21 March 2023

Stocks and Precious Metals Charts - Organized Indifference and Managed Discontent


"In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance."

Hyman Minsky, The Financial Instability Hypothesis

"As Hyman Minsky once said, and the moderns seem to have forgotten, 'Anyone can create money; the problem is in getting it accepted.'   He should have added, except by force [force is bad monetary policy by other means].  Reform goes hand in hand with recovery."

Jesse, Moral Hazard of the Fed's Current Policy, 24 January 2013

"Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. Wall Street encouraged businesses and individuals to take on too much risk, he believed, generating ruinous boom-and-bust cycles.  The only way to break this pattern was for the government to step in and regulate the moneymen."

John Cassidy, The Minsky Moment, The New Yorker, 4 February 2008

“In order that a select few might live in great opulence, millions of people work hard for an entire lifetime, never free from financial insecurity, and at great cost to the quality of their lives. The complaint is not that the very rich have so much more than everyone else but that their superabundance and endless accumulation comes at the expense of everyone and everything else, including our communities and our environment.”

Michael Parenti

"If we are indeed in a Minsky Moment, which we think we are, then monetary inflation by the Fed and government intervention without reform will most likely increase the probability of a protracted stagflationary repression in the United States, and possibly lead to civil unrest and an exogenous [compelled] reform of the system.  An abandonment of the system as it is with a turn to fascism has been the historic choice of Wall Street.  The political lobbying against systemic reform by the Bankers and their sycophants will be intense and as persuasive to the many as most appeals to fear.  However, their reckless advice leads to a trip to the brink of the abyss."

Jesse, Which Way Out of the Minsky Moment, 23 March 2008

Below is a video of a recent talk by Thomas Frank, one of the best historical analysts of contemporary American politics and economics.

I recommend you watch it, with the caveat that he begins by characterizing the Republican party in fairly blunt and unattractive terms.  But then he turns and savages the Clinton - Obama wing of the Democratic Party. 

Frank is a centrist.  That means in this polarized environment and partisan hysteria he probably upsets most everyone who holds to strong and implacable positions on the left and the right.

But it important to at least consider our current social and economic troubles in a new way, from a new perspective, since the old model has been consistently failing most Americans for the past 30 years.

You may not agree with it, but you can at least have it as a way of organizing your thoughts about what is happening during those idle moments when hating the 'other side' and big label boogeymen grows old.

Stocks were bubbling higher, floating up ahead of the FOMC decision tomorrow.

The Dollar chopped sideways.

VIX plummeted.

And gold and silver were nailed from first thing in the morning.

Given their recent gains a stiff correction was probably well in the cards, especially with a Fed Day approaching.

But still, it underscores the problem with applying the rules of bull stock markets and market driven commodities to the precious metals markets, which is a rat's nest of hidden leverage and manipulation of prices more in keeping with a currency.   

I expect the Fed to raise 25 bp tomorrow, but then to potentially say something idiotic and self-serving to the favored few.

So let's see what happens.

Have a pleasant evening.

20 March 2023

Stocks and Precious Metals Charts - The Seething Brew of History in the Making


"When what remained of the German Republic was about to collapse, Fritz Lang made Das Testament Des Dr. Mabuse, a sort of last-ditch stand against impending disaster.  But the curtain fell before this Nero production could be released, and no sooner did the Nazis take over than Dr. Goebbels banned it. 

In his subsequent talk with Lang he expressed his delight in Metropolis, without so much as mentioning his disapproval of the new Mabuse film; whereupon Lang deemed it wise to leave Germany.  An uncut print of the film's French version, made simultaneously with the German original, was smuggled across the border and edited in France.

In 1943, when the film reached New York audiences, Lang wrote a 'Screen Foreword,' expounding his original intentions: 'This film was made as an allegory to show Hitler's processes of terrorism.   Slogans and doctrines of the Third Reich have been put into the mouths of criminals in the film. 

Thus I hoped to expose the masked Nazi theory of the necessity to deliberately destroy everything which is precious to a people.  Then, when everything collapsed and they were thrown into utter despair, they would try to find help in the 'new order.'"

Siegfried Kracauer, From Caligari to Hitler, 1947

"Is this a sign that the Germans are brutalized in their simplest human feelings, that no chord within them cries out at the sight of such deeds, that they have sunk into a fatal consciencelessness from which they may never, never awake?"

Sophie Scholl, The White Rose, Second Leaflet, Munich 1942

"The totalitarian doctrine of the state thus satisfied the various traditional partisans of German reaction: university professors, bureaucrats, army officers, and big industrialists.  It was also acceptable to the western world in general.  The situation was difficult and Hitler was prompt to use the weapon of the totalitarian doctrine. The revolution was to proceed in an orderly fashion—in so far as property, the civil service, and the army were concerned."

Franz Neumann, Behemoth: The Structure And Practice Of National Socialism 1933-1944

"When humanity, subjugated by the terror of crime, has been driven mad by fear and horror, and when chaos has become the supreme law, then the time for the empire of lawlessness will have come."

Friedrich Rudolf Klein-Rogge, Das Testament des Dr. Mabuse

The FOMC will be announcing its rate decision on Wednesday, and that may move markets.

For now expectations are for a 25 bp increase, and that is a fairly reasonable bet given the alternative downsides.

However, what the Fed and the Chairman may choose to say about the banking system, and the recent bank runs, is another potential for exogenous market impact.

Stocks had another wide ranging day, with a finish unchanged to slightly green.

VIX is a yo-yo and today it fell.

Gold and silver went out mostly unchanged.

The Dollar fell a little.

We think we are something grander than ourselves.

Soon enough we will find out where things really stand, as the tides recede.

Have a pleasant evening.

17 March 2023

Stocks and Precious Metals Charts - Always the Same Words


“Every time I hear a political speech or I read those of our leaders, I am horrified at having, for years, heard nothing which sounded human.  

It is always the same words telling the same lies."

Albert Camus, Carnets

“It was miraculous. It was almost no trick at all, he saw, to turn vice into virtue and slander into truth, impotence into abstinence, arrogance into humility, plunder into philanthropy, thievery into honor, blasphemy into wisdom, brutality into patriotism, and sadism into justice. Anybody could do it; it required no brains at all. It merely required no character.”

Joseph Heller, Catch-22

“And on the subject of burning books: I want to congratulate librarians, not famous for their physical strength or their powerful political connections or their great wealth, who, all over this country, have staunchly resisted anti-democratic bullies who have tried to remove certain books from their shelves, and have refused to reveal to thought police the names of persons who have checked out those titles.

So the America I loved still exists, if not in the White House or the Supreme Court or the Senate or the House of Representatives or the media.  The America I love still exists at the front desks of our public libraries.”

Kurt Vonnegut, A Man Without a Country

The 'saves' of the troubled banks did not quite stick, in particular with respect to Credit Suisse. 

And so it was 'risk off' once again.

Stocks dumped, led south by the banks, particularly the regional and smaller banks which tend to populate the Russell 5000. 

The VIX took back its decline from the day before.

Gold and silver rallied higher, breaking out of their restraints.

They may face a challenge next week with an FOMC rate decision on Wednesday. 

There will be a key precious metal option expiration on the Comex on the 28th.

The cavalier attitude towards banking policy taken by the Fed and Yellen's Treasury can be added to the extraordinary things which we have been experiencing. 

The oligarchy is audacious.

Have a pleasant weekend.