SP 500 and NDX Futures Daily Charts - Mr. Bubble Goes Sideways

The economic news was rather poor this morning.

Stocks remained resilient, although they are largely moving sideways form the past five days.

Are equities getting ahead of themselves?  This chart below suggests that this may be the case.

Don't Be Fooled, Economic Recovery Is Not Real - Guardian UK

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Brown's Bottom

The prices are higher, sans exubérance.

I have not seen the gold and silver crowd so gloomy since about 2000-2001 when the consensus was that gold was 'dead money.'

And of course we know that this marked the bottom of around $250 per ounce. 

I was not watching gold at the time. I was watching the big triple top in the dollar, and the antics in the equity markets, and wondering what was going on.

That time was marked by the selling of Britain's gold reserves allegedly to bail out the bullion banks it is said, which has since become known as Brown's Bottom.

The disconnect between reality and the financial markets seems quite vividly to resemble the tech and housing bubbles, when the markets were marked by a pronounced mispricing of risk, and rampant bad behavior and white collar theft of assets.  These things can go on for some time.

What does one call a negative bubble, a time when prices are pushed artificially lower, in order to use overvalued paper to pick up productive real assets on the cheap?

I thought Russia's proposal to the G20 for more transparency in the global raw materials markets was interesting, although the G20 have pulled the original press release from its web site.  Are we seeing some discord in the emerging global oligarchy?  One can only hope.

I could not help but notice that there was no press release, and not even one word, that came out of the meeting of the G20 in Istanbul over the 'reinventing of Bretton Woods.'    The principals who are in charge of communication will not even acknowledge emails.  But the G7 finance ministers called an emergency meeting for the following weekend, which also released very little news except that they were exploring ways to mitigate the corruption in the financial industry.

You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.

And some of those people have enough power to resist you when you inevitably resort to more than persuasive means. And this is the great flaw in Modern Monetary Theory, whether it is debt based or Treasury based.  People rarely govern themselves wisely, much less oversee the wealth of others when it can be so easily taken, especially when there is a lack of transparency and accountability.  It matter little how one rolls when the system itself is corrupt.

The banal chatter and triumphalism of the economists is quite discouraging, as once again they willfully miss what is happening all around them.   A few are raising their voices, somewhat timidly, but the most of them are all too willing to go along to get along, or to safely lose themselves in triviata of their fallen profession.

BBC: Bankers Payback Time Episode 3

Gold Daily and Silver Weekly Charts - Coiling, Coiling...

“Asked to do too much, for instance to accommodate misguided fiscal policies, to deal with structural imbalances, to square continuously the hypothetical circles of stability, growth and full employment, then it will inevitably fall short." Those efforts cause it to lose “sight of its basic responsibility for price stability, a matter that is within the range of its influence.”

Paul Volcker, Fed May Fall Short

Stocks are starting to look 'toppy.'

Things around the world are 'shaky.'

The setup for a major short squeeze in the metals is in place.

So let's see what happens.

Russia is drafting proposals with the G20 on 'transparency in the raw material markets.'

Matt Taibbi has a new critique of the kleptocrats and their enablers titled 'Mad Science of the National Debt' that is worth reading.

"Guaranteeing that Chinese bondholders would get paid off before veterans or elderly citizens waiting for medical care is politically a weird enough idea to begin with, but for the House speaker to think that getting Congress to prepare the government to behave like a bankrupt business would reassure the markets about the stability of U.S. sovereign debt is pure lunacy...

Essentially, all of these central banks are creating vast sums of money and thrusting themselves into the world economy as gigantic buyers of stuff, be they mortgages or treasury bonds. In theory, the banks will eventually "sterilize" or reverse the process by selling off all this stuff they've bought and draining the economy of its "excess liquidity," but no one knows when that will be, and for the time being, QE is pure financial steroids.

It's stimulus on a much bigger scale than Obama's recovery program, it's open-ended, and it's not voted upon. In fact, apart from the fact that the Fed chairman is nominated by the president, the actions of the central bank are not merely undemocratic but intensely secret, with minutes of its Federal Open Markets Committee (which debates decisions like the raising of interest rates or QE) only released three weeks after decisions are made. The Fed therefore never has to engage the public in real time about its decisions. Instead, it hands down edicts, and Wall Street watches for clues into its mysterious behind-closed-doors deliberations..."

SP 500 and NDX Futures Daily Charts

US 10 Year Note Yield Very Long Term Chart

One picture is worth 1000 words.

This puts some teeth in the concept of 'historic lows.'

Ten Year Note Yield with SP 500

Charts courtesy of Ralph Dillon at Global Financial Data