Stocks and Precious Metals Charts - FOMC Meeting And Non-Farm Payrolls Next Week - Exuberance In Davos

"And the beast was given a mouth for uttering haughty and blasphemous words, and it was allowed to exercise authority for forty-two months."

Rev 13:5

The attendees were describing the mood in Davos today as 'exuberant.'

Trump addressed the assorted billionaires movers and shakers, there this afternoon, asserting that 'the US is open for business.'   He also took some time to take a shot at the press and 'fake news' in response to reports that he had tried to fire the special counsel Mueller last June, and was stopped by the White House counsel who threatened to resign. And he was loudly booed by the august gathering.

Trumpolini is now on his way back to Washington, and will be delivering his first State of the Union address to Congress next week.  He needs to get busy on developing those infrastructure plans, or we might never be able to say that he made the trains run on time.  The 'tax cut' is more likely to fuel speculation and monopolization than productive growth.

Speaking of the need for an infrastructure program, the second revision to the 4Q17 GDP number missed estimates, coming in at 2.6%, down from the initial 3.2%.

Perhaps more concerning in the numbers was the fact that at current consumption rates the US consumer is not saving, and continues to fall more underwater because of the stagnant wage situation.

Gold and Silver managed to move a little higher, off renewed US dollar DX weakness, finishing up the day at 88.90. Monsieur Draghi has a problem on his hands. And with 18 European nations sporting 2 Year negative real yields, one might understand his frustration.

There will be a double hurdle for the metals next week, if recent history is any guide, with the FOMC rate decision on Wednesday 31 January, and the January Non-Farm Payrolls report on Friday 2 February.

The US is experiencing its worst outbreak of flu since 2009.

I still believe that the Banks are continuing to scrape the bottom of the physical barrel for gold, to meet the continuing offtake in Asia. Although they have been innovative and risk-taking in their leverage, it does make one wonder how suddenly this might end.

And some others and I have been discussing how quickly the US economy may jump the rails, and what effect this might have on the global economy and the political landscape.

If the economy does falter, one has to wonder if there is enough collective experience and wisdom and basic humanity in Washington to help avert a greater disaster. I would not like to use post-disaster Puerto Rico as an example of their competency and compassion.

Have a pleasant weekend.

In the Garden of Beasts: First the Unholy Slaughter of the Innocents

"The perpetrators were scholars, doctors, nurses, justice officials, the police and the health and workers’ administration.   The victims were poor, desperate, rebellious or in need of help. They came from psychiatric clinics and childrens' hospitals, from old age homes and welfare institutions, from military hospitals and internment camps. The number of victims is huge, the number of offenders who were sentenced, small."

Commemorative Tablet at Tiergartenstraße 4, Berlin


"The inability to identify with others was unquestionably the most important psychological condition for the fact that something like Auschwitz could have occurred in the midst of more or less civilized and innocent people. What is called 'fellow traveling' (collaboration) was primarily business interest: one pursues one’s own advantage before all else and, simply not to endanger oneself, does not talk too much. That is a general law of the status quo."

Theodor Adorno


“Each day we are becoming a creature of splendid glory or one of unthinkable horror.”

C. S. Lewis

The efficiencies of the death camps evolved from the initial experiments in killing the disabled, the mentally ill, the anti-social, and the poor.

One does not wake up one morning, and decide to become a monster.  No, men become beasts,  but one rationalization, one marginalization and objectification of the other,  one small step and excuse  towards the horror at a time.

Do you think that we are so good as to be exempt from this?  That we are incapable of such wanton blindness towards sin?

The model for the identification, sterilization, and finally the slaughter of the weak and the vulnerable in Germany was found in the United States, an ugly chapter in American history that is rarely mentioned.

And what then, is the difference between gassing and burning those who you consider to be life unworthy of life, or exposing them to predators, denying them a fair chance or the assistance for the basics of a decent life such as a living wage, health care, warm clothing, and basic human dignity, slowly working them to an early death while defaming them as deserving of it, because you think that they are inferior, and not as human as the such as you.

Oh no, no one ever helped me.  I did it all on my own.  And so can they. 

And so you deny God Himself, and how He has saved you from misfortune, He has helped you in your failings, and He has given you the gifts that you possess, in your pride.

“It is worth remembering one of the important lessons of the Carrie Buck story [from Charlottesville, Va]:  a small number of zealous advocates can have an impact on the law that defies both science and conventional wisdom.”

Paul A. Lombardo, Three Generations, No Imbeciles: Eugenics, the Supreme Court, and Buck v. Bell

"There is not a more perilous or immoral habit of mind than the sanctifying of success.”

Lord Acton


The fact that the foolish person is often stubborn must not blind us to the fact that he is not independent. In conversation with him, one virtually feels that one is dealing not at all with him as a person, but with slogans, catchwords, and the like that have taken possession of him.

He is under a spell, blinded, misused, and abused in his very being. Having thus become a mindless tool, the foolish person will also be capable of any evil and at the same time incapable of seeing that it is evil. This is where the danger of diabolical misuse lurks, for it is this that can once and for all destroy human beings.”

Dietrich Bonhoeffer, Letters and Papers From Prison


"Many commentators automatically assume that low intergenerational mobility rates represent a social tragedy. I do not understand this reflexive wailing and beating of breasts in response to the finding of slow mobility rates. The fact that the social competence of children is highly predictable once we know the status of their parents, grandparents and great-grandparents is not a threat to the American Way of Life and the ideals of the open society.

The children of earlier elites will not succeed because they are born with a silver spoon in their mouth, and an automatic ticket to the Ivy League. They will succeed because they have inherited the talent, energy, drive, and resilience to overcome the many obstacles they will face in life."

Greg Clark, The Economist, 13 Feb. 2013


"You have not strengthened the weak or healed the sick or bandaged the injured or brought back the strays or looked for the lost; rather, you have ruled them with harshness and tyranny. So they were scattered because there was no shepherd; they were scattered and became prey for every wild beast of the field."

Ezekiel 34:2-5


“You may choose to look the other way, but you can never say again that you did not know.”

William Wilberforce

Stocks and Precious Metals Charts - On the Road to Damascus - Precious Metals Options Expiration

"Today we commemorate, not the whole history of St. Paul, nor his Martyrdom, but his wonderful Conversion...

It taught him not to despair of the worst sinners, to be sharp-sighted in detecting the sparks of faith amid corrupt habits of life, and to enter into the various temptations to which human nature is exposed. It wrought in him a profound humility, which disposed him to bear meekly the abundance of the revelations given him; and it imparted to him a practical wisdom how to apply them to the conversion of others, so as to be weak with the weak, and strong with the strong, to bear their burdens, to instruct and encourage them...

Now, observe, I do not allege that St. Paul's previous sins made him a more spiritual Christian afterwards, but rendered him more fitted for a particular purpose in God's providence,—more fitted, when converted, to reclaim others...The Pharisees were breakers of the Law; the Gentile reasoners and statesmen were infidels. Both were proud, both despised the voice of conscience. 

All sin, indeed, when repented of, He will put away; but pride hardens the heart against repentance, and sensuality debases it to a brutal nature."

John Henry Newman

The US dollar was swooning this morning, and stocks were in a light rally. The cause of this was the ongoing policy of the Trump Administration for a weaker dollar.  The weak dollar increases the price of imports, and decreases and makes more competitive exports, priced in dollars.

Treasury Secretary Mnuchin had just affirmed that policy from Davos, and Wilbur Ross added some 'trade war' friendly comments to boot.

 I wrote about this intraday here.

I was a little surprised at the metals strength, because today is an option expiration on the Comex for the precious metals, particularly significant for gold. And I thought that my lowball bids to buy more gold were just going to go unfilled for the day.

And lo and behold, President Trump issued a statement from Davos in the afternoon saying that he 'supports a strong dollar' and that furthermore, Secretary Mnuchin's remarks were 'taken out of context.'

And so the Dollar started rallying, erasing all its losses for the day.  And gold and silver were immediately punched lower for a loss, reversing the entire rally which had come up to key resistance.

And my lowball bid was filled (silver lining perhaps).

Is it reasonable to believe that President Trump's remarks were credible enough to justify a major market reversal in the metals and currency markets, not to mention the stocks which also reversed and moved lower?

Don't bother answering because that is a rhetorical question.  And maybe an IQ test.

Of course the remarks were not credible  They were obvious rubbish, and totally at odds with everything that they have done from day one.  Trump spins out literally incredible whoppers like a fast and loose New York real estate developer.   How unusual.

And Trump and some Congressmen seem to be pursuing a strategy of saying that 'everyone is dirty,' and there is no rule of law, no objective morality, so that anything goes.

It is foolish to believe that these markets, as they are now regulated and constructed, need any genuine fundamental reason to value anything.   They are pushed and shoved in the ways that benefit the insiders and the Banks, with the willing cooperation of the exchanges.  We have all seen it.

This is how it goes, at least in the near future.  But that does not make it right, or just, or sustainable.  Our markets are not square, and out elite are increasingly shameless and amoral in serving power and breaking oaths.  There is just no other way to put it.

Maybe sometimes people can become so proud, so headstrong, so blinded by a dedication to power, with the human element be damned, that they have to get knocked off their high horse and brought  down low, to get back to earth.   And when they hit bottom, they may relent and seek the healing restoration of repentance, and of the humanizing touch, also known as grace.

Or, as Martin Luther King put it, when he was speaking truth to exceptionally abusive power shortly before he was martyred, "God has a way of standing before the nations with judgment, and it seems that I can hear God saying to America, 'You're too arrogant!  And if you don't change your ways, I will rise up and break the backbone of your power, and I'll place it in the hands of a nation that doesn't even know my name.  Be still and know that I'm God.'"

Have a pleasant evening.

The US Dollar Since the November 2016 Presidential Election - Butter It With Growth and Take It Out In Trade

"Obviously a weaker dollar is good for us as it relates to trade and opportunities. The currency’s short term value is not a concern of ours at all Longer term, the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency,"

Steve Mnuchin, US Treasury Secretary


"Trade wars are fought every single day," he said. "So a trade war has been in place for quite a little while, the difference is the U.S. troops are now coming to the rampart."

Wilbur Ross, US Commerce Secretary


"With the global punditry assembled in Davos this week, the topic of the dollar seems to have bubbled to the surface again. Down more that 10% from the December 2016 peak, the greenback has started to sag at just the time when Treasury deficits are climbing and the Fed is paring back its purchases of US government debt and agency mortgage bonds."

Chris Whalen, Dollars, Deficits, and Duh in Davos

Short term at least, the Trump Administration is pursuing a weaker dollar policy.  This despite President Trump's very incongruous assertion late today from Davos that 'he supports a strong dollar'  and that Secretary Mnuchin's comments were taken out of context.   As if.

A weaker dollar stimulates exports, and acts like a general tariff on imports.   This is less of an issue for the US now that it has become 'oil independent.'  There are other key imports but oil has been the heavy hitter.

The financial sector may not be so welcoming of this, as the weaker dollar makes it a bit more difficult to peddle their dodgy financial instruments to non-US clients.

Still, in the bigger of things, the dollar weakness is rather mild.  I show a longer term DX chart in the second graph.

The weaker currency strategy is certainly good for those who hold gold and silver priced in US Dollars.

One of the more interesting economic phenomena to watch will be the manner in which the US Treasury and the Fed manage the huge US debt, having doubled to over twenty trillion US Dollars, with interest rates beginning to creep up back to more 'normal' levels.

And the recent tax cuts for the wealthiest and corporations will continued to fuel that deficit.

The hope is that a growing economy will help to offset will negate the problem.

This is a key facet of 'supply side' economics.

As Tony Sanders puts it at Confounded Interest, "The hope is the the economy will grow faster than it has since The Great Recession."

But at the end he does add that 'too much sugar is bad for you.'

Another party, which seeks to resurrect the printing money solution, albeit with a new brand and gnostic marketing campaign, is of the opinion that the US can resolve the issue by decoupling the currency from the US debt markets.

If too much sugar is bad for you, is replacing it with crystal meth going to be better long term solution? Not unless everyone around the world becomes your enabler, then caretaker, and finally caregiver.

As US Treasury Secretary John Connally put it at the G-10 meeting in late 1971, "It is our dollar, but it's your problem."

All in all, if I daresay, not such a bad time to own independently valued assets, like gold and silver.