Stocks and Precious Metals Charts - The Recovery™ - Bare Ruined Choirs

'Bare Ruined Choirs' - Detroit, Michigan

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.  By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. 

The sight of this arbitrary rearrangement of riches strikes not only at security but at confidence in the equity of the existing distribution of wealth."

John Maynard Keynes


"In reality high profits tend much more to raise the price of work than high wages."

Adam Smith


"That time of year thou mayst in me behold
When yellow leaves, or none, or few, do hang
Upon those boughs which shake against the cold,
Bare ruined choirs, where late the sweet birds sang."

William Shakespeare, Sonnet LXXIII

The FOMC increased the target range for its benchmark interest rate by 0.25% to a range of 1.75%-2%.   There was no dissent among the eight voting members.

In its statement the Fed said the economy is growing at a 'solid rate,' a change from its May statement that the economy was growing at a 'moderate rate.'   They eliminated their language about policy being 'accomodative' for some time, and said that 'recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly.'

Fed officials thank that monetary policy is near the interest rate at which the economy would experience full employment and price stability, which the Fed has defines as 2% inflation.

The Fed’s statement also includes a summary of economic projections, which are economic, labor market, and interest rate forecasts from Fed officials.

The Fed raised its outlook for growth and inflation this year, while lowering its expectations for the unemployment rate.

The dot plot now shows most Fed officials believe that two additional rate hikes are coming in 2018, bringing the year’s total up from three to four.

In other words, The Recovery™ is alive and well.

In the press briefing, Chair Powell said that the Fed is keeping an eye on non-financial corporations and households, and see no real problems with either with regard to debt and leverage there.

Are you kidding me? The average American working household is living paycheck to paycheck, with almost no cushion to cover a myriad of common incidents that occur in life that can quickly become personal tragedies.

I see no reason yet to change my longer term forecast of economic stagflation to be resolved through exogenously motivated systemic changes, prompted perhaps by broad rejection of the status quo and expressions of civil dissatisfaction reminiscent of the late 1960s.

Stagflation is such an unnatural economic outcome that it takes a remarkable dedication to policy errors and self-deception to achieve it.  And as surprising and utterly improbable an outcome it seemed back in 2005, it sure seems more likely now given what the Fed and fiscal authorities have done.

And it is still improbable.   But if stagflation does come, I am fairly confident that the establishment and their technocrats will blame it on Trump and his trade policies.    That I think is almost a sure thing.  The credibility trap would demand it.

Keep an eye on the yield curve.

Based on this more hawkish perspective gold and silver slid and then recovered and finished marginally higher. Silver took the 17 handle and gold at 1300. The dollar drifted a little lower.

Stocks gave up much of their early gains of the day to finish lower.

Need little, want less, love more. For those that abide in love abide in God, and God in them.

Have a pleasant evening.

Stocks and Precious Metals Charts - Markets Gangnam Style - They Never See It Coming

"This means that the Government is following through on Treasury Secretary James A. Baker 3d's comments on Thursday implying that the United States might let the dollar fall in reaction to higher interest rates in West Germany. Mr. Baker said today that Bonn ''should not expect us to sit back here and accept'' rises in German interest rates that experts say could slow the economies of both countries and that indirectly have been contributing to falling stock prices on Wall Street.

Analysts and the Administration official, who declined to be identified, said Mr. Baker's remarks, in a television interview, meant that the Administration and the Federal Reserve Board would not interfere if market pressures start pushing the dollar down somewhat against the mark. They also said a decline of the dollar against the mark could be expected to bring a decline against many other currencies as well.

During an appearance on the Cable News Network program, ''Newsmaker Saturday,'' Mr. [James] Baker discussed major influences that have been playing upon a Dow Jones industrial average that plunged 9.5 percent this week, or 235.48 points, producing the largest weekly loss since World War II. The drop on Friday of 108.36 points alone wiped out $145 billion in the value of investors' stocks.

''I think if you look at the underlying economic fundamentals in this country, they're very, very good,'' he said. But he added that the stock market appeared to be reacting to prospects of tax increases by Congress, the enactment of protectionist legislation to reduce foreign imports, and to fears of rising interest rates and inflation. He also said growth of computer-generated ''program trading'' of securities had contributed to the size of the daily sell-offs."

NY Times, US Said to Allow Decline of Dollar Against the Mark, Sunday, October 18, 1987

As a reminder, the US stock market crashed on Black Monday, October 19, with the Dow Jones Industrial Average falling roughly 22.6%.

The FOMC will be releasing their June rate decision tomorrow afternoon.

The market is broadly, if not unanimously, expecting a 25 bp rate increase tomorrow.

They are further expected three rate increases this year. Although given the *right* kind of economic reports there may be room for a fourth.

The Administration is signaling less concern with the impacts, collateral damage if you will, of their policy decisions and liquidity drains on the emerging markets.  This is the famous 'our dollar, your headache' posture that was made famous by James Baker III.

That sort of attitude tends to dissipate quickly when markets start smoking and the interdependent consequences of overly leveraged and gimmicked markets start falling down, and losses come home to roost on the market overlords, the Banks.

Here is the substance of the Fed's recent statements:

1. Inflation expectations are low and little changed
2. Risks to the economy are balanced
3. Rates will be raised, but slowly

Let's see if the Fed varies any of its familiar patterns.

Gold and silver were off a little on a slightly stronger dollar.

After the bell we are waiting for the judge's decision on the AT&T and Time Warner merger. This decision may have a large impact on the M&A climate this summer.  Watch for the action in similar 'vertical' plays involving content holders like Disney et al.

As a reminder there will be a stock option expiration for June this Friday. I believe that this one will be a 'triple witch' if not a quad.

The Korean summit flashed in Singapore, with a promise and a hope that we can all just get along.

"What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?"

Adam Smith

That may be advice from a 'moral philosopher' worth heeding. 

Need little, want less, love more.  For those who abide in love abide in God, and God in them.

Have a pleasant evening.

Stocks and Precious Metals Charts - Natural Born Killers - Stock Option Expiration on Friday

"Three dark personalities, narcissism, Machiavellianism, and psychopathy have been studied in businesses.  Although the first two share similar traits with psychopathy, such as superficial charm, lying and manipulation, the inability to accept responsibility for their actions, and the complete lack of empathy, guilt and humility, a large body of research has demonstrated that psychopathic individuals are more dishonest, treacherous and destructive than the others.

While all three dark personalities can be bad news for a company, corporate psychopathy is the most dangerous.  Nevertheless, because they use hard/deceitful manipulation tactics, are perceived as more dominant, and use overt means to appear more 'attractive' to those they wish to manipulate, psychopathic individuals may have the upper hand when it comes time to identify and select the most likely to succeed candidate for employee selection and promotion."

Cynthia Mathieu, The Devil Lurks In the Suit


"Psychopathy is a personality disorder characterized by twenty well-documented traits and characteristics.  The most visible are glib/superficial charm, a grandiose sense of self worth, a strong need for stimulation (that is, psychopaths are easily bored) and impulsivity. 

However, there are others, which they successfully hide from view, in particular pathological lying, conning, manipulation, a lack of empathy, remorse and guilt.  Over time, one might begin to see examples of irresponsibility, lack of realistic, long-term goals, and their failure to take responsibility for their own actions."

Paul Babiak, co-author with Robert Hare of Snakes In Suits


“Killers aren't always assassins.  Sometimes, they don't even have blood on their hands.”

Ruta Sepetys,  Salt to the Sea

Bloomberg said that this will be the most important week for the world economy.

Trump is meeting with North Korea's Kim, the UK MP's will be voting on a Brexit bill, the Fed is expected to raise rates 25 bp, the ECB will be updating their plan for bonds, and the BOJ is expecting to maintain its stimulus.

And there will be a stock option expiration in the US on Friday.

Despite a little action back and forth in the markets today, they seemed to be largely 'holding their breath' waiting to see what happens next.

Need little, want less, love more.  For those that abide in love abide in God, and God in them.

Have a pleasant week.

Neoliberalism and the Rise of Corporate Globalism

Excerpted below is a recent book review of Globalists: The End of Empire and the Birth of Neoliberalism, by Quinn Slobodian, Harvard University Press.

I have included a link to the entire article which I recommend reading if you wish to know more about how the rise of globalism, corporatism, and neoliberalism may go hand in hand within a reasoned construct.

I could have included much more and still not done justice to the themes and thoughts that it contains.

I found it particularly helpful because it provides a plausible rationale for the continuation of the European Union, despite its malformed integration of a currency union without internal financial integration of debts and transfer payments.  Not to mention its odd admixture of a remote central bureaucracy trumping traditional policy areas within the domain of national sovereignty.

It also helps to understand the stubborn commitment to global 'trade treaties' by corporate Democrats that tend to elevate international  bureaucracies and rules bodies,  dominated by corporate lobbyists, over the inclinations of their own national electorates. 

Obama's determined slogging for the TPP, even as his intended Democratic successor was being electorally eviscerated for her perceived corporatist elitism, was otherwise inexplicable given his sophistication in managing perceptions.

In this perspective these seemingly obtuse things can be seen as 'features' rather than well-intentioned but naively crafted arrangements containing unintentional flaws.

This review also positions neoliberalism within the context of the development of economic and political thought in the 20th century.  The two are inexorably entwined because, as is well established throughout human history, money is power.

The Boston Review
The Market Police
J. W. Mason

"Globalism in this story is not only, or even primarily, an extension of contacts between people, trade, production. Rather, it is the creation of a set of property rights that, precisely because they span multiple sovereignties, cannot be touched by one government without inviting conflict with another. In this sense it is positively desirable for property claims to cross national borders. Foreign investment, regardless of its value or otherwise for financing production, performs a political function that domestic investment cannot...

Organizing property and production across borders—whether through free trade, protections for foreign investment, currency unions or other devices—does more than limit the power of governments. It also serves, Slobodian writes, “to dissolve the small, discrete collective of mutual identification...in a larger unity.” Hayek spent much of his life searching for “a political model that would undermine the ‘solidarity of interests’ that naturally cohered” among similarly-situated people. Open borders played a critical role here, ensuring that economic interests were never “lastingly identified with the inhabitants of a particular region...

Today, the European Union offers the fullest realization of the neoliberal political vision. There is no sovereign people of Europe; the authority of European institutions rests on a body of law and treaties. The European Union is not a nation, but it is not simply an agreement among nations either. Unlike international agreements, European regulations are directly binding on individuals and not only on the government signing them. In many areas, European regulations and authorities don’t merely constrain, but actually replace, their national equivalents. (This is what makes Brexit so difficult.)

Europe’s incomplete integration—with its confusing mix of powers delegated to Brussels and powers retained by national governments—is often seen as a design flaw. But to Slobodian’s globalists, partial integration is precisely the goal—it means that neither the national nor the international body have the legitimacy and capacity to direct the economy. With no international entanglements, a government is sovereign; with complete integration, sovereignty moves to the higher level. What is wanted is a situation in which some powers but not others are delegated, leaving neither national nor super-national governments able to act outside of circumscribed role...

One might even call this the neoliberal paradox. State power is needed to enforce market relations and property rights, but when it rests on democratic politics, it can easily turn into a vehicle for a broader program of economic planning. So the site of power must be anonymized, hidden from politics—as in the opaque jurisdictional mazes of Europe...

From this point of view, the essential thing about the single European currency is not whatever dubious practical advantages come from having prices across the continent measured in the same units. Rather, it is the creation of the European Central Bank as an ostensibly technical decision-maker, more insulated from democratic politics than any national authority could be."

Read the entire book review at The Boston Review.