20 October 2017

Stocks and Precious Metals Charts - To the Moon, Alice

"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Stocks continued moving higher.

Where they'll stop, nobody knows.

Asia is rolling out the most new stocks in the US since the Alibaba IPO.  Making America great again.

And the pundits know plenty of reasons why this is still a good time to buy.

Permanent prosperity and a recovery, for some.   It's all in your perspective.

Have a pleasant weekend.

19 October 2017

Stocks and Precious Metals Charts - All Is Well -1987 and Its Consequences

"On a side bar. remember a couple of years ago, when I went on CNBC to talk to them about things that were happening in the markets in the afterhours that didn't make sense, and looked like an 'outside force' was moving them?   And they laughed at me, and told me to take my theory to Hollywood, and see if they would make a movie of it!  And then a month or so later, a guy came out and proved my theory?  Well. I have to believe that the rise of Gold and Silver, the rise of Treasury yields, and Oil, all being reversed on a dime, smells like PPT. it walks like PPT. and it talks like PPT."

Chuck Butler, Everbank World Markets

“Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole.”

Robert Heller, Federal Reserve Board

"There is no trap so deadly as the trap you set for yourself.”

Raymond Chandler, The Long Goodbye

Today is the 30th anniversary of Black Monday, the crash of 1987.  I remember it very well.

As you may not recall, on Tuesday following the crash, with the futures market indicating a significantly lower open, Alan Greenspan and the Fed came in buying SP 500 futures in order to turn the markets around. And it worked.   And it continued, with the Fed supporting the equity markets with jawboning, persuasion, and occasionally direct intervention, so that by the end of the year all was well with the markets.

And most will forget that Mr. Greenspan's expansion of the role of the Exchange Stabilization Fund for currency markets to manipulate equity and commodity markets was formalized in the following year. On the advice of his financial advisors, President Reagan formed The Working Group on Financial Markets (colloquially referred to as the Plunge Protection Team) was created by Executive Order 12631, signed on March 18, 1988.

 And thus came the era of bubble-nomics.

Stocks in the US opened significantly lower after an overnight sell off overseas.

The cause of that selling was the news out of Taiwan that Apple has significantly reduced orders to its suppliers for the iPhone 8.

Bearing in mind that there is an option expiration on Friday, and more importantly that the stock market has become a proxy for the economy in general, steady buying was applied almost from the opening bell, especially to the SP 500 futures.

And see that the SP and the Dow managed to finish in the green, while the tech heavy NDX finished in the red.

This is classic bubble top action.

Have a pleasant evening.

18 October 2017

Stocks and Precious Metals Charts - Stock Option Expiration on Friday - Anything Goes

"Wall Street did not accidentally run a barge aground and leave a small oil slick on the Hudson River. Wall Street did not accidentally release tainted lettuce that sickened a few dozen people.

What Wall Street did was intentional and criminal: it financially engineered a toxic subprime house of cards which it knew from its own internal reviews was going to collapse; it then molded the toxic product into inscrutable bundles; it sold the bundles to unsuspecting investors around the globe while making side bets that it would all come crashing down.

Then, after causing the greatest financial collapse in the United States since the Great Depression, Wall Street’s unrepentant scoundrels paid themselves billions of dollars in bonuses with taxpayer bailout funds."

Pam and Russ Martens, Wall Street On Parade

There will be a stock options expiration for October on this Friday.

The touts are talking up stocks this week. I'll take that as a good sign to take profits out of equities if you have them. We are nearing what is likely to be at least a short term top.

The bullish argument is that the Fed will keep supplying easy money to Wall Street, and they and their minions will keep piling into stocks because they have no other choice. That is sounding a bit tired at this point.

Never forget what Pam and Russ Martens said above.  We were all there watching it. We know what happened, not only from the news but our own personal experiences.  The myth makers are out in force, trying to rewrite history.

And I think this is because they are concerned about another big wash and rinse, again.  And they are softening up public opinion in advance.   Yes, they really do think that most people are that easily led.  And you know what, they may just have a point. 

You can fool all of the people some of the time, and some of the people all of the time, but you can't fool all of the people all of the time.    Hillary forgot to include that one in her book.

Have a pleasant evening.

Very Long Term Gold Chart Priced In Dollars

17 October 2017

Stocks and Precious Metals Charts - The Arc of the Moral Universe

"Since 1970, every time asset values have risen above 520% of households disposable income (the dashed line in the chart) then the US has been in a bubble and a subsequent crash has followed.  This has simply meant asset values growing much faster than households income or households capability to sustain those price increases. The depth of each crash has been relative to the overshoot of asset values on the upside."

Chris Hamilton, Bubble-nomics

It seems as though when I procrastinate long enough someone eventually does a very good job of making a point for something that is important, and does it in a way that I may not have been able to do as well otherwise.

A favorite refrain of financiers, fraudsters, politicians and their defense lawyers is to pose the questions in defense of a lie or a fraud in such a way as to blur the lines of recognition, so as to create room for a reasonable doubt.    Indeed, the boldest among them will ask those would listen to them to question reality itself.   What does 'is' really mean, for example.

Chris Hamilton of Economica as noted in the second quote above has come up with a very clever way to help to put a little rigor around the concept of financial asset bubbles. Obviously the crux of the problem is to find some metric, some reasonable and relatively stable or significant relationship against which to measure changes in one value and compare them over time.

Chris has chosen disposable income, which is actually pretty darn good.  And since the link between disposable income and net worth has a suggestion of correlation, and not just causation, the shoe seems to fit fairly well. 

One might rephrase it as 'when is the economy unusually asset rich, and relatively income poor.'  There are other standards one might use, but modern fictionalization economic measures like money supply has knocked a few of them for a loop.  And I am sure that there are economists aplenty who can cast a doubt on any of them.

Truth can become a very slippery thing, especially when a conspiracy of silence, or  the subornation of perjury, in support of a lie  becomes especially lucrative to the point of being de rigueur, a kind of badge of office among the elite, and sadly even among those who are sworn to uphold justice, and to protect the innocent. 

This next bubble and crash cycle is going to put a tear in the social fabric, and may even leave a mark.   The natives are clearly getting restless and their sahibs may be in danger of losing control.

What does it profit a man, indeed.

Have a pleasant evening.