Money, Currency, Value, Elusive, Changing, Unequal

This being the final posting for 2019, a divergence...

It's December 31. Do you know where your money is? Better, do you know what your money is?

To the unwashed, money is the crumpled pieces of paper in your pocket with pictures of dead presidents on them and some funny neo-Latin phrases and pulpy words like trust, debt, public, private, America.

It's not. Those papers are currency. Money is different. Gold is money. Silver is money. Diamonds and other precious gems are money. The paper is a convenience, a value identifier. In and of themselves, the papers with 10s or 20s or 100s on them are worth roughly the paper and ink, nothing more. But, in the minds of the unwashed, this is all there is. To them it is money. It is not money. It is currency.

The things we crave: food, shelter, cars, jewelry, these things have value. Words and numbers on paper, or digits on a computer or smartphone screen have only perceived value inasmuch as they can purchase the things we want or need, two wholly different things.

It is the thing itself that has value. The house, who some say is "worth" $450,000, others may see as worth less or as a massive misallocation of value. The house is shelter, an environment, a place of safeness, a sanctuary. It's value is derived from the joy or comfort it bestows upon the occupant(s), the safety it provides from threats of other men, from weather which we cannot control, form animal invaders. It's value, while it may be measured by a currency, is subjective. One man's 30,000 square foot castle may be no more comforting or safe than another man's cardboard box on a city sidewalk. It's a matter of perspective.

Further out, beyond the pointlessness of printed currencies, the anonymity of digitized value-measures, the sheer madness of crypto-currencies, are the certificates of ownership, of stocks, bonds, debentures, options, derivatives. Have these any intrinsic value? Not in the least. It is all perception and judgement of crowds. Often judgements are incorrect, inaccurate, altruistic, nonsensical, amusing, boring, tired, obsolete or otherwise jaded.

Like a horse race, the public gets to choose upon which favoritism is bequeathed. One horse may be valued at odds of eight-to-five. Another, sixty-to-one. They are both horses. They both run. Who is to say which horse is better on any given day? The judgement of crowds is more often wrong than right. The eight-to-five stallion does not always win the race. In fact, in practice, public favorites win only a third of the time. Imagine the same measure applied to value? A painting which sold for $300,000 in 2005, may sell for $2 million in 2020, and $45,000 in 2030. Such is the nature of value and currency. None of the numbers are correct indefinitely, but rather, acceptable in a given time, at a given place. Both value and currency are in constant flux and struggle against reality.

There is no real value in a painting.

A painting can neither feed nor clothe you, shelter you (perhaps from a rainstorm for a short period, but it would ruin the colors), but it can provide joy, prestige of ownership, emotion.

There's a number for all of that; it's elusive and always changing.

But, it's not money.

For auld lang syne, my dear
For auld lang syne,
We’ll tak a cup o’ kindness yet
For auld lang syne!

-- Robert Burns, 1788

At the Close, Monday, December 30, 2019:
Dow Jones Industrial Average: 28,462.14, -183.12 (-0.64%)
NASDAQ: 8,945.99, -60.62 (-0.67%)
S&P 500: 3,221.29, -18.73 (-0.58%)
NYSE Composite: 13,876.15, -67.99 (-0.49%)

Stocks Continue Surging Into Year-End; Fed Rate Hike Baked In, Unsubstantial

He said, "Call the doctor. I think I'm gonna crash."
"The doctor say he's comin', but you gotta pay him cash."
They went rushin' down that freeway,
messed around and got lost
They didn't care they were just dyin' to get off
--Life in the Fast Lane, Eagles, 1976

Stocks careened higher on Friday, finishing off a week that saw increased investor buying virtually across the board. It was the best week for stocks, especially on the Dow, since the week immediately following the US elections, an odd scenario for analysts and talking media heads who predicted turmoil and collapse if anybody but Hillary Clinton was elected president.

Since the election of Donald Trump, we now know that what emerges from the mouths of Wall Street psychopaths and media slaves is usually incorrect, politically driven and nine times out of ten wrong. What we still don't understand is why the same people are relied upon for their opinions, having been proven completely wrong over and over again, the best examples of this kind of nepotistic following being seen regularly on the financial networks, Bloomberg, Fox, and notoriously, CNBC, which has its own designated cheerleader, Jim Cramer.

How could all of these pundits and overpaid professionals have gotten it so wrong? Easy. The chances of stocks advancing or declining is almost always a 50/50 proposition, but, anybody reading the tea leaves from leftover elections would have known that a Republican president following a lame duck incumbent makes for a major bull market (that's made up, but it's probably true anyhow, and, in the age of "fake news" all one needs is a headline and story, right?).

Maybe people with money think Donald Trump's various positions on trade, immigration, wages, borders and culture will usher in another gilded age of American exceptionalism. For the most part, anybody with half a brain still in working order would welcome such a change. More than likely, following the initial post-election stock surge the rest of the advances have been driven largely by herd behavior.

It should be widely accepted, though it isn't, that stocks are valued extremely high, but the right thing is that bonds have been collapsing over the past five weeks, at the same time stocks have been rising. That's not your run-of-the-mill pair trade, but it is imaginative. As bonds fall, yields rise, making them more attractive as safety plays. In the meantime, with interest rates largely remaining at bargain basement levels, stocks have continued to be the investment de jour.

If there's a cloudy lining inside the silver cloud of stocks, it's that a correction is long overdue. However, bears and shorts have been saying that for the better part of the past four years and it hasn't happened. Instead, we happen to be in the midst of a massive valuation expansion. Whether or not individual stocks are good or bad investments presently does not seem to matter. There's an explosion of cash coming into the market, the same cash that was being hoarded pre-election. Once that money is exploited and exposed, the intensity of the rally should subside, but probably not until the calendar turn to 2017, the attractiveness and continual pimping of the "Santa Claus Rally" expected to be the main driver over the remaining weeks of 2016.

So, if a crash is coming, January's your huckleberry, or, right after the Fed raises the federal funds rate next week, which has evolved from a possibility to a near-certainty. The Fed and their one quarter of one percent hike in overnight lending is more a canard than a reality. Only the monumentally stupid or disconnected will suffer on a small rate increase. It's so tiny that almost nobody will notice. Certainly, it's not the kind of event that will cause a run, a panic, a rout, so the best action for next week is probably inaction.

Crashes and sudden downturns in the market normally come from out of the blue, caused by forces to which nobody (or only a select, ridiculed few) had been paying attention. If there's going to be a turn, the most likely causes are going to come from Japan or China or Europe, possibly even Brazil or another major portion of Latin America. More likely is that after Mr. Trump is inaugurated, US markets stabilize and places such as those mentioned above suffer. Such is the way of the world. There will be winners and losers. If America is going to be "great again" other countries are going to be not so great. The market is economics in motion and the chances for a crash in America are minimal over the short term. Longer term, dependent on too many factors to delineate here, corrections and crashes are bound to occur. The truth of the matter, is that the usually-wrong analysis from Wall Street is actually right on this account: if your time horizon is 20 or more years, crashes and corrections are buying opportunities and nothing more. The world won't end tomorrow or the next day, or the next month or the next year.

Thus, the outlook for stocks remains fairly solid, albeit a bit on the high side right now. Since the election, the Dow is more than 1400 points higher, a gain of nearly eight percent. That's a pretty healthy gain for five weeks and something that should be taken into account whatever investment decision one is making or about to make.

Friday's Closing Quotes:
Dow: 19,756.85, +142.04 (0.72%)
S&P 500: 2,259.53. +13.34 (0.59%)
NASDAQ: 5,444.50, +27.14 (0.50%)
NYSE Composite: 11,191.79, +41.83 (0.38%)

For the Week Ending 12/09/16:
Dow: +586.43 (+3.06%)
S&P 500: +67.58 (+3.08%)
NASDAQ: +188.85 (+3.59%)
NYSE Composite: +353.21 (+3.26%)

Go Figure: Trump Is A Winner And So Are Stocks

Editor's Note: I've been itching to write a post-mortem on the election for the past two days, but Wednesday was spent mostly recovering from the victory celebration which went late into Tuesday night and today the weather here in upstate New York is a breathtaking thing of beauty for mid-November with temperatures in the low 60s. Thus, I'm itching to get outside and enjoy the fresh air my little slice of America. I'll take my bows and victory lap for a month ago having predicted Trump's victory another time, likely at some point over the weekend.

There are more than a few points I wish to make and I am not yet over the elation of having gotten my country back to focus on penning a reasonably good essay, though I intend to in due time.

--Fearless Rick

Being just two days hence, the historic win in the presidential election by Donald J. Trump is still fresh in the mind, but already there are signs that the script has not yet been written for this chapter in American history.

Stocks, especially the Dow Jones Industrial Average, will close at record highs today should current prices be maintained or closely held.

The public had been led to believe that a victory for the Donald (can we still call him that once he's sworn in?) would be a death knell for stocks, but apparently, wall Street types see it somewhat differently, especially since not only did a Republican take control of the presidency, but the house and senate remained firmly in control of the GOP.

As strange as it may seem, Wall Street could actually believe in what Mr. Trump has been preaching and the last two days of trading may well be proof of that. Stranger yet is gold being down and silver up. Could the historic deviation from the gold/silver ratio we've witnessed over the past 30 years be starting to unwind? The best advice offered is one made a few months ago in Money Daily: buy solar panels (preferably American made).

Millenials May Be The Last Free Americans

On this day, a conversation was had with a couple of millennials, roughly in their mid-20s, working (or acting like they were working) in a smoke shop.

The conversation - following them chiding a senior citizen for talking about rolling your own and growing your own tobacco while he was buying rolling papers - was inferior, not even worth mentioning, which is why it is being mentioned.

At issue is the future, and the current youth... or, at least a sizable portion of them, want to vote for Bernie Sanders, who promises a $15/hour minimum wage, free college for everybody, and a host of other liberal-ideological non sequiturs that would essentially turn a once-prosperous free-market country (USA) into another stinking hell-hole like much of Europe, or the Middle East, or perhaps, Japan.

The problem lies not with the millennials. They don't know any better. Most of them haven't been around for more than 25 years, meaning that scads of them were in high school during 9-11, and those images are burnt into their psyches, as too the neo-liberal education they've been given, in which they know little about history, economics, language, culture or just about anything that would promote a thriving, free nation.

No, to blame are largely baby boomers, who foisted upon their youth such undistinguished values as participation trophies, non-judgemental attitudes, video games, addiction to cell phones, social media and other claptrap that promotes laziness, sloth, stupidity, class hatred, and decline.

Between the educational system run from afar in Washington, D.C., the Federal Reserve (also a D.C. inhabitant), and a mainstream media intent on propaganda du jour rather than objective journalism, the millennials may just be the last generation of Americans who can claim any level of freedom.

Americans are being taxed, silenced, tabooed, and numbed into a state of slavish devotion to media and government.

As a nation, America is pretty much doomed unless radical changes in the culture are made, and soon. Traditional values would be a welcome relief, but, whenever they are proposed, millennials scoff and pay, and continue down the path to self-destruction.

Thank you, Janet:
S&P 500: 2,068.46, +13.45 (0.65%)
Dow: 17,748.61, +115.50 (0.66%)
NASDAQ: 4,881.76, +35.14 (0.73%)

Crude Oil 38.38 +0.26% Gold 1,229.00 -0.69% EUR/USD 1.1335 +0.36% 10-Yr Bond 1.83 +0.88% Corn 369.25 -1.01% Copper 2.19 -1.02% Silver 15.25 +0.11% Natural Gas 1.99 +0.66% Russell 2000 1,113.52 +0.40% VIX 13.40 -3.04% BATS 1000 20,682.61 0.00% GBP/USD 1.4378 -0.06% USD/JPY 112.4500 -0.22%

Slaughter On Wall Street: Stocks Whacked Again As China Markets Close Early; Macy's Lays Off Thousands

Sure, the economy is just fine.

That's what the pundits on Bloomberg and CNBC would have you believe.

So, if everything is so darn good, why is Macy's - which has over 700 stores in the US - closing 40 stores and laying off 4,500 employees?

And why did the NASDAQ and the Dow close the day in correction territory (down 10% from high) today, with the S&P not far off?

People who host shows and are guests on TV want you to believe it's all China's fault. Over on mainland China, their stock markets closed early for the second time this year. That's twice in four days that circuit breakers have been triggered. A 7% selloff causes the market to shut down. Those are their rules. Or, rather, those were their rules.

Early in the US session, Chinese authorities announced that they were suspending the circuit-breaker rule, so their stock markets may fall a lot deeper tomorrow than a mere 7% before everything in the People's Republic goes down the drain.

It's not China's fault. It's the fault of the Fed, the government (for looking the other way and accepting bribes from corporations and banks), and the greed of Wall Street. It's also the fault of smart people taking their money out of the rigged casino, aka Wall Street, before it all vanishes, like it did in 2000, or 2008.

Also, Yahoo! is laying off 1000 employees as part of their reorganization plan. One employee that isn't being let go, but should, is CEO Marissa Mayer, of whom Money Daily said years ago was nothing but a wannabe, a poser, with no measurable skills for running a company.

Yes, the economy is not good, Wall Street and the government is run by a gang of crooks, and, incidentally, those highly-paid CEOs, like Ms. Mayer, should be in bread lines with the rest of the people being let go, because they're incompetent.

America, a once-great country, is going down the tubes, and in a big hurry. The culprit is not some foreign entity, terrorism, guns or aliens. The reasons can be found all over the country. Greedy lawyers, greedier bankers, corrupt government officials, incompetent business leaders, and, interwoven into the fabric of this country, placid, placated, ill-educated, preoccupied, self-engrossed people who vote (or don't) in elections and think they've done their part are all part of the problem, and not part of the solution.

But, people could be the solution. If people stopped making poor decisions, stopped listening to people in authority positions, and started taking responsibility for their own lives, rather than hoping for handouts from an uncle sugar government, people could solve their problems on their own.

The concept of self-reliance has been largely lost in America, but, herms hoping it's going to make a comeback when people wise up to the antics of politicians who don't deliver on their promises and kick them to the curb, where they belong.

There are lots of problems in this country that people could solve on their own if they took charge of their own lives. That, truthfully, may be asking for too much. We've wasted too much time in this country and waited too long for the governing class to do the right thing. Now, it may be too late, and we'll all just have to fend for ourselves.

Actually, that may not be too bad a thing.

The day on wall Street was not pretty, with major indices taking a third huge loss in four days. The Dow Industrials are down nearly 1000 points so far this year, putting 2016 already 6% in the red for even the safest stocks. Averages were lower all day, with no signs of rallies, and, perhaps more telling than anything, there was no snap-back at 3:30 on short covering, which has been the norm of late.

As noted by the quotes below, WTI crude oil finished with a 33 handle, a number not seen in the oil pits in 12 years. Gold and silver have broken out of moribund ranges, though holding and advancing from these levels may be difficult, as central banks collude to keep currency that may compete with the almighty dollar, euro or yen at undesirable levels.

What's undeniable about the gold and silver rigging is that it is unsustainable long-term, though central banks and their henchmen in the COMEX have managed to keep sending the prices of precious metals lower for nearly five full years. With stocks potentially falling out of favor, bonds, cash and PMs may appear to be the best bets with which to ride out a currency storm, a scenario that could be occurring in real time as the dollar/yen carry trade continues to unwind.

There is chaos everywhere, and, for the final trading day of the new year's first week, two important developments will be how the Chinese markets fare and US non-farm payroll data for December, due for release at 8:30 am ET.

Closing prices for Thursday, January 7, 2016
S&P 500: 1,943.09, -47.17 (2.37%)
Dow: 16,514.10, -392.41 (2.32%)
NASDAQ, 4,689.43, -146.34 (3.03%)

Crude Oil 33.21 -2.24% Gold 1,109.20 +1.58% EUR/USD 1.0929 +1.41% 10-Yr Bond 2.1530 -1.10% Corn 352.00 -0.35% Copper 2.02 -3.16% Silver 14.32 +2.50% Natural Gas 2.37 +4.46% Russell 2000 1,064.57 -2.72% VIX 24.99 +21.37% BATS 1000 20,761.26 -2.29% GBP/USD 1.4618 -0.05% USD/JPY 117.5480 -0.80%
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