Weekend Wrap: Financial Warfare

When Mario Draghi announced on Thursday that the European Central Bank (ECB) would cut overnight lending rates an additional 10 basis points - to 0.50% - and another round of QE, markets responded with a bit of a yawn as the news had already been largely leaked and played upon.

Such are financial markets these days, wherein nobody is supposed to feel even the slightest degree of pain or anguish and central banks telegraph their every move. There's no feel to markets, especially stocks, other than that of a rigged game. Analysis is useless in the face of dovish banking motives, all coordinated and supposedly well-intentioned.

Truth of the matter is that there is a fierce financial war on over money, finance, and trade, with competition among unbacked currencies (all of them) terrific and without wane. The Europeans want to beat the US and Japan, Japan wishes to devalue against the Euro. China, clearly the world's leader in discounted exporting, parlays its wobbly currency against everybody.

Not only are nations and regions waging financial war, governments continue to stick their grubby hands into the pockets of domestic populations at an increasingly torrid pace. The level of regulations, rules, taxes, fees and tariffs has risen substantially over the past ten years, as political forces get in on the action which inflation has long forwarded. Now, deflation threatens to skew the balance more toward government confiscation of labor's remuneration. Wages have stagnated and may slow further, but the tax load will only increase, making discretionary spending for many no longer a choice, but a command imperative.

As money (more accurately, currency) becomes less available and devalued on a widespread basis, after government comes the corporate grab of every last consumer penny. Regulation in developed nations has stifled small business creation to the point of near-extinction. Instead of choice, say, along a road from a variety of local food purveyors, Americans are offered only fast foods from giant companies. It's a Big Mac, Whopper, or Wendy's or nothing.

Locally-owned and operated retail stores are being killed at an alarming rate, and with it goes choice, and with choice goes freedom. The global financial war is threatening not to just the major players, but to individuals, increasingly squeezed by forces well beyond their control.

The cartel-like Amazon-ification of retail feels the same when it comes to nearly every segment of consumer goods and services. Cell phones? Not much choice of carriers there. Data, ditto. Clothing, all the same from China, Cambodia, or other SW Asian countries where labor is cheap. Investments? If you haven't been in stocks, you're a loser, and that game will continue to separate money from former savers and younger people who delay household-making because it seems fruitless and beyond budget.

Tariffs, and Donald Trump's imposition of them, are actually a symptom of the problem, which is loosely described as crony capitalism with a hint of nationalism and monetary monopolism.

The choices for regular citizens are stark and scary. Divert funds away government (federal, state, and local) and mega-corporations, and towards friends and neighbors, barter, frugality. In developed nations, the fruits of labor are being scooped up at a rapacious rate, by big business and government, much of it before it is even in the hands of the laborer.

When more than half of your income goes to taxes, and another third to basis household costs, there isn't much left over for either saving or discretion. It's a problem that's been building since Nixon took the US off the gold standard, it's global, and it's unstoppable.

At the Close, Friday, September 13, 2019:
Dow Jones Industrial Average: 27,219.52, +37.07 (+0.14%)
NASDAQ: 8,176.71, -17.75 (-0.22%)
S&P 500: 3,007.39, -2.18 (-0.07%)
NYSE Composite: 13,124.34, +8.29 (+0.06%)

For the week:
Dow: +442.06 (+1.57%)
NASDAQ: +73.64 (+0.91%)
S&P 500: +28.68 (+0.96%)
NYSE Composite: +190.96 (+1.48%)

Wall Street Awaiting Fed's Next Move

On the road again... drive by post.

As one can see from the figures below, there was muted reaction in the US to the ECB rate dump early in the day.

Wall Street is no doubt waiting for the Fed's response in kind, next week, when they're expected to drop the federal funds rate another 25 basis points. They're now behind the curve in the currency race into the abyss (a new term because "race to the bottom" would assume there is some stopping point... thanks to negative interest rates, there isn't), and will be playing catch-up the next year or more, at least into the election season.

What a horrible hotel. Hilton Airport in Knoxville, TN. The room smells like a doctor's office. The air is antiseptic and stifling, the coffee machine doesn't work properly and the sheets on the bed are treated with some kind of agent which induces congestion and itching. Not recommended. In the spirit of negative interest rates, I'm giving it -4 stars.

At the Close, Thursday, September 12, 2019:
Dow Jones Industrial Average: 27,182.45, +45.41 (+0.17%)
NASDAQ: 8,194.47, +24.79 (+0.30%)
S&P 500: 3,009.57, +8.64 (+0.29%)
NYSE Composite: 13,116.05, +33.64 (+0.26%)

Global Banker Duplicity: Draghi Cuts ECB Overnight Rate to -0.50%

At Thursday's announcement, the ECB's Chief Governing Council (sounds impressive, doesn't it?) cut the bank’s overnight deposit rate, trimmed by 10 basis points, to −0.50%, meaning that commercial banks must effectively pay just a little bit more to the ECB to hold their excess cash balances overnight.

There were other policy moves, such as a restart to the ECB's Asset Purchase Program, otherwise known as QE, with an unlimited timeline. The bank will purchase assets at a rate of 20 billion euros per month, until they see inflation begin to tick up, so, essentially, forever, or, until the currency is completely worthless or eviscerated by the continuous destruction of capital by negative interest rates.

It would be easy to say that the central bankers don't know what they're doing, because all of the stimulus applied to economies around the world for the past ten years hasn't produced anything close to a desired result, either increased inflation (which isn't good, by the way), or rising GDP in developed nations.

What the ECB and other central banks like the BoJ and the US Federal Reserve are doing is choking down the currency in desperate, disparate attempts to conceal the rot within the system, which essentially imploded in 2008.

Nothing has been done at the micro level to induce business formation. It's all been macro level stuff, aiding governments and big corporations, which have a stranglehold on the most profitable franchises worldwide.

This is apparently good for asset prices in risky segments, such as stocks, but also for gold and silver, which have popped on the news, but will no doubt retreat.

The end game is a global depression, which some claim we've been in since 2008, but that's splitting hairs. The final blow comes when currencies backed by nothing are thrown out with the bathwater by populations tired of being taxed to death and dragged roundly their ears and noses with shifting central bank tricksterism.

Negative interest rates, if they prevail, will destroy all fiat currency. It's just math.

At the Close, Wednesday, September 11, 2019:
Dow Jones Industrial Average: 27,137.04, +227.64 (+0.85%)
NASDAQ: 8,169.68, +85.52 (+1.06%)
S&P 500: 3,000.93, +21.54 (+0.72%)
NYSE Composite: 13,082.41, +88.41 (+0.68%)

It's September 11

It's September 11.

Since this is a very solemn day in American life, there will be no economic or political analysis here. Just take a few moments and reflect upon what being an American means to you. Reflect upon what is important to you. Be honest with yourself. You may want to read what's below.

Recently, I was driving from upstate NY to Eastern Tennessee (moving... thank you, Andrew Cuomo). Watching all the cars and trucks moving up and down the highways, I thought, "all this law enforcement, laws, rules, regulations, restrictions, are bullshit. Look at all these people, traveling wherever they want, carrying whatever they please; there is no way the government can stop people from doing what they want, being free. There are just too many people. They can't control them all."

People need to stop being sheep, being herded, being told what to do. Unfortunately, the public school system has brought us to the brink, but, that was being said 50 years ago, when I was in high school. There are 330 million of us, a handful of them. Throw off the yoke of fear and the control net they throw over us via the media.

It takes a long time for individuals to awaken to the truth, but it can happen in an instant. The moment you shake off all the lies that have been told to you since you were a little kid is the moment you become free. Free to do as you please, without harming anybody else. If you want to farm, do it. If you want to weld, do it. Anything you want can be accomplished if you only have the will to start.

In the classic, "Think and Grow Rich," by Napoleon Hill, there is a great line which never fails:

Whatever the mind of man can conceive and believe, it can achieve.

Anyone who truly wants freedom can have it. Nobody needs to raise arms, fire a single bullet. All the power rests in the minds of the people, individually, and collectively.

At the Close, Tuesday, September 10, 2019:
Dow Jones Industrial Average: 26,909.43, +73.92 (+0.28%)
NASDAQ: 8,084.16, -3.28 (-0.04%)
S&P 500: 2,979.39, +0.96 (+0.03%)
NYSE Composite: 12,993.96, +33.24 (+0.26%)

Stocks Flat; Britain Should Leave The EU ASAP

Markets - whatever is left of them - seemed to be running on fumes Monday, as no Trump tweets nor economic news were sufficient to move stocks in general either way.

This kind of quiet may be just what investors are seeking: less volatility, less media madness, a more sanguine environment and some degree of security and safety. With all the talk of recession, the past few months have spooked some of the more ardent longs, but the market is still not conducive to short trades in any form.

One could conclude from recent action that stocks will hold their ground and move to new highs, as has been the case throughout the run from 2009 (buy the dip philosophy), and with another 1/4 point rate cut from the Fed a sure thing next week, that is the likely trading strategy for the day-trader and short-termer. Long term investors should be seeking value or growth, best, a combination of the two. With interest rates so low, dividend-yielding stocks with long track records are the safest and surest, plus, many will survive well under difficult conditions, should a recession actually arrive.

Central banks still have control of markets, a condition that may persist for quite a long time. It should serve memory well to reconsider the aftermath of the 2008 crash, wherein central banks coordinated to save everything, even unworthy companies, from default.

This might be a prime time to move from passive to active investing, with individual stocks preferred over ETFs or mutuals. Expect some noisy ups and downs over the next few months, though the next major event is Brexit, with a hard-line, no-deal escape from the EU by Great Britain set for October 31 by Boris Johnson, the most recent Prime Minister of the country.

It's been more than three years since jolly ole' England voted to leave the EU. Parliamentarians and stubborn bureaucrats have delayed the wishes of the people for too long and the wait may soon be over. Anything short of England removing itself from the EU - without onerous conditions - will be very bad for markets. The hyperbole of the media and those on the "remain" side of the issue have played the hysterics card for all it's worth.

Time is up. Populism should prevail in England and the result of leaving the EU, while dramatic, does not have to be traumatic.

At the Close, Monday, September 9, 2019:
Dow Jones Industrial Average: 26,835.51, +38.05 (+0.14%)
NASDAQ: 8,087.44, -15.64 (-0.19%)
S&P 500: 2,978.43, -0.28 (-0.01%)
NYSE Composite: 12,960.72, +27.34 (+0.21%)