22 February 2017

Stocks and Precious Metals Charts - Round and Round She Goes - 2 March 2017


The Fed's minutes came out today, and they were yet again mildly hawkish in that vague sort of way that has preceded twenty-nine of the last two actual rate increases.

There is a theory going about that because of the failure of the EU and alternatively China, the inflows of monies into dollar assets are bound to continue to drive the major stock indices higher, and will prompt the Fed to raise rates higher than many think.

This is a variant of the 'money on the sidelines' theory that, for whatever reasons, will be compelled to toss their wealth into overpriced assets because they have no other choice.  For a free people, getting the public to act by coercion seems a familiar resort.

Now of course this is possible. The real question is, 'how probable.' And what sorts of things might we watch to determine if this particular scenario is genuinely falling into place.

Nothing in the markets is one dimensional. A Fed raising rates to try and stem a stock bubble fueled by a flight to safety from Europe or Asia is certainly a scenario, but there are a lot of other things that go along with it.

For example, what happens to the real economy and wage growth in the US as the Fed starts jacking up rates to try and halt an exogenously driven stock bubble? What other steps might the Fed and the regulators take?  How does ever increasing inequality affect the mood of the voters?

To what extent will the market ignore expectations for US business performance and just run with the rallies with abandon?

I do not know. But one thing I am almost certain of is that no one else does either.  And to the extent that they do know, they certainly are not telling the general public about it, or selling it to retail investors.    There is a legitimate market for buying research on specific companies, no doubt.  That is different than buying sweeping predictions from gurus.

The SNAP IPO should be coming out around the 2nd of March.  As you know I would be waiting for some time around then if I were of a mind to take a bearish stance toward equities, barring any unforeseen events of consequence.  But we have to be watchful regardless as the Trump administration is leaning towards rolling back what little protections the Banks had received.

I see some good things and bad things almost everywhere I look. We are seeing a lot of new construction in our corner of the world. Since I think this is one of those 'fortunate' areas of the US, I am not sure how heavily that weighs on my thinking about things overall.

But in addition to all this new, big time construction for commercial square footage, we are also seeing investment money buying up existing properties, and attempting to drive their rents higher.

So we are seeing quite a few long-established businesses folding up and moving along, because the rentiers are driving prices up against the market's ability to pay. And I am not talking about fly by night storefronts, but places that have been around for forty to sixty years, and weathered a lot of business cycles reasonably well.  And not retail stores displaced by Amazon either.

Is this a 'creative destruction' or the ongoing malinvestment and distortions fueled by the Fed's top down approach to stimulating an economy caught in a very painful household balance sheet recession?

And of course, the current leadership in Washington is toying very seriously with the 'A' word. They are looking to cut back on 'entitlements' for people to help to finance more tax cuts and favours for the 'jobs creators.'  

What happens when few have the surplus income to provide the broad buying demand for these new big jobs black boxes?

Recently the 'liberal establishment' economists, aka the minions of Hillary, have been circling the wagons around those care worn Clinton principles of governance;  globalism, financialism, and corporatism, as an agenda taken forward by the combined powers of the military and the Banks.

Unfortunately, they have not yet realized fully that they are speaking to themselves and a small circle of those who believe that they have few other options.

The Council on Foreign Relations recently promoted an article in their house magazine Foreign Affairs that was subtitled, 'How Dissing the Experts is a Danger to Democracy.'   

Yes, shame on you idiots.   How dare you lose confidence in the professional class, the 'experts' who have been caught manufacturing conclusions for pay, and presenting unicorn myths as sound economic policy options?

Do you not have more respect for your betters?

Would you believe that a very similar point of view was promulgated by the Clinton Democrat's in the 1990's under the title, Illiberal Democracy?  The answer for those foreign countries who embraced their freedoms in the wrong way, regime change and colour revolutions were the prescriptions.

And so we might ask, what about now?

Have a pleasant evening.


21 February 2017

Stocks and Precious Metals Charts - Don't Lie To Yourself


'Till human voices wake us, and we drown.'

T. S. Eliot


"Do you think he is so unskillful in his craft, as to ask you openly and plainly to join him in his warfare against the truth? No; he offers you baits to tempt you. He promises you civil liberty; he promises you equality; he promises you trade and wealth; he promises you a remission of taxes; he promises you reform.

This is the way in which he conceals from you the kind of work to which he is putting you; he tempts you to rail against your rulers and superiors; he does so himself, and induces you to imitate him; or he promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind. He scoffs at times gone by; he scoffs at every institution which reveres them.

He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J. H. Newman

Things are getting stretched out quite a bit. We are in what can modestly be called pivotal times.

The market for equities is now pricing in expectations of both a corporate tax cut and a repatriation deal for the transfer priced cash that US corporations have been hoarding in tax havens overseas.

The Deep State, formerly known as the Military/Industrial Complex, is showing more of its ugly face than it has since Vietnam and the untimely death of John F. Kennedy.

What really matters is not what they do— it is whom you choose to serve, and what you do, for that is what you will be asked about, and answered.

No matter how attractive the glamours of the world may seem, there is only one thing in the end that has value, that is worth it all.

In the end, there is only one real tragedy. Keep your eye on the prize.

Have a pleasant evening.





19 February 2017

A Tuneful Sunday Afternoon: Somos El Cuerpo De Cristo


“Christ has no body now but yours. No hands, no feet on earth but yours.

Yours are the eyes through which he looks with compassion on this world. Yours are the feet with which he walks among His people to do good. Yours are the hands through which he blesses His creation.

Yours are the hands, yours are the feet, yours are the eyes, you are his body. Christ has no body now on earth, but yours.”

Teresa of Ávila


"If I speak in the tongues of men and of angels, but do not have love, I am only a resounding gong or a clanging cymbal. If I have the gift of prophecy, and can fathom all mysteries and all knowledge, and if I have a faith that can move mountains, but do not have love, I am nothing. If I give all that I possess to the poor, and surrender my body over to hardships that I may boast of them, but do not have love, I achieve nothing.

Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonor others, 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. Love always protects, always trusts, always hopes, always perseveres. Love never fails"

1 Corinthians 13:1-8







17 February 2017

Stocks and Precious Metals Charts - Three Day Weekend - Times of General Corruption


"And I'll leave you with one set of numbers that I found today, which is just an absolute for this whole thing. In 2015, Wall Street Bonuses, not regular compensation, bonuses, seven years after they were bailed out with the public purse, totaled $29.4 billion dollars. Total compensation paid to every single person in this country who makes minimum wage totaled $14 billion...

The era of neo-liberalism is over. The era of neo-nationalism has just begun."

Mark Blyth


"Caesar was swimming in blood, Rome and the whole pagan world was mad.  But those who had had enough of transgression and madness, those who were trampled upon, those whose lives were misery and oppression, all the weighed down, all the sad, all the unfortunate, came to hear the wonderful tidings of God, who out of love for men had given Himself to be crucified and redeem their sins.

When they found a God whom they could love, they had found that which the society of the time could not give any one— happiness and love."

Henryk Sienkiewicz, Quo Vadis: The Time of Nero

When historians look back on this period of the last forty years and diagnose what went wrong, they might do worse than to conclude that at the root of it was a general failure of character, from the top down.

The replacing of honor and duty with egoism and greed as the most honored of civic virtues was a long and slow process.  It took root and was nurtured in a portion of the population that was served by it during the Reaganomics revolution, but eventually spread to those institutions and groups that had generally provided a bulwark for freedom and justice against the perennial amorality of the greedy.

Although they were certainly not the root cause of it, the Clintons played a prominent role in sealing the deal between the political and the financial class, and throwing the whole thing into a higher gear. They made political corruption, which heretofore had been hidden in the closets,  fashionable.

Indeed, it may not be too much to say that they were to soft corruption in politics what Henry Ford was to automobile production.  They certainly did not invent it, and were probably not the worst compared to some of their colleagues across the aisle, but they industrialized it, and knocked down the last bastions of public conscience in the process by showing how well greed could pay off while still maintaining some semblance of public respectability.

There will be a three day weekend in the US markets because of President's Day on Monday.

There was some surprisingly good 'soft' data this week in the Philly Fed and Empire Manufacturing reports.  Let us see if those translate into good, hard economic numbers.

The crux of the problem is the huge imbalance between corporate power and the ability of worker's to achieve increasing wages.  Without increasing wages, broader aggregate demand in the form of consumption cannot be sustained.

It was sustained during a long period of wage stagnation by innovative debt instruments associated with the housing bubble that was greatly encouraged by the financial sector and their servants in the political and professional classes.  The fraud which they helped to perpetuate was conscious and pre-meditated.  The crafted specific financial offerings towards that purpose.

However, in the aftermath of the housing bubble collapse, the ability and willingness of the average American to go into debt for ordinary consumption is reluctant to say the least.  At least half the nation is living paycheck to paycheck with little to no savings.

This is not going to end well or easily as you might expect.  However, the elites have been winning for so long, and are so full of themselves, and so firmly committed to their schemes that I think they will finally let the whole thing hit the wall in some way, and then make the people another deal that they cannot refuse, as they had done with the bank bailouts in 2008.

And that is where the right preparations and the willingness to do what is required of this generation will be most important.

No one ever said that it would be easy, or that we would be going to heaven on featherbeds.

I find the current political situation to be as bad as I thought it would be when I forecasted it about ten years ago.   The worst is yet to come.

The corruption in the system is becoming much more apparent.  The extreme biases in the mainstream media in favor of their particular owner's faction is fairly obvious.

The liberal establishment, in their zeal to excuse themselves and their failure to support the working class, is embracing a kind of McCarthyism with an ease that is almost astonishing in its hypocrisy.  The hypocrisy on display at MSNBC is almost as embarrassing as that on Fox News.

That the Wall Street Democrats brought their own political failure on themselves by their strong and enduring pivot to the wealthier urban professionals is something that escapes their consciousness.

And on the other hand, the Republican establishment is gone bananas in their service to greed.  I figure if they are able to beat down Trump like the Democrats beat down Bernie, then we are in for a real reckoning.

This is nothing new. Indeed, this resembles the America of the past more than most people realize.  Our education is slanted and poor, and our national self-image is a masterpiece of public relations.

The discussing of politics is 'fun' and avoids having to make comments on what is certainly a confusing period in American economics.  I try to stay on that topic, especially since so few are actually shedding light on it these days.  But truth be told, money and politics are often about power, and nevermore as in times of general corruption, when might makes right.  Or at least policy that they call right.

This is the worst, most sluggish 'recovery' we have seen in modern times here.  But since it has a bipartisan stamp, it is difficult for some to wrap their politically black and white heads around it.

And I hate to resort to it, but in historical terms what we are seeing is more like a 'class war' from ages long ago than any kind of financial new era.  The moneyed class turned the law and the thought leaders framing to their own benefit, and would now do anything they can to keep their ill-gotten gains.

Wrap it up in a credibility trap and tie a bow around it, and here we are.

Have a pleasant weekend.  See you on Tuesday.