Involuntary Early Retirement of a Middle Eastern General
The procession of news through the week – namely that chronicling the aftermath of the targeted drone strike and killing of Iranian General Qasem Soleimani – advanced with an agreeable flow. The reports at the start of the week were that Orange Man Bad had spun up a Middle Eastern mob of whirling dervishes beyond recall. World War III was imminent.
The recently expired general, when he was still among the quick – and seemingly in a good mood. [PT]
Photo via harpy.ir
Fiat Currency Rankings – From Bad to Worse
Today, as we step into the New Year, we reach down to turn over a new leaf. We want to make a fresh start. We want to leave 2019’s bugaboos behind. But, alas, lying beneath the fallen leaf, like rotting food waste, is last year’s fake money. We can’t escape it. But we refuse to believe in its permanence.
This is what “monetary stability in the Fed-administered fiat money regime looks like: in the year the Fed was established it took $3.80 to buy what $100 buy today – provided the government’s CPI data are actually a valid gauge of the dollar’s purchasing power. [PT]
World Class Entertainer in the Cross-Hairs
Christmas is no time to be given the old heave-ho. This is a time of celebration, redemption, and excess libation. A time to shop ‘til you drop; the economy depends on it. Don’t get us wrong. There really is no best time to receive the dreaded pink slip. But Christmas is the absolute worst. Has this ever happened to you?
The verdict: Orange man bad! [PT]
Addicted to Spending
There are many falsehoods being perpetuated these days when it comes to money, financial markets, and the economy. But when you cut the chaff, three related facts remain: Uncle Sam needs your money. He needs a lot of your money. And he needs it bad!
The inescapable logic of tax & spend: empty vault… empty pockets… gimme more! [PT]
Panem et Circenses
The transfer of wealth from workers and savers to governments and big banks continued this week with Swiss-like precision. The process is both mechanical and subtle. Here in the USA the automated elegance of this ongoing operation receives little attention.
Give them bread and circuses and they will never revolt… so said Juvenal, reportedly [PT]
The Bubble Machine
The launch angle of the U.S. stock market over the past decade has been steep and relentless. The S&P 500, after bottoming out at 666 on March 6, 2009, has rocketed up over 370 percent. New highs continue to be reached practically every day.
S&P 500 weekly, since the low of 2009. A party of roaring 20s proportion in terms of duration, extent and end point valuations (a post-war inflation episode triggered a devastating bear market from November 1919 to August 1921, in which the DJIA fell from ~120 to ~64 points. It then rose until early September 1929, topping at ~380 points. By the time it peaked, Wall Street had created all sorts of new-fangled instruments such as the then highly popular investment trusts, everybody was speculating on margin and the equivalent of today’s FANGs such as RCA (“Radio”) traded at previously unheard of multiples – as did the rest of the market. Numerous sharp corrections along the way had eradicated the perception of risk in investors’ minds. We have discussed the parallels between the two eras before, and in the meantime another parallel can be discerned in the charts. In late 1928 the market suffered a sharp sell-off in the normally seasonally strong period, very similar to what occurred in 2018. It was the biggest correction of the entire bull market, but the market swiftly rallied again and by February 1929 it made new highs. It then proceeded to build a chart formation known as “three peaks and a domed house”. The three peaks of 2019 are not a perfect replica of the basic schematic of the formation, but the timing is in line with it (they are supposed to be established within 6-10 months). George Lindsay’s original schematic is very detailed, it is therefore unlikely that the pattern will repeat perfectly every time. The so-called domed house can take up to 7 months to form, but we would focus on the shape rather than the precise duration. Whether the formation does indeed form remains to be seen. It is definitely something worth keeping an eye on. [PT]
Monetary Lunacy, Nipponese Version
Earlier this month, Bank of Japan (BOJ) Governor Haruhiko Kuroda commented that Japan’s central planners are considering a 50-year government bond issue as a long-term means of putting a floor under super-long interest rates. How this floor would be placed is extremely suspect; we will have more on this in a moment. But first, the dual benefits – according to Japan’s central planners…
Kuroda-san: the man with a plan, or rather, a plethora of plans (過剰な計画). [PT]
Prettifying Toxic Waste
The promise of something for nothing is always an enticing proposition. Who doesn’t want roses without thorns, rainbows without rain, and salvation without repentance? So, too, who doesn’t want a few extra basis points of yield above the 10-year Treasury note at no added risk?
The yield-chasing hamster wheel… [PT]
Beta-driven Fantasy
The decade long bull market run, aside from making everyone ridiculously rich, has opened up a new array of competencies. The proliferation of ETFs, for instance, has precipitated a heyday for the ETF Analyst. So, too, blind faith in data has prompted the rise of Psychic Quants… who see the future by modeling the past.
Gandalf, quant of Middle-Earth, dispensing sage advice. [PT]
The Sky is Falling
“We believe monetary policy is in a good place.”
– Federal Reserve Chairman Jerome Powell, October 30, 2019.
The man from the good place. “As I was going up the stair, I met a man who wasn’t there. He wasn’t there again today, Oh how I wish he’d go away!” [PT]
Wildfire Surge
The hillsides are always brown in the land of fruits and nuts come autumn. After baking away all summer long in the hot sun, the dense sage and chaparral covering the coastal hillsides and canyons are dry and toasty. Though, before conditions get better, they must first get worse.
California is ablaze again… as every year. [PT]
Photo credit: Noah Berger / AP
Planning on Your Behalf
Watch out! At this very moment, professional economists of all stripes are making plans on your behalf. They are dreaming and scheming new and innovative ways to spend your money long before you have earned it.
Strange and strangely persistent beliefs… [PT]