation and the dearth of updates about their missing money...

Read the rest here.

"Nothing is so unworthy of a civilized nation as allowing itself to be governed without opposition by an irresponsible clique that has yielded to base instinct."

Sophie Scholl

In Honor of the 70th Anniversary of the Munich Students Movement - 'The White Rose'

"Many people think of our times as being the last before the end of the world. The evidence of horror all around us makes this seem possible.

But isn't that an idea of only minor importance? Doesn't every human being, no matter which era he lives in, always have to reckon with being accountable to God at any moment? Can I know whether I'll be alive tomorrow morning?

A bomb could destroy all of us tonight. And then my guilt would not be one bit less than if I perished together with the earth and the stars.”

Sophie Scholl

The White Rose
First Leaflet
Munich, 1942

We will not be silent.

Nothing is so unworthy of a civilized nation as allowing itself to be governed without opposition by an irresponsible clique that has yielded to base instinct.

It is certain that today every honest German is ashamed of his government. Who among us has any conception of the dimensions of shame that will befall us and our children when one day the veil has fallen from our eyes and the most horrible of crimes - crimes that infinitely outdistance every human measure - reach the light of day?

If the German people are already so corrupted and spiritually crushed that they do not raise a hand, frivolously trusting in a questionable faith in lawful order of history; if they surrender man’s highest principle, that which raises him above all other God’s creatures, his free will; if they abandon the will to take decisive action and turn the wheel of history and thus subject it to their own rational decision; if they are so devoid of all individuality, have already gone so far along the road toward turning into a spiritless and cowardly mass - then, yes, they deserve their downfall.

Goethe speaks of the Germans as a tragic people, like the Jews and the Greeks, but today it would appear rather that they are a spineless, will-less herd of hangers-on, who now - the marrow sucked out of their bones, robbed of their center of stability - are waiting to be hounded to their destruction.

So it seems - but it is not so. Rather, by means of gradual, treacherous, systematic abuse, the system has put every man into a spiritual prison. Only now, finding himself lying in fetters, has he become aware of his fate.

Only a few recognized the threat of ruin, and the reward for their heroic warning was death. We will have more to say about the fate of these persons. If everyone waits until the other man makes a start, the messengers of avenging Nemesis will come steadily closer; then even the last victim will have been cast senselessly into the maw of the insatiable demon.

Therefore every individual, conscious of his responsibility as a member of Christian and Western civilization, must defend himself as best he can at this late hour, he must work against the scourges of mankind, against fascism and any similar system of totalitarianism.

Offer passive resistance - resistance - wherever you may be, forestall the spread of this atheistic war machine before it is too late, before the last cities, like Cologne, have been reduced to rubble, and before the nation’s last young man has given his blood on some battlefield for the hubris of a sub-human. Do not forget that every people deserves the regime it is willing to endure!

Please make as many copies of this leaflet as you can and distribute them.

"I was satisfied that I wasn't personally to blame and that I hadn't known about those things. I wasn't aware of the extent of the crimes. But one day I went past the memorial plaque which had been put up for Sophie Scholl in Franz Josef Strasse, and I saw that she was born the same year as me, and she was executed the same year I started working for Hitler. And at that moment I actually sensed that it was no excuse to be young, and that it would have been possible to find things out."

Traudl Junge, Im toten Winkel - Hitlers Sekretärin

Gold Daily and Silver Weekly Charts - Sweet Home Chicago

Intra-day bear raid was more effective in silver rather than gold which showed greater resilience.

SP 500 and NDX Futures Daily Charts - Hard Time Killin' Floor Blues

Weak reports on the economy continue.

Amazon earnings after the close.

Whither the Facebook IPO?

Is the Next Phase To Be Commodity Wars?

As the global trade system that had existed under the Bretton Woods II money regime evolves and changes, we may see more struggles for key commodities.

These will be characterized by local and regional military tensions as well as financial assaults on the relevant sovereign credit and currencies.

Reuters
12 Companies Join German Commodity Alliance
By Michael Hogan
Jan 30, 2012 3:23pm GMT

HAMBURG, Jan 30 (Reuters) - Twelve German companies have joined the new German alliance aimed at securing raw materials supplies in the face of growing competition for key commodities, the Federation of German industry BDI said on Monday.

In October 2010, Germany's government approved a new commodities strategy aimed at helping German industry secure supplies in the face of intense competition from China and other newly-industrialised countries which will include partnerships with supplier countries and greater cooperation between German commodity consumers.

A series of major German companies have been involved in talks about a project lead by German industrial association BDI to invest in foreign commodity projects and 12 have now agreed to join, the BDI said.

The founding members are copper producer Aurubis, chemical groups BASF, Bayer, Evonik Industries, Wacker Chemie < WCHG.DE> and Chemetall; carmakers BMW and Daimler ; steelmakers Georgsmarienhütte Holding, Stahl-Holding-Saar, ThyssenKrupp and electronics group Bosch.

"We are working together to build up a powerful corporation which will provide long-term improvements to Germany's raw material supplies," said BDI vice president Ulrich Grillo. Grillo is head of one of Germany's leading zinc processing groups Grillo-Werke AG.

"The alliance has the goal of taking shareholdings in commodity projects to achieve a long-term improvement in the supply of raw materials to industry," Grillo said.

"The commodity alliance will become involved in projects at an early phase which seek and assess reserves so as to give German companies the option of sourcing (raw materials) or taking shareholdings," Grillo added.

In specific cases the alliance may itself invest in projects to develop commodity reserves, he said....

Read the rest here.

Gold Daily and Silver Weekly Charts

The precious metals took a well-deserved rest to consolidate their gains from the recent protracted rally.

SP 500 and NDX Futures Daily Charts

There is more talk of the Facebook IPO coming out this week, perhaps on Wednesday.

If this is the case the Street will prop this market up to get that IPO priced and out the door, barring any unforeseen events from Europe.

MF Global: A Despicable State of Affairs

Much of the financial press picked up this story from the Wall Street Journal, Money From MF Global Feared Gone. Much of the mainstream media in the US and the UK these days is just a conduit for sound bites from the monied interests.

"Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.

As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a "significant amount" of the money could have "vaporized" as a result of chaotic trading at MF Global during the week before the company's Oct. 31 bankruptcy filing, said a person close to the investigation."

And as we have heard, quite a bit of that money was also diverted in the last few days into the pockets of MF Global's bank, JP Morgan, which still reportedly holds much of it. Now whether they are legally entitled to keep that money is another matter. But this entire charade has been cloaked with a public relations campaign using terms like 'missing,' 'vaporized,' and 'mystery' to describe the customer assets as if no one really knows where the funds had gone, which the CFTC has explicity stated months ago is not the case. And that the handling of the bankruptcy and the method of ordering customers with creditors is in violation of the CFTC's rule 190, as is evident from the precedents and intentions which established it.

What the press apparently has not yet heard or is not reporting is that vulture funds are now contacting the MF Global customers, however they may have obtained their names, and are offering them 85 cents on the dollar for their claims.   Most of the claim holders are reported to expect or to have been payed 72 cents on the dollar as things now stand.   The Wall Street Journal certainly casts gloom on their prospects for a full recovery and hopes of justice, based on the report from an unnamed source.

This is creating a difficult position for these much abused customers because of the need to settle their income tax obligations for 2011. Until they can prove the funds are not 'recoverable' they bear the responsibility for their tax obligations on the full amount. But if they settle with the vulture funds they can take the loss and move on, capitulating to the despair and the anxiety of having been cheated and abused by the partnership between government and Wall Street.

Obviously customers can ask for extensions on filing their taxes and hope for a settlement at some point. But the issue is the odd manipulation of the bankruptcy in the courts, and the uncertainty and fear fostered in the customers caused by the management of this situation through rumour and innuendo and the canard of the 'missing money' from almost day one.

Remember that the customers were not speculators who lost money on their bets, as the bailed out banks had been, but in many cases were depositors who had cash and valid title to precious metals and treasuries held on account in a firm that was one of the Fed's primary dealers and a major player at the CME.  And the money was taken twice.  First by MF Global, and then by the financial institutions that seized the money and then manipulated the courts and the press to hide it and to keep it.

The theft of customer funds was bad enough, but the manner in which the exchange, the regulators, the court, the Congress and the Obama Administration have dealt with the aftermath of this is truly despicable. Throughout the financial crisis the character of the public's dealings with the financial sector has been dominated by of opacity, obfuscation, misuse of influence, abuse of power, and fear.

If I have ever seen the opportunity for those in the government to take a heroic stand in defense of the people against the predations of powerful financial interests this was it. And they have failed miserably. So whatever these politicians now say seems at best a shallow mockery, with the ring of untruth, and the hollowness of hypocrisy.

And perhaps this is why the American people are turning away from their corporate-branded presidential candidates and Congressional representatives, whose approval ratings have fallen to 9%, in righteous indignation and revulsion, in disgust at their craven betrayal of their sacred oaths and trust.

They must have no sense of justice, or of proportion, or history, and apparently they have no shame.

Moyers Journal: How Did the Big Banks Get So Powerful? Easy Is the Descent Into Hell

Bill Moyers talks with former Citigroup Chairman John Reed to explore a momentous instance: how the mid-90's merger of Citicorp and Travelers Group, and a friendly Presidential pen, brought down the Glass-Steagall Act, a crucial firewall between banks and investment firms which had protected consumers from financial calamity since the aftermath of the Great Depression. In effect, says Moyers, they put the watchdog to sleep.

Listen carefully to the rationales provided for taking down Glass-Steagall, which helped to set up the current financial crisis and collapse. This interview with John Reed by Bill Moyers is one of the most powerful and yet simple summaries of the cause of the financial crisis that I have heard.

The arguments for 'free financial markets' are being repeated again every time there is a discussion of financial re-regulation, providing reform to curb reckless speculation, and shrinking the TBTF banks and the systemic risks which they provide.

All of them are fallacious, but they are backed by amoral self-interest and more importantly, big money.

Although the great landscape of moral decay covers the widespread fraud in the mortgage markets and the foreclosures, there is fine microcosm of this outcome to be seen in the blatant theft of customer money at MF Global by the broker and his banks, as the courts and the regulators turn a blind eye to the victims.

John Swinton is anecdotally, and quite possibly apocryphally, reported to have said this about journalists in The Gilded Age of robber barons, but it aptly describes the economists, politicians, lawyers, accountants, regulators, and the rest of the Wall Street demimonde of our day. Once one sells the integrity of their knowledge, they become tolerant of and even open to soft participation in a much broader set of injustice and crimes.

"The business of the journalist is to destroy the truth; to lie outright; to pervert; to vilify; to fawn at the feet of mammon, and to sell his country and his race for his daily bread.

You know it and I know it and what folly is this toasting an independent press? We are the tools and vassals of rich men behind the scenes. We are jumping jacks, they pull the strings and we dance. Our talents, our possibilities and our lives are all the property of other men. We are intellectual prostitutes."

After the Crash of 1929, in the Congressional hearings a Wall Street 'publicist,' A. Newton Plummer, revealed that the majority of financial journalists had been 'on the take' from the great stock pools and manipulators of the day. He could not be discredited by the deniers because he had kept a great cache of cancelled checks to prove his allegations. So he was largely ignored, his story buried for the sake of confidence and recovery, and the freedom and ease of the complicit.

And in our day, now that the music is stopped, the participants and enablers are standing with dirty hands, ashamed but too frightened to acknowledge their part in it, and more cynically, concerned about losing the benefits and the easy money they have obtained from it.

And so the nation is caught in a credibility trap that stifles recovery and reform, and there does not seem to be the ability or the will to return to healthy markets and a balanced economy, what is derided as the 'old normal.' Descensus Averno facilis est...

"Easy is the descent to hell; all night long, all day, the doors of dark Hades stand open; but to retrace the path; to come out again to the sweet air of Heaven - there is the task, there is the burden."

Virgil, The Aeneid

John Reed on Big Banks' Power and Influence

Love Remains

"At that time many will falter, and betray and despise each other, and false prophets will appear and deceive many people. Because of the increase of wickedness, the love of many will grow cold, but those who stand firm to the end will be saved. And the gospel of the kingdom will be preached in the whole world as a testimony to all nations, and then the end will come." Matt 24:10-14

"If I speak in the tongues of men and of angels, but have not love, I am only a resounding gong, a clanging cymbal.

If I have the gift of prophecy and can fathom all the mysteries and knowledge, and if I have a faith that can move mountains, but have not love, I am nothing.

If I give all I possess to the poor and surrender my body to the flames, but have not love, I gather together nothing.

Love is patient, love is kind. It does not envy, it does not boast, it is not proud.

It is not rude, it is not self-seeking, it is not easily angered, it keeps no record of wrongs.

Love does not delight in evil but rejoices with the truth.

It always protects, always trusts, always hopes, always perseveres.

Love never fails. But where there are prophecies, they will cease; where there are tongues, they will be stilled; where there is knowledge, it will pass away.

For we know in part and we prophesy in part, but when perfection comes, the imperfect disappears.

When I was a child, I talked like a child, I thought like a child, I reasoned like a child. When I became a man, I put childish things behind me.

Now we see as in a glass, darkly; then we shall see face to face. Now I know in part; then I shall know fully, even as I am fully known.

And now these three remain: faith, hope and love. But the greatest of these is love."

1 Cor. 13

Many come here seeking ways to increase and protect their material wealth, and the well being of themselves and their families. And this is a worthy effort.

But not all remember to preserve something so much more important and precious -- themselves.

They do the right things, but then may go too far, falling into greed and lawless expediency, and win the battle, but lose the war, to a much cleverer, patient, and opportunistic foe.

For truly, what does it profit a man, to gain the whole world, but lose themselves.

Registered Silver Ounces At the Comex

There are 49,436 contracts currently open for the next delivery month which is March 2012. Each contract represents 5,000 ounces. That is 247.18 million ounces of silver being traded for March delivery against a registered 36.56 million ounces. This is a subset of all the contracts going out over the year.

The is leverage of about 6.8 to 1. It 'works' because most contracts are speculative and settled for cash. Comex is not where one goes for the delivery of a large amount of silver.

I think that over time the US markets will become increasingly less relevant as a price-setting mechanism for a number of commodity prices including the metals.

The failure of MF Global and the blatant cheating of the customers, both before and after the fact, will accelerate the process of failure.

It really is shocking, all the more so because so few people see it and understand its significance in the coming crisis of confidence in the US markets.

Great leaders see the big changes coming and harness them. There is no one on the horizon that fits that prescription. What I see is failure repeated, but as history indicates, not endlessly.

Year-To-Date Performance: Silver, Gold, SP 500, and the Dollar - Fitch Downgrades Europe

There are still two trading days left in the month so it is obviously too early to book the results.

And it may not be quiet next week, or the rest of the year, as Fitch issued a new downgrade on five European nations.

Fitch downgraded the sovereign credit ratings of Belgium, Cyprus, Italy, Slovenia and Spain on Friday, indicating there was a 1-in-2 chance of further cuts in the next two years. In a statement, the ratings agency said the affected countries were vulnerable in the near-term to monetary and financial shocks. "Consequently, these sovereigns do not, in Fitch's view, accrue the full benefits of the euro's reserve currency status," it said. ...

The old saying is, "As goes January, so goes the year."

If that is the case it may be a record year for precious metals but hard on traders' nerves.

It should be noted that the metals sector took an extraordinarily heavy handed pounding in December.

Let's see how the month ends.

Here's how things stack up so far.

Silver +22%
Gold +10.8%
SP500 + 4.7%
US$ - 0.1%

Gold Daily and Silver Weekly Charts

There was a really nice push up into resistance today.

Next week could be dicey unless there is some settlement in the European debt situation.

SP 500 and NDX Futures Daily Charts

There were additional rumours of the Facebook IPO coming out next week. If that happens the Street will probably prop the major markets in order to get it priced and out the door.

The market was wobbly today, with a late push in the financials failing to turn the markets green.

Gold Daily and Silver Weekly Charts - Consolidation (With a Slight Return)

We had the expected consolidation in the metals today after a spectacular rally run off the artificial hammering they took in December.

Flat now in the trading books at least, and waiting to see what happens next. I would like to see another day or two of gains consolidation with a little retrace, and then a gap and a leg higher.

But let's see what happens first. The market will always be there.