Oh, Snap! Weekly winning steaks were ended with the first down week in the last eight on the NASDAQ. The S&P 500 and NYSE Composite saw their winning streaks ended at six weeks, while the Dow saw the underside of the unchanged line after four straight positives.
That US stock indices were all lower by less than one-half of one percent points up the resiliency and absurdity of the markets. Eminently malleable, stocks have been guided higher seemingly by Adam Smith's invisible hand, the one that keeps pension plans from imploding, sovereign governments from defaulting, and fiat currencies from the ruinous effects of unacceptability.
Putting into focus the NASDAQ, its seven-week upside move was the second-longest of the year. It began 2019 with an eight-week short-crushing rally on the heels of the final two weeks of 2018, which saw the index rise from the December ashes of a 6,190 low. While that 10-week advance boosted the index by some 1400 points, the most recent weekly gains accounted for only 800 additional points, although it recorded a new high in the week prior to the most recent and has backed down only slightly.
Anyone wise enough to have put all their money into the NASDAQ at the start of this year would be up a whopping 25% with just over a month remaining to add onto those lush profits. For ordinary folks locked into a buy and hold fund strategy, the gains since the highs of August-September 2018 to the present add up to only five percent. That's a more realistic figure for the real world and one which fits like a glove with the slowing pace of GDP and the generally dull data drops over these past 14 months.
While the stock markets may have the appearance of being big, bold, large and in charge, the truth is a somewhat more sobering landscape. Recovering so quickly from 20% losses has kept the investing public soothed and subdued, the politics of passive investing intact, and the wheels of industry churning, albeit at a lower crunch rate.
While stocks took this brief pre-holiday pause, interest rates were moving in the same direction, only with quickened pace. Negative interest rates rode across the plain of developed nations (Europe, Japan), suggesting that US treasuries were underpriced. Indeed, the long end of the curve was where most of the drama occurred, with the 30-year bond trimmed 21 basis points - from 2.41% to 2.22% - since November 8 (10 trading days). The 10-year note shed 17 basis points, slumping from 1.84% to 1.77% over the same period.
That's a trend sure to continue, as it represents a massive carry trade for investors outside the US. With yields in their native nations prefaced with minus signs, your bold-thinking French, German, Swiss, or Japanese investor is afforded a nearly risk-free two percent or more on money that otherwise would be eroded over time if held in sovereign securities. It's a neat trick that only the biggest and richest can perform. The rest of the population is unwittingly blinded by the stagnation and destruction ongoing behind the scenes.
Only a savvy few see negative interest rates for what they really are: a devious central bank device designed to wind down the fiat currency regime. In thirty to fifty years, the euro, yen, pound and even the dollar will be remnants of the industrial and information ages, replaced by something, we hope. while that may sound like a distant projection into the future, anybody in their 20s, 30s, or 40s might be best to be scared to death, because currency death-watches and funerals are morbid events played out over long periods of time.
Those of advanced age may better survive the utterly deflationary effects of negative interest rates and the impending currency decapitation in lower prices on everyday goods, but saving for retirement might best be measured in canned goods and precious metals instead of scraps of paper with important people on them or digitized numerical amounts on smart phone screens.
For many, the future is going to be destroyed before it arrives.
That's right. The world as it is now known will be a vastly different place in 2050 and it's unlikely to be prettier unless one has made the proper preparations into hard assets that will maintain value over harder times. Keeping up with the Joneses will be replaced by outrunning the Zombies. Fuel, food, water, shelter, and arable land - which, by the way, can be had on the cheap in some areas - are life-sustaining. Debt will be repudiated and rejected by a class of people similar to those of the depression era, whose lives were ruined by the influence of a currency they did not control, one which held neither value nor promise for a generation after 1929.
In case one is unconvinced of the effects of negative interest rates, just consider the math. Most pension plans in developed nations are already underfunded and have targets of six or seven percent annual gains written into their accountancy. If the best one can expect is two percent or less, a long-term shortfall is not only inevitable, it is assured.
All of this occurs over a long period of time, not all at once, but the effects on economies will nevertheless be devastating. Pension plans will not fail nor will sovereign debt default outright, but like rows of dominoes falling in super-slow motion, major currencies and first-world economies will gradually, inexorably decline and self-destruct.
Ah, but you say, these are negative thoughts marring the cheery landscape of the holidays.
Nay, if you get coal in your stockings this Christmas, consider yourself lucky. At least you will stay warm over the coming long winter.
At the Close, Friday, November 22, 2019:
Dow Jones Industrial Average: 27,875.62, +109.32 (+0.39%)
NASDAQ: 8,519.88, +13.67 (+0.16%)
S&P 500: 3,110.29, +6.75 (+0.22%0
NYSE Composite: 13,440.95, +34.55 (+0.26%)
For the week:
Dow: -129.27 (-0.46%)
NASDAQ: -20.94 (-0.25%)
S&P 500: -10.17 (-0.335)
NYSE Composite: -52.01 (-0.39%)
Showing posts with label arable land. Show all posts
Showing posts with label arable land. Show all posts
Monday, November 25, 2019
Tuesday, January 14, 2014
Why the Hyper-Inflationists Have Been Wrong, Are Still Wrong and Will Continue to be Wrong
The hyperinflation argument is completely worn out. The proponents of such nonsense have been pitching it for five years now and the Fed continues to print, print, print.
Why?
The deflation which began in earnest in 2008 is still staring them in the face.
Look at it this way: When the Fed prints, it creates debt. That's their job and they're working overtime. On the other side of the equation are the countless numbers of homes (millions of them) that went into foreclosure or are on their way to forclosure and all the mortgages that are still being paid down. That last bunch constitutes the bulk, and that is destroying debt.
The Fed is promoting bubbles in stocks and college loans, car loans and any other loans they can find because many, many consumers and businesses are paying down debt and not incurring any more.
If the Fed keeps its foot to the pedal at $75B or $100B or more per month, it's because there's at least that much debt being eradicated at the same time, so they're trying to keep up.
Remember, in our fiat debt-based system, if there is no debt, there is no money and that's why the Fed keeps printing. And if interest rates rise too much, that's game over because then nobody could afford debt and most debtors would, facing higher rates they cannot pay, default.
The Fed has itself backed nicely into a corner. They need to keep the US dollar strong, but at the same time, they'd like inflation at 2-3%, and GDP growth at 3-4%, which they consider equilibrium.
They've managed to keep the dollar stable, even higher lately, but that plays against their inflation and growth desires.
They can't have it all and deflation is winning and will keep winning as long as people have choices and there's no wage increases. If a loaf of bread doubles in price, people will eat half a loaf. Yep, some will starve, which lowers consumption, and thus, lowers again, the price of a loaf of bread.
The Fed is totally screwed with ZIRP and QE, which, the evidence is beginning to prove out, cannot exist at the same time, lest you get a result of zero growth (which is probably what we've really had the past five years in sum when you take out all of the BS hedonics and other magnificent calculations).
They're completely screwed. If I could borrow at 0.25%, like the banks, I'd do it all day long and pay it back just as quickly. So, what does the Fed gain from that? They created cheap money, and just as fast as it was borrowed, it was repaid.
Businesses are also self-funding, with stock buybacks and their own debt issuance, which, if you've read the Creature from Jekyll Island, the bankers hate, because corporate stock and debt is like having your own currency, and the banks make nothing off that.
The deflation will continue as long as interest rates remain low, like a 10-year under 3.5%, which is likely to remain that way for at least another year or two or three.
So, enjoy the deflation. Buy land, ammo, guns, vehicles, any reliable alternative energy source (wind, solar, deep cycle batteries, etc.), non-GMO seeds and opt out of the debt system. As long as the deflationary regime remains intact, you'll be fine. When it ends, you'll be prepared to survive without money.
TODAY'S MARKETS
Stocks did a serious about-face on Tuesday, based upon... hmmm, maybe the bogus retail sales data for December, which showed modest increases only by revising November sales down.
That's how it works in the present regime of making it up as the economy rolls along. While most retailers reported dismal holiday sales, we're supposed to believe the government's claim that everything was rosy in December. When the store, and later, entire malls, begin closing down, then what will they say? Go ahead, guess. They'll probably blame the weathre or threat of terrorist attacks or some other nonsense.
Also boosting stocks was, maybe, fourth quarter results from JP Morgan (JPM) and Wells-Fargo (WFC), two of the nation's mega-banks, which are supposedly flush with cash and making money hand over fist, even though their filings are so opaque and farcical, nobody really believes them at all, except those brokers and traders who make money by selling stocks to retail investors.
The banks aren't as unhealthy as they were in 2008, but, by no means are they the cash-cows we're led to believe.
Deflation, over-supply and an aging demographic will continue to erode the economy. And that ACA (Obamacare) isn't helping, either.
DOW 16,373.86, +115.92 (+0.71%)
NASDAQ 4,183.02, +69.71 (+1.69%)
S&P 1,838.88, +19.68 (+1.08%)
10-Yr Note 98.95, -0.15 (-0.15%) Yield: 2.87%
NASDAQ Volume 1.88 Bil
NYSE Volume 3.33 Bil
Combined NYSE & NASDAQ Advance - Decline: 4132-1568
Combined NYSE & NASDAQ New highs - New lows: 255-35
WTI crude oil: 92.59, +0.79
Gold: 1,245.40, -5.70
Silver: 20.28, 0.103
Corn: 431.50, -3.00
Why?
The deflation which began in earnest in 2008 is still staring them in the face.
Look at it this way: When the Fed prints, it creates debt. That's their job and they're working overtime. On the other side of the equation are the countless numbers of homes (millions of them) that went into foreclosure or are on their way to forclosure and all the mortgages that are still being paid down. That last bunch constitutes the bulk, and that is destroying debt.
The Fed is promoting bubbles in stocks and college loans, car loans and any other loans they can find because many, many consumers and businesses are paying down debt and not incurring any more.
If the Fed keeps its foot to the pedal at $75B or $100B or more per month, it's because there's at least that much debt being eradicated at the same time, so they're trying to keep up.
Remember, in our fiat debt-based system, if there is no debt, there is no money and that's why the Fed keeps printing. And if interest rates rise too much, that's game over because then nobody could afford debt and most debtors would, facing higher rates they cannot pay, default.
The Fed has itself backed nicely into a corner. They need to keep the US dollar strong, but at the same time, they'd like inflation at 2-3%, and GDP growth at 3-4%, which they consider equilibrium.
They've managed to keep the dollar stable, even higher lately, but that plays against their inflation and growth desires.
They can't have it all and deflation is winning and will keep winning as long as people have choices and there's no wage increases. If a loaf of bread doubles in price, people will eat half a loaf. Yep, some will starve, which lowers consumption, and thus, lowers again, the price of a loaf of bread.
The Fed is totally screwed with ZIRP and QE, which, the evidence is beginning to prove out, cannot exist at the same time, lest you get a result of zero growth (which is probably what we've really had the past five years in sum when you take out all of the BS hedonics and other magnificent calculations).
They're completely screwed. If I could borrow at 0.25%, like the banks, I'd do it all day long and pay it back just as quickly. So, what does the Fed gain from that? They created cheap money, and just as fast as it was borrowed, it was repaid.
Businesses are also self-funding, with stock buybacks and their own debt issuance, which, if you've read the Creature from Jekyll Island, the bankers hate, because corporate stock and debt is like having your own currency, and the banks make nothing off that.
The deflation will continue as long as interest rates remain low, like a 10-year under 3.5%, which is likely to remain that way for at least another year or two or three.
So, enjoy the deflation. Buy land, ammo, guns, vehicles, any reliable alternative energy source (wind, solar, deep cycle batteries, etc.), non-GMO seeds and opt out of the debt system. As long as the deflationary regime remains intact, you'll be fine. When it ends, you'll be prepared to survive without money.
TODAY'S MARKETS
Stocks did a serious about-face on Tuesday, based upon... hmmm, maybe the bogus retail sales data for December, which showed modest increases only by revising November sales down.
That's how it works in the present regime of making it up as the economy rolls along. While most retailers reported dismal holiday sales, we're supposed to believe the government's claim that everything was rosy in December. When the store, and later, entire malls, begin closing down, then what will they say? Go ahead, guess. They'll probably blame the weathre or threat of terrorist attacks or some other nonsense.
Also boosting stocks was, maybe, fourth quarter results from JP Morgan (JPM) and Wells-Fargo (WFC), two of the nation's mega-banks, which are supposedly flush with cash and making money hand over fist, even though their filings are so opaque and farcical, nobody really believes them at all, except those brokers and traders who make money by selling stocks to retail investors.
The banks aren't as unhealthy as they were in 2008, but, by no means are they the cash-cows we're led to believe.
Deflation, over-supply and an aging demographic will continue to erode the economy. And that ACA (Obamacare) isn't helping, either.
DOW 16,373.86, +115.92 (+0.71%)
NASDAQ 4,183.02, +69.71 (+1.69%)
S&P 1,838.88, +19.68 (+1.08%)
10-Yr Note 98.95, -0.15 (-0.15%) Yield: 2.87%
NASDAQ Volume 1.88 Bil
NYSE Volume 3.33 Bil
Combined NYSE & NASDAQ Advance - Decline: 4132-1568
Combined NYSE & NASDAQ New highs - New lows: 255-35
WTI crude oil: 92.59, +0.79
Gold: 1,245.40, -5.70
Silver: 20.28, 0.103
Corn: 431.50, -3.00
Wednesday, May 29, 2013
Who Bought This Dip?
About the best that could be said about today's general market decline is that it could have been worse. Stocks were slammed right out of the opening bell, and quickly fell to their worst levels of the day. By around 11:00 am EDT, the Dow had slumped 180 points from the previous close, the NASDAQ was down 38, the S&P off by 20 and the Composite down a whopping 126 points.
Naturally, some traders smelled the unmistakable aroma of easy money, so the buying started in earnest, with the major averages getting back close to half of the losses by day's end.
Still, anyone buying this particular dip - which incidentally, began from a peak early in the morning on Tuesday - might not be in the chips any time soon, as the market of late has not shown a great propensity for quickly and quietly erasing losses from previous downfalls.
Despite yesterday's advance, stocks left half of the gains from early in the day off the table, vanished, so the decline on the Dow, from the top of 15,521.49 to today's close, is nearly 220 points, or, about 1 1/2 percent.
That surely isn't anything to write home about, but it is significant in a short, end-of-month week heading into the summer doldrums, so to speak. It's difficult to make a case for buying so close to a market all-time peak, but money has to go somewhere, it is said, though many outside the world of Wall Street are beginning to find better places for the dough than in stocks. Bonds have slumped as well, pushing up yields, the 10-year note hitting 2.16% yesterday before settling down at 2.11% today.
Other places people have been putting money are into homes, either as new purchases or renovations, classic and not-so-classic cars (everybody needs reliable transportation), arable land, small business machinery, art, collectibles, rarities, gold, silver and other hard assets.
If stocks continue to display weakness (or even if they continue to sprint back and forth and increase volatility) and the Fed continues twiddling and tweaking and cajoling the markets with jabberwocky talk about easing or tapering or slowing their bond purchases, people can and will look beyond the NYSE and the NASDAQ for better, tangible assets with intrinsic or functional value.
People may be wearying of the constant barrage of "suggestions" from the Fed, analysts, broker-dealers and other hucksters of equities and make the move to something that they can actually touch, feel and literally appreciate. Sometimes - and this may be one of those times - it's better to keep what money you have than to risk it in what appears to be a very risky environment.
Today's action was rather uniform, with all the major averages falling about the same percentage amount on better-than-average volume. If this looks like an orderly retreat, those who bought the dip midday might be wondering what happens when the market becomes a bit more disorderly.
Dow 15,302.80, -106.59 (0.69%)
Nasdaq 3,467.52, -21.37 (0.61%)
S&P 500 1,648.36, -11.70 (0.70%)
NYSE Composite 9,422.49 71.68(0.75%)
NYSE Volume 3,969,497,750
Nasdaq Volume 1,754,239,625
Combined NYSE & NASDAQ Advance - Decline: 1627-4849 (1:3)
Combined NYSE & NASDAQ New highs - New lows: 172-151 (narrowing of the gap)
WTI crude oil: 93.13, -1.88
Gold: 1,391.30, +12.40
Silver: 22.45, +0.26
Naturally, some traders smelled the unmistakable aroma of easy money, so the buying started in earnest, with the major averages getting back close to half of the losses by day's end.
Still, anyone buying this particular dip - which incidentally, began from a peak early in the morning on Tuesday - might not be in the chips any time soon, as the market of late has not shown a great propensity for quickly and quietly erasing losses from previous downfalls.
Despite yesterday's advance, stocks left half of the gains from early in the day off the table, vanished, so the decline on the Dow, from the top of 15,521.49 to today's close, is nearly 220 points, or, about 1 1/2 percent.
That surely isn't anything to write home about, but it is significant in a short, end-of-month week heading into the summer doldrums, so to speak. It's difficult to make a case for buying so close to a market all-time peak, but money has to go somewhere, it is said, though many outside the world of Wall Street are beginning to find better places for the dough than in stocks. Bonds have slumped as well, pushing up yields, the 10-year note hitting 2.16% yesterday before settling down at 2.11% today.
Other places people have been putting money are into homes, either as new purchases or renovations, classic and not-so-classic cars (everybody needs reliable transportation), arable land, small business machinery, art, collectibles, rarities, gold, silver and other hard assets.
If stocks continue to display weakness (or even if they continue to sprint back and forth and increase volatility) and the Fed continues twiddling and tweaking and cajoling the markets with jabberwocky talk about easing or tapering or slowing their bond purchases, people can and will look beyond the NYSE and the NASDAQ for better, tangible assets with intrinsic or functional value.
People may be wearying of the constant barrage of "suggestions" from the Fed, analysts, broker-dealers and other hucksters of equities and make the move to something that they can actually touch, feel and literally appreciate. Sometimes - and this may be one of those times - it's better to keep what money you have than to risk it in what appears to be a very risky environment.
Today's action was rather uniform, with all the major averages falling about the same percentage amount on better-than-average volume. If this looks like an orderly retreat, those who bought the dip midday might be wondering what happens when the market becomes a bit more disorderly.
Dow 15,302.80, -106.59 (0.69%)
Nasdaq 3,467.52, -21.37 (0.61%)
S&P 500 1,648.36, -11.70 (0.70%)
NYSE Composite 9,422.49 71.68(0.75%)
NYSE Volume 3,969,497,750
Nasdaq Volume 1,754,239,625
Combined NYSE & NASDAQ Advance - Decline: 1627-4849 (1:3)
Combined NYSE & NASDAQ New highs - New lows: 172-151 (narrowing of the gap)
WTI crude oil: 93.13, -1.88
Gold: 1,391.30, +12.40
Silver: 22.45, +0.26
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