SP 500 and NDX Futures Daily Charts - Low Volume Jibber Jabber

Most of the action in the equity markets was a 'technical trade' because the punters are edgy to take serious positions while the US government's sovereign debt is being held in what is essentially a hostage situation by a minority in government, that does not like the existing healthcare law, but does not have the votes and the sanction of the people to do anything about it other than threaten the US credit rating.

Like a lot of people I thought that a single payer system made much more sense than an extension of the private healthcare insurance monopolies.  But that was not in the cards, and so a compromise was reached.  And now the parties who don't like the compromise which to hold the government debt hostage while they try to get their way.  This is not government.  One could accept civil disobedience amongst private citizens, but in lawmakers it is embarrassing and unseemly.

And I do not believe for one minute that this hostage taking is in the genuine interest because they believe that the law will harm the country. Think about it. They are saying that we think this is going to harm the country, so we will harm the country first, and in a potentially more substantial way. How nuts is that?

No, they are afraid that the law will work, and people will come to accept it. If they really thought it would fail, they should allow it to go forward, with protests, and then use it as a bludgeon on the Democrats in the 2016 election. That is a more usual course of political strategy.

The Banks do the same thing. Regulate us, pass laws that we do not like, and we will crash again and take the system down. That is what comes of a period when the government sets a bad example and its light regard for the law begins to promote anarchy.

Let's be clear on this. No one in Washington is looking particularly good these days. None of them save a few and they face a formidable task, with harsh criticisms rather than support coming from those who would most likely be their supporters, but have given themselves over to lashing out in their frustration.

So let's see how this plays out, as it comes to a head next Tuesday. We will likely see the adults enforce some rational outcome after the players have played their histrionic tune on television for their base.

Have a pleasant evening.

The Financial States of America and Why the European Union Is Inherently Unstable

I am including this because it shows the economic diversity in growth and wealth amongst the States.

And they all function under a common currency. Why does this work whereas the Eurozone is having such problems?

That is because with a common currency union, a political and fiscal union are required as well. This is a hard lesson from monetary theory and history.

When you have a fiat system with a central authority setting policy according to economic conditions over a geographic area in which there is diversity, there must be fiscal policy and transfer payments to 'even out' the effects of that monetary policy.

That is why the European Union is inherently unsustainable, because it is a monetary union without a public policy and fiscal union.

The EU cannot possibly create the appropriate single government, without undue hardship. So they must consider allowing the individual countries or regions to conduct their own monetary policy and have their own currency and exchange rates.


Source: Financial States of America

This chart is from Moneychoice.org.  They are responsible for the data and the figures. 

Gold Daily and Silver Weekly Charts - CFTC Sees Nothing and Moves Along

As you most likely have already heard, the CFTC announced today that they have closed their five year investigation into manipulation in the silver market without further comment except that they have seen nothing.

I was disappointed but not surprised, since the regulators and politicians in the US and the UK are deeply wound in a credibility trap. Intraday commentary on that here.

It appears that JP Morgan is embroiled in a settlement over mortgage debt antics that is now rumoured to be in the $11 billion range for this one investigation alone.

As you know, September is considered a non-active delivery month, even though there is the usual delivery schedule as I have posted it below.    Can anyone tell me exactly why it is that some months, like August, October, and December are active delivery months and September and November are not?  I am quite curious.  I doubt it is just custom, and must have some basis in the rules. 

I asked several old gold hands today who certainly know more about the gritty details and they could not say, other than that some months are active in the futures, and others are more active in delivery.  The exception is December which is active in both.  If you know of some specific reason I should like to hear it.

Note: Since no one responded I spent some time and found the answer on the CME site here:

"Trading is conducted for futures contracts with delivery in February, April, June, August, October and December, falling within a 24-month period."

So let's see this last week of September pass, and look forward to October, wherein the rather thin inventory at the COMEX may be in for another run through the gauntlet of real things.

Speaking of real activity in real things, there was little activity in the COMEX bullion warehouses yesterday, with just 30 bars of customer gold being received at the Scotia Mocatta warehouse. 

It appears that the five tonnes withdrawal from the day before has not shifted to another COMEX domain but has said sayonara, and gone to other climes, perhaps not to return for some time and higher prices.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Marking Time Before the Budget Showdown

Stocks were meandering around today, without much conviction, as the comedy of modern government played out in the US capitol.

I expect that the budget showdown will come to little or nothing, more symbolic than substantial, but it might not. And so like the markets I sit and wait, hoping for the best but prepared for the worst.

But the same can be said of so many more important things that the bloviated egos of pompous and distant men and women.

Have a pleasant evening.

CFTC Drops Probe of Silver Manipulation Takes No Action - Credibility Trap

I cannot say that I am surprised, since it was the safer thing to do, career-wise.  Pleading ignorance is the last refuge of the craven, be they bureaucrats or CEO's.

One might safely have little confidence in regulatory action in the US or the UK unless it is provoked by an unavoidable whistleblower or a noticeable financial crisis.   Or a divergence of interest among white collar crime families.

Although he made a show of action now and then, Gary Gensler is political, and fully a creature of the system.  The Republican members of the CFTC are 'free marketeers' who have generally impeded regulation of Big Money at almost every turn. 

Principles are not a career enhancing option in times of general cynicism and deceit.  

In fairness to the CFTC,  the credibility trap is far-reaching.  This is not a problem of a 'few bad eggs,' but a system that is largely given over to the corruption of the monied interests from what I have seen and read.  Mark Leibovich provides the colour commentary to the state of affairs in his recent book, This Town.

The manipulation of markets seems to be a fairly regular and long-standing occurrence.  But it is nice to at least have their decision on the record. 

Manipulation is no free lunch, and there are always consequences.  And they are usually not confined to one or two asset classes of wealth, but to a growing circle of abuse with much broader effects. I think Martin Niemöller had some insightful words on the subject.

Change will come, but apparently not yet.

Reuters
U.S. CFTC ends probe of silver markets, takes no action

(Reuters) - The U.S. Commodity Futures Trading Commission said on Wednesday it has closed its long-running investigation into complaints about manipulation in the silver markets, and is not recommending any charges.

The CFTC publicly confirmed the probe in September 2008. At the time, the agency had received complaints about whether the silver futures contracts traded on the Commodity Exchange Inc (COMEX) were being manipulated.

"Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets," the CFTC said in a statement on Wednesday.

Silver has featured prominently in modern commodity market scandals. In the most memorable case, the Hunt brothers of Texas hoarded the precious metal, aiming to corner the market and control global prices starting in the late 1970s...

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NAV Premiums of Certain Precious Metal Trusts and Funds

The gold/silver price relationship is back to a rather high level by historical standards at a ratio of 60.

Fives Tonnes of Customer Gold Leave the HSBC Vault

On Monday 173,582 ounces, or roughly five tonnes, of customer gold was withdrawn the HSBC warehouse.

This takes the total gold in all of the COMEX warehouses to a new low of 6,860,160 ounces in 100 oz. bars.

The portion of this that is deliverable or 'dealer gold' remains at 672,000 ounces.

While this is adequate for the non-active delivery month of September, these are slim numbers for the upcoming active delivery month of October, and hardly appropriate for the contracts that are held through December, at least at these prices.

I will include additional charts as appropriate later on this evening.

These inventory figures indicate that option expiration shenanigans aside, higher prices will be required to move more gold into the dealer category and clear the markets at the COMEX.  The blatant price manipulation in paper has led to a tough situation for the banking cartel which seems to be at the apogee of their power, despite a prominent role in the financial crisis of only five years ago.

"When I despair, I remember that all through history the ways of truth and love have always won. There have been tyrants, and murderers, and for a time they can seem invincible, but in the end they always fall. Think of it--always."

Mohandas K. Gandhi

Weighed, and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - A Quiet Option Expiration with a Few Hijinks

Markets are a bit shaky ahead of the US budget ceiling showdown. Senator Ted Cruz' filibuster will be called by procedure tomorrow, the Senate will strip out the Obamacare defunding language, and will toss it back to Boehner in the House who will have 24 hours to take whatever action he may.

They took gold and silver down overnight, and played their reindeer games in the day trade, with the metals snapping back up for slight gains in the after hours Globex session.

I will take a look at COMEX inventories this evening as we toddle on to the close of September this week.

This will not end well. It never does.

SP 500 and NDX Futures Daily Charts - Tales of the Randy Rich

Stocks marked time today with some technical intramurals that shoved the price around a bit, trying to skin a few specs.

The markets are not quite sure to do ahead of the US budget showdown. We might see some volatility associated with this unless the adults can rein in the feral congressmen.

I see where a professorial devotee of Ayn Rand suggest that the 99% 'owe a debt of gratitude' to the wealthiest few.

If reforms are not enacted and a progressive movement does not save capitalism from itself once again it is hard to tell where things will go. 

On Bloomberg TV today the complaints of the Brazilian president about US spying on her country and official activities was dismissed as a meaningless 'tantrum.'   The US has the duty of hegemony to act in ways that may be outside the norm and all that, as a consequence of its exceptionalism.

They'll never learn.

Gold Daily And Silver Weekly Charts - Tomorrow is COMEX Precious Metal Options Expiry

Gold and silver were under modest pressure through the night and today as tomorrow marks the precious metal options expiration on the COMEX. Holders of in the money options will have their bets changed to contract positions tomorrow.

Depending on how that goes we will see a market move designed to test the new holders resolve up or down.

There was no appreciable movement of bullion in or out of the COMEX last Friday. September is not usually a big delivery month. October may provide more action but I think the focus will be on December.

Let's see what happens. I am laying back a bit more now waiting for the price to show us something other than antics. Those who were caught offsides by the FOMC last week have a chance now to square up if they take it.

SP 500 and NDX Futures Daily Charts - VIX Jumps a Bit As Financials Weigh on Stocks

It is hard to tell if this is the debt ceiling uncertainty weighing today on equities or if punters just took their FOMC profits ahead of another uncertain government confrontation. This is a short term oriented market which means light on fundamentals and heavy on the technical trade.

Not much in the way of economic news this week. Stevie Cohen floated an offer of a settlement on criminal charges for insider trading today, with a billion dollar fine being bandied about, a cost of doing business for Steve who is no stranger to billion dollar paydays.

Blackberry (BBRY) finally got an offer for their troubled business which is $4.7 Billion, a premium of 3% over Friday's close.

"BlackBerry said on Monday that it had reached an agreement to be taken private by a group led by Fairfax Financial Holdings.

The company signed a letter of intent that would pay shareholders $9 a share in cash, a deal that values the faltering smartphone maker at about $4.7 billion, according to a press release. Fairfax already owns 10 percent of BlackBerry."

The company has hit the wall, with a legacy set of users accustomed to its face keeping it afloat but barely. I suspect this private equity company will likely carve the company up, and perhaps retain a small portion of it. Or just rip and strip it, to mark the end of an era.

Have a pleasant evening.

Moyers: Inequality For All with Robert Reich

This study of the decline of the middle class and the failure of upward mobility in the US is worth watching.

Gold Daily and Silver Weekly Charts - Triple Witching Hit on GLD and SLV, COMEX Next Week

All those happy momentum buyers of paper gold and silver, GLD and SLV, got a stiff gut check today, especially if they were playing the miners and ETFs with options, because gold and silver took a determined bear raid selloff in honor of the September triple witching expiration today. It happens four times per year.

The front month in SP 500 and NDX stock futures is now December. Can you believe it? Where has the summer gone?

Next week is the COMEX futures option expiration on the 25th which is Wednesday. So we might see the usual up and down action around that time.

Paper metals are a speculative trade, and playing them with options is gambling. And I think 'the house' cheats.

So take it for what it is worth.  If you do it, you may look forward to many days like today.

As you may recall, September is not a big delivery month and there has been a lack of serious movement of bullion in and out of COMEX warehouses the past week.  It could pick up a bit as the month closes next week, but I would look forward moreso to October and December for possible test of inventory levels.

I am already watching December gold and silver futures, which is more of a personal quirk, since they do not follow the same pattern as stocks.

As you know I have said that the empire of the precious metals cartels will fall apart from the edges first, with the core of it in London and New York to go at the last. It could happen differently, but that is what I think.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Antics on the Triple Witch Option Expiration

Today was the triple witch options expiration in stocks.

I should have given you all a heads up on this, but the week has been full of personal distractions.  I assume that anyone who trades stocks and options would know this, but I forget that there are gold and silver people who can become alarmed at these sorts of technical shenanigans.

"An event that occurs when the contracts for stock index futures, stock index options and stock options all expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December."

It is important to precious metal traders because of the big option interest in the paper gold and silver trades in GLD and SLV.  

As you know I think all amateurs should be out of these markets from a short term trading stance, given the low stock volume and even lower level of regulatory oversight.  We're not in Kansas anymore, Toto, this is Crooklyn.

Have a pleasant weekend.

Ron Shaich: Panera Bread CEO Talks About 'Panera Cares'

Give something back. For your own good fortune, pay it forward.

Even if you can only do a little, it can mean a lot to someone.

It really makes a difference, to others and to yourself.

Gold Daily and Silver Weekly Charts - Assis sur le Rebord du Monde

Gold and silver had a choppy consolidation day after yesterday's moonshot on the Fed surprise.

It is constructive that gold and silver took out overheard resistance and nailed it, holding it today despite the chop.

The next leg higher will have to challenge the big neckline area.

I think we all got a kick out of the 'taper' speculation that started up again today.  I don't think that the Fed could have been any more clear about their criteria for a taper. 

I suspect some of this talk was done to cool some markets rally mode, and allow the wiseguys a chance to square off against this before the next move.  If you were short gold or silver yesterday was a spanking deluxe.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Back to Reality ZZZZ

Stocks were mixed with JPM leading the financials and the SP 500 slightly lower with a bit more resilience in tech.

Otherwise a sleepy day as the markets digested yesterdays' FOMC decision 'surprise' and rally.

US Dollar Very Long Term Chart - Coiling

It has been quite while since we have taken a look at the US Dollar Very Long Term Chart.

And with good reason, since it has been moving within a fairly tight range, in a slowly tightening coil. So there will not be much to see until it breaks out of this formation.

And as you can see from the composition of this dollar DX index on the chart, it hardly reflects the new realities in the world today, since it is so heavily weighted to the Euro, the Yen, and the Pound, with no representation at all from the BRICs.

But it has some indicative value in addition to historical value.

Gold Daily and Silver Weekly Charts - You Have To Be In To Win

"But we in it shall be remembered;
We few, we happy few, we band of brothers..."

William Shakespeare, Henry V

As Bill Murphy always says, you have to be in to win.

There is intraday commentary on the Fed decision and the precious metals markets here.

I suspect that you might be able to name a bank or two that may have just done the bearish leaning metals funds like dogs, not to mention the gullible baby bears.

In case you have already forgotten, here is the setup in pictures.  And we are not done with it yet.  There is a long road ahead for this generational bull market in precious metals.  Most traders always miss the really big moves because they are too busy chasing after coins in traffic.

Have you remembered to send a message to your representatives to ask for an investigation of the whistleblowers who are said to have come forward with evidence of market manipulation, and of the shocking lack of response from the CFTC?

Next week is an option expiration on the COMEX.   Markets do not reform themselves, and manipulation swings both ways.

It appears that a right shoulder has been set, and overhead resistance was punched through with some authority, but still the neckline remains to confirm. 

But for now, enjoy what you may have gained.

Have a pleasant evening.

“Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and those ripples build a current which can sweep down the mightiest walls of oppression and resistance.”

Robert F. Kennedy

SP 500 and NDX Futures Daily Charts - The Fed Blinks

The Fed did not even make a token taper as they thought they might, given that the market was giving them a 'freebie' to break the ice at least.

That they did not speaks volumes about the true state of the US economy. I think the taper is off the table for this year, unless they do a token taper in December.

Bernanke will leave the hard job of the great unwind to his successor.

NAV Premiums of Certain Precious Metal Funds and Trusts

Federal Reserve Decides Against Even Token Taper - Baby Bears Spanked by Blythe

I was a little surprised that the Fed did not take the opportunity to do at least a token taper to end the speculation about 'when.'   The market had clearly priced it in. But the buts in the statement are significant.

I think their major concerns are that higher interest rates will kill the housing market and consumer demand, which are both in a weak recovery. And the potential of a debt limit showdown looms over the Fed without a doubt. Mortgage debt is important, but the sovereign debt is the entire game.

The capping of gold and silver this week was trader games and perception management, nothing more.

The fundamentals may not always prevail, but they matter in the longer term.

The Right Shoulders on the gold and silver charts look like they are now in, but we must break the resistance and then the neckline to confirm. Notice that the daily high on the short squeeze stopped right on it at big resistance of 1350 to 1360.  I think the real test will come at the first neckline as the funds square up and get long.  What we are seeing today is the trap, sprung.

The COMEX precious metals trade has hardly turned into an efficient and transparent market in one day. I suspect that physical offtake will force their hand, and probably from without, on a more physically oriented exchange that declares bids without offers at price, and then a market dislocation follows. It may occur in the forex markets, and that would be significant.

The COMEX may lead, but will more likely follow since it is, after all, a fiat exchange whose day has past, having diverged badly from the reality of world markets, unless it changes with the times. 

Hey, do you think the biggest banks on Wall Street had any with the Fed about their decision today? Goldman just came out with another bear call on gold. But open interest to registered gold inventory suggested that these prices were already untenable and likely to break to the upside.

COT analysis suggests JPM had closed their gold shorts and went net long in the last couple of weeks. ROFLMAO

Release Date: September 18, 2013

Information received since the Federal Open Market Committee met in July suggests that economic activity has been expanding at a moderate pace. Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

Play it again Sam, play it for old time's sake.