End of the Road
The confluence of factors that influence market prices are vast and variable. One moment patterns and relationships are so pronounced you can set a cornerstone by them. The next moment they vanish like smoke in the wind. One thing that makes trading stocks so confounding is that the buy and sell points appear so obvious in hindsight. When examining a stock’s price chart over a multi-year duration the wave movements appear to be almost predictable.
The fascinating obviousness of hindsight – it is now perfectly clear when one should have bought AMZN. Unfortunately it wasn’t quite as clear in real time. [PT]
Life After ZIRP
Roughly three years ago, after traversing between Los Angeles and San Francisco via the expansive San Joaquin Valley, we penned the article, Salting the Economy to Death. At the time, the monetary order was approach peak ZIRP.
Our boy ZIRP has passed away. Mr. 2.2% effective has taken his place in the meantime. [PT]
Orchestrated Larceny
The government continues its approach towards full meltdown. The stock market does too. But when it comes down to it, these are mere distractions from the bigger breakdown that is bearing down upon us.
Prosperity imbalance illustrated. The hoi-polloi may be getting restless. [PT]
Positive Energy
By now, late September of 2018, it has become increasingly evident that something big is about to happen. What exactly that may be is anyone’s guess. But, whatever it is, we suggest you prepare for it now… before it is too late.
Art auction energizer: Norman Rockwell’s portrait of John Wayne. You can’t go wrong shelling out top dollar for me, pilgrim, can you? [PT]
Happy Destiny
There’s great elation flowing from the various economic bureaus down through President Trump. They bring us good tidings. If you haven’t heard, here in the USA, we live, work, and play in the dazzle and delight of an economy in which GDP growth exceeds the unemployment rate.
The president has clearly had a hand in job creation. :) Seriously, there can be no doubt that aggregate economic activity has increased as a result of the measures the government has implemented, including deregulation, tax cuts and increased deficit spending. Note that the latter is offsetting the salutary effects of the other measures in the long run, even though government spending is added to GDP and therefore provides a near term boost to official “growth”. It is just difficult to tell how much of this growth consists of genuine wealth creation and how much of it is simply masking capital consumption. [PT]
Misadventures and Mishaps
Over the past decade, in the wake of the 2008-09 debt crisis, the impossible has happened. The sickness of too much debt has been seemingly cured with massive dosages of even more debt. This, no doubt, is evidence that there are wonders and miracles above and beyond 24-hour home deliveries of Taco Bell via Door Dash.
The global debtberg: at the end of 2017, it had grown to USD 237 trillion. Obviously this is by now a slightly dated figure, as debt issuance has continued with gay abandon this year. [PT]
A Fake Money World
The NASDAQ slipped below 8,000 this week. But you can table your reservations. The record bull market in U.S. stocks is still on. With a little imagination, and the assistance of crude chart projections, DOW 40,000 could be eclipsed by the end of the decade. Remember, anything and everything’s possible with enough fake money.
Driven by a handful of big cap tech companies, the Nasdaq Composite has made new highs – but the broad market (here shown in the form of the NYSE Index) has not even made it back to the January blow-off peak. It is a good bet the return of the average investor’s portfolio mirrors that of the latter. Such divergences are typically a sign of steadily weakening market internals which are seen near major trend changes. When such a glaring divergence in performance persistently fails to be invalidated and keeps dragging on for many months, it tends to be particularly concerning for the longer term outlook, Note that even more glaring divergences exist now between US stocks vs. European and EM stocks. Despite the fact that US economic indicators remain strong and no obvious recession warnings are evident, we have yet to see such large divergences resolve without a hiccup. Usually the hiccup turns out to be quite a doozy. [PT]
Squishy Fact Finding Mission
Today we begin with the facts. But not just the facts; the facts of the facts. We want to better understand just what it is that is provoking today’s ludicrous world. To clarify, we are not after the cold hard facts; those with no opinions, like the commutative property of addition. Rather, we are after the warm squishy facts; the type of facts that depend on what the meaning of ‘is’ is.
Fact-related pleas… [PT]
Financial Potemkin Village
A rising stock market has the illusory effect of masking the economy’s warts and blemishes. Who cares if incomes are stagnant when everyone’s getting rich off stocks? Certainly, winning wealth via the stock market beats working for it.
Learning from history, 2018 style [PT]
Cold Dark Clouds
The sun always shines brightest in the northern hemisphere during summer’s dog days. Here in America, from sea to shining sea, the nation burns hot. But, all the while, cold dark clouds have descended over the land of the free.
In case you ever wondered – yes, they really did say it… [PT]
Historical Evidence
The world grows increasingly at odds with itself, with each passing day. Divided special elections. Speech censorship by Silicon Valley social media companies. Increased shrieking from Anderson Cooper. You name it, a great pileup is upon us.
It was probably Putin’s fault (just a wild guess) [PT]
Conditioned to Absurdity
The unpleasant sight of a physical absurdity is both grotesque and interesting. Only the most disciplined individual can resist an extra peek at a three-legged hunch back with face tattoos. The disfigurement has the odd effect of turning the stomach and twisting the mind in unison.
Francesco Lentini, the three-legged man. Born in Sicily in 1881 with “three legs, four feet, sixteen toes and two pair of functioning genitals” he made a career of his disfigurement and worked for circus sideshows until his death at age 78. [PT]
Most read in the last 20 days:
Circling the Drain
Drain, drain, drain... "Master!", cried the punters, "we urgently need rain! We can no longer bear this unprecedented pain!" "I'm sorry my dear children, you beg for rain in vain. It is I who is in charge now and mine's the put-less reign. The bubble dragon shall be slain, by me, the bubble bane. That rustling sound? That's me... as I drain and drain and drain." [ed note: cue evil laughter with lots of giant cave reverb] - a public...
Washington’s Latest Match Made In Hell
Almost Predictable One of the more enticing things about financial markets is not that they’re predictable. Or that they’re not predictable. It’s that they’re almost predictable... or at least they seem they should be. For a long time people believed – and from what we read and hear, many still do – that economic cycles move in easily predictable, regular time periods. All you had to do was create a chart of the up and down waves of your favorite cycle model...
The Bear Market Hook
Has a Bear Market in Stocks Begun? The stock market correction into late December was of approximately the same size as the mid 2015/early 2016 twin downturns, so this is not an idle question. Moreover, many bears seem quite confident lately from an anecdotal perspective, which may invite a continuation of the recent upward correction. That said, there is not much confirmation of said confidence in data that can be quantified. Our proposed bearish wave count for the...
The Real or Imagined Third Fed Mandate - Precious Metals Supply and Demand
Fundamental Developments – Silver Looking Frisky The price of gold went up four bucks, and the price of silver rose 32 cents. Silver has been going up in gold terms since the middle of last week, when the gold-silver ratio peaked at just under 87. It closed this week at just under 82 (a lower ratio means silver is more valuable). Silver: more valuable since last week, both in absolute and relative terms. Just avoid dropping it on your toes – it's still just as heavy as...
The Downside of Mindless Investing
Unexpected Inflection Points High inflection points in life, like high inflection points in the stock market, are both humbling and instructive. One moment you think you’ve got the world by the tail. The next moment the rug’s yanked right out from under you. The yanked rug... [PT] Where the stock market is concerned, several critical factors are revealed following a high inflection point. These factors are not always obvious at first. But they become...
The Strongest Season for Silver Has Only Just Begun
Commodities as an Alternative Our readers are presumably following commodity prices. Commodities often provide an alternative to investing in stocks – and they have clearly discernible seasonal characteristics. Thus heating oil tends to be cheaper in the summer than during the heating season in winter, and wheat is typically more expensive before the harvest then thereafter. Silver: 1,000 ounce good delivery bars [PT] Precious metals are also subject to...
Change is in the Air - Precious Metals Supply and Demand
Fundamental Developments: Physical Gold Scarcity Increases Last week, the price of gold rose $25, and that of silver $0.60. Is it our turn? Is now when gold begins to go up? To outperform stocks? Something has changed in the supply and demand picture. Let’s look at that picture. But, first, here is the chart of the prices of gold and silver. Gold and silver priced in USD – the final week of the year was good to the precious metals. As an aside: January is the...
The Chairman's Curse - Precious Metals Supply and Demand
Something Odd is Happening The price of gold went up two bucks, while that of silver fell ten pennies. Something’s odd about how the metals have traded. Back when the market thought that the Fed was tightening, the prices of gold and silver were rising. Silver is now about a buck higher than its Oct-Nov trading range. A timeline of brief bubble trouble followed by bubble restoration via Hedgeye. It starts in early December (upper left corner) when Santa refuses to provide...
Austrian Theory and Investment
Realtime Charts
Gold in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
Gold in EUR:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_euoz_2.gif)
Silver in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
Platinum in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/platinum/t24_pt_en_usoz_2.gif)
USD - Index:
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
