SP 500 and NDX Futures Daily Charts - Zzzzzzzz....

Stocks were in an upward push on light volumes that faded fairly hard into the late afternoon after it became clear that the puppies weren't eating the puppy food, and all the wiseguys were doing is moving the same stocks around the plate.

 

Earnings and economic news should pick up later this week.   There seems to be a bit of a divergence between perception and reality. 

 SP 500 Earnings Estimates Plunge Most Since the Financial Crisis

 

Not that this should dampen any enthusiasm about The Recovery™..

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Policy Will Continue until Pitchforks and Torches Appear

Gold led the way as it popped back over 1200 on news that India showed record gold imports in March of 125 tonnes.

Gold is flowing from West to East.  The data shows this without much room for error, unless you are an economist or analyst whose paycheck has willfully obscured their vision.  How this ends I do not know and no one can really say.  But it will end.  I would like to think that at some point the central planners will go so far off into the weeds of their own obfuscation that the people will generally rise up and tell them to take them models and use them to pound sand.

 

If you watch the financial news, as I do, the divergence between valuations and reality is getting to the absurd point where the tech bubble had gotten.  I remember chatting in the business class section of transcontinental and international flights back in the day with some of the Wall St analysticals and presstitutes. 

They would give the cynical wink wink, nod nod to the valuation bubble that was about to rock the world.  Knowingly they would admit,  'of course it's a bubble, but don't get in front of it.'  And they apparently are not afraid to do it all over again.  Got to keep dancing when the music is playing, and the devil take the innocent into the abyss. 

I see where Willem Buiter would like to eliminate cash and tax all currency in general.   The purpose would be to remove that ability to store wealth as cash, safely from the negative interest rate confiscation of central banks.  If we do that, maybe we can assign everyone a number and implant a chip in their arms and force them to transact all their business with it.  Just joking.   When it comes to money, he's a statist, par excellence. 

 

Next week we will see earnings news dominating the stock market I would like to think, although the latest antics from Draghi in Europe may make their own mark.  There will be a bit more economic news as noted in the calendar shown below.

 

Given the wobbly state of the real economic recovery, and the weakness of the domestic jobs market,  and the almost moribund state of almost every sector except financial,  any policy actions that encourage a stronger dollar in the face of the rest of the world's devaluation race to the bottom is beyond economic malpractice, and almost insane if the general good of the country is considered. 

 

Never mind that the strong dollar favors the international creditors, and the acquisitive desires of the monied class, hungrily eyeing the income producing assets of their victims prospective sellers.

 

You could make the case that the Fed's stimulus has been more than useless, and actually destructive to the real economy, so ending it might not be a bad thing.  That seems to be a weak argument, but certainly more honest than claiming that it has actually worked.

 

Well, what can one expect from a den of vipers.

 

Have a pleasant weekend.

 

SP 500 and NDX Futures Daily Charts - Bubble On - Weekend at Bennie's

Stock and bond valuations are high, and 'The Recovery' is flopping around, and the Fed is expending enormous resources to keep Wall Street and the TBTF Banks standing upright like a Weekend at Bernie's.  

 

The subsidies to the financial sector will continue until pitchforks and torches appear.

But the money masters would like higher rates, and an ever stronger dollar. The better this will serve to let them roam about overseas and across the land, picking up income producing assets on the cheap.

 

Stronger dollars they get interest free, and economically weaker prey--  a win win!

I would feel better if they just said they will raise rates a couple of times just for the hell of it, or because the Banks want it.  And that it won't matter anyway because none of the stimulus is making it down to the general public.  Their concern for the economy is all just for show. 

Next week should cast some light on earnings and on the wobbly state of the economy.  Not that it will make any difference in Bankland.

Have a pleasant weekend.

Credibility Trap: Moving Beyond Corporatism and Corruption

The heart of the problem is that because of the credibility trap, we have never had a proper public discussion on what went wrong with the policies of the US.  The apathy of the people enables this.

Oh yes, there are plenty of staged discussions in the media, where two paid talking heads and a moderator who carefully stages the parameters and definition of the 'discussion' shout slogans past one another that play to the emotions of their deeply polarized and propagandized constituencies.

Since we have not yet been able to speak frankly and openly about the massive fraud and abundant soft and overt corruption of the political and professional class, there can be no meaningful reform. Until one admits they have a problem and are able to face it, they cannot begin to address it.  

 Like any other type of hopeless addict, the US and many of its client states will most likely have to finally hit rock bottom before they can begin to face their addiction to deceit and corruption, money and power.   This will be difficult because so many of those who control the platforms for the conversation about corruption are also those whose hands are dirty with it, either by participation or acquiescence. This is the same phenomenon that compels a country to remain in protracted, unwinnable wars long beyond any rational expectation of an unachievable 'victory.'

 And this is the credibility trap.

It is the widespread corruption and cowing of the professional class in a society that sets the stage for the madness of the mob.

It is foolish to hope that the plunderers of society will some day have enough, and come to their senses. They are not rational, but pathological, and their only impulse is to want 'more.'   They will not stop until someone finally moves to stop them. But like battered spouses and ashamed parents we cannot even bear to raise the subject.

Perhaps the children will ask the right questions, since the adults are too diverted, preoccupied, and fearful.

Gold Daily and Silver Weekly Charts - Currency Wars and the Gathering Darkness

“We first crush people to the earth, and then claim the right of trampling on them forever, because they are prostrate.”

Lydia Maria Child

Gold and silver were under pressure most of the day, starting with a trend to weakness yesterday evening in the globex market.

 

A brief rally this morning back above 1200 in gold was shoved back down fairly hard.  Again, this is just the tyranny of round numbers and perception management.

 

There was negligible activity in the Bucket Shop on the Hudson, although they were certainly moving silver bullion around the plate in the warehouses, with little net affect.

 

There was intraday commentary on the currency war here.   I think it is fairly important to read this and understand it, even if you don't agree with all of it.   The issue is that quite a few people in the rest of the world see things this way, and are acting on it.  So the effect is there, even if your particular domestic media choose to ignore it for whatever reasons.

 

Personally I think it is spot on, and the greatest macro financial trend of my generation, ie the resolution of the settlement and basis for global trade, both in terms of rules and valuations.  Its ramifications are being manifested ever more strongly across all three levels of international relations:  diplomatic, economic, and military.

 

I think it is not too much to say that the currency war is the Rosetta stone for understanding what is happening in our world today.   The most surprising thing is how such great events can be taking place, affecting so many lives around the world, while so few non-specialists are even aware of it.  And I suspect that quite a bit of that is by design. 

 

First by inflation, and then by deflation.  More income producing assets end up in fewer and fewer hands.  Policy and law are bent to the service of greed and injustice, until the lands are impoverished.  And our house will be made desolate, not by fantastical beasts and beings, but by our own hardened, wicked hearts. 

 

Have a pleasant evening.

 

 

 

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SP 500 and NDX Futures Daily Charts - Late Day Lift, Futures Driven

Sold!

 

 

 

 

Notes on the Currency War - 'Old as Babylon and Evil as Hell'

Below is an excerpt from a much longer article which you can read in its entirety here.

It is an interpretation told from a certain perspective, but overall does a fairly decent job of laying out the general boundaries for the currency war that has been brewing in the background since 1971 with the collapse of Bretton Woods.

It is more visible to us now because it started manifesting more overtly in the 1990's and since then has slowly been gaining momentum.

If an analyst does not understand this, is not aware of it even if they do not agree with this particular interpretation, then they have a poor grasp of the major trends that are driving so much financial and political activity in the world today.

And fortunately or unfortunately, gold and silver are deeply involved as the traditional supra-national world currencies.

To put the entire thing in a nutshell, in 1971 the US arbitrarily ended the Bretton Woods Agreement by closing the 'gold window,' and placed the world on an entirely fiat reserve currency which the US controlled. Since the US is making monetary policy to suit its own domestic agenda, and increasingly so over the past twenty years, the stresses that this creates in the world have become unacceptable to many other countries, some of which are in a position to push back against this.

This tension between the dollar and the rest of the world is either going to end in an acceptable and workable compromise, or will result in a split of the world into regions of power and financial influence, most likely three or four. This will be accompanied by conflict on all the usual levels: diplomatic, economic, and military. We are seeing this today.

Compromise is being thwarted by a neo-conservative, militaristic and nationalistic group in the States, with clients in other countries, that view an American hegemony as the natural and highly desirable outcome of the end of the Cold War.  However, this is a patriotic cover story for what is essentially a bid for more money and power for a privileged few who have no patriotism and little decency, who serve only themselves and their patrons.  To quote Edward Abbey, their motives are 'old as Babylon and evil as hell.'

Signorelli, Sermons and Deeds of the Antichrist

Whether you agree with this or not does not matter so much, because it is painfully obvious to those thought leaders in countries like the BRICs that this is the situation.   And they are acting on this, and the US is reacting in response. But from reading the literature of the neoliberal economists and neoconservative politicians, it seems hard to come to any other conclusion based on facts and specific actions which have been taken by the US, the UK, Canada, Germany and Japan.

 

In some ways the situation in Europe, with Germany and a few northern countries driving the ECB and its monetary policy, is a microcosm of the type of tyranny of monetary policy which is held globally by the US Dollar.  This does not even have to be purposeful, but is the natural outcome of a fiat currency held as the major exchange mechanism over a region without political and fiscal unity.  It is inevitable by its very construction, and manifests in other economic problems such as those described in Triffin's Dilemma.  

 

So why do some people keep promoting these types of unsustainable mechanisms?  As always, money and power.  Controlling the reserve currency enables a form of financial neo-colonialism in securing and controlling the payments and politics of the indebted nations.  We are seeing a fine example of this now in Greece, but the US set the pattern for this, particularly in South America, long ago.

And the money masters rationalize this, as Polyani noted, "by indulging in prejudice and sentimentalism. The improvidence of the poor is a law of nature, for servile, sordid, and ignoble work would otherwise not be done.  Also what would become of the fatherland unless we could rely on the poor? 'For what is it but distress and poverty which can prevail upon the lower classes of the people to encounter all the horrors which await them on the tempestuous ocean or on the field of battle?'"

 

The role of the many is to suffer, labor, and die for the select few, however they may choose to define themselves, and assert and maintain their dominance.   This is nothing new, but again, a theory 'old as Babylon and evil as hell.'  Exceptionalism is the very rationale for evil, and pride,  the father of sin.

 

I do not think it is too much to say that we are experiencing a type of 'world war.' This seems to be the settling of differences and adjustments that tends to follow major economics shifts, as we had seen in the first half of the 20th century.  The gilded age, the great financial bubble, interspersed by almost twenty years of horrific carnage.  And the sociopathic few, those black holes of the human spirit, are unleashing the madness once again.

 

"The Fed effectively acts as the world’s central bank, but sets monetary policy only in its own interest. Under the pressure and the orders of financial oligopolies, it fixes interest rates and prints money to suit itself, sending economies across the globe into tailspins...

These policies aren’t enacted with the express goal of kicking the global South in the stomach, but this outcome is a necessary and predictable result of the domination of the global financial order by a sole country whose interest is to keep its hegemonic status. Other measures are taken precisely toward this end. This latest round of financial warfare has to be seen in the context of financial imperialism in general. Countries struggling for sovereignty are also being hit by sanctions, speculative currency attacks, commodity price manipulation, biased evaluations from US ratings agencies, massive fines on some banks for what the US has deemed inappropriate practices, and the prohibition of certain banks from participating in the international banking system...

Not only does the dollar enable the US empire, but also protecting the dollar’s status is a major reason for US imperial wars. American financial and military strength is based upon the fact that the dollar is the world’s reserve and international trade currency, creating a global demand for dollars which allows the US to print as many greenbacks as it likes. It then pumps them into the overbloated finance capital system and uses them to fund its criminal wars...

Without this international demand for dollars, the dollar would “correct,” and US hegemony would eventually, inevitably, come to an end. Therefore the US pressures and attacks countries that attempt to free themselves from the dollar’s yoke, not only because they’re guilty of lèse-majesté, but in order to force the world to maintain the status of the dollar and thus preserve US domination...

Although it has so far been unsuccessful, the idea of rebalancing the world monetary system is extremely threatening to the US, and goes a long way toward explaining recent US wars and warmongering, which may otherwise seem irrational...

The dollar is rallying less because of any supposed US recovery than because of higher global demand for dollars due to investors’ risk aversion, in the wake of the Fed pulling the plug on QE. Parenthetically, the US economy is definitely not recovering..."

Michèle Brand and Rémy Herrera, Dollar Imperialism 2015

"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power as well.

Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

Tacitus, Agricola

Not exceptional, except in its delusions. It is a story of an otherwise decent people made capable of doing monstrous things, drunk on rhetoric and power, led on by the madness of the few and their visions of empire.   It is a story old as Babylon, and evil as hell.