Can the Fed Talk-Up a Bummer Economy?

imageThe best news of the week, if you’re a humanitarian, is that the price of copper has just busted two-bucks.  The futures are saying this morning that the demand for copper has continued to decline.

I mentioned long ago that copper prices are one of the “pet proxies” around here for the odds of war.

The reason is simple:  Copper is the main ingredient in Brass (copper and zinc with sometimes 2% lead to improve machining characteristics) and brass is used to make shell casings.  Unless, of course, you happen to be firing polymer-coasted steel casings from  the USSR because they’re cheap for your AK-47 and SKS collection, but that’s a side point.

So with the price of copper down  under $2-bucks, we are able (at least for this morning) ruling out a nuclear war firing off this week in the Middle East.

It also tells us that later this month we should look for softening in Housing Starts because another big use of copper is housing wiring.

See how useful the study of markets can be?

OK, let’s move on to some of the more “doomly” reports making the rounds over the weekend.

Here’s a story, for example, about how there were “no ships” moving in the Atlantic because trade is collapsing.

True – but only in part.

In fact, if you zoom-in on the map over here, you’ll find that there is plenty of coast-wise traffic.  And let’s think about what’s going on:

If you were a ship owner, would you pay crews to work over New Years?  I would try to scale down operations, that’s for sure.  And since people didn’t come back to work on the first, many came in on the fourth.  And when a ship has been shut down, there’s loading time for cargo, and you don’t just put the hammer down and go like an airplane.

What about the collapse in the Baltic Dry Index?”

Well, what about it?

I mean sure, it’s at 429 and that’s pretty damn low, but look at the biggest cost in ocean shipping:  fuel.  And then go back to the commodities this morning where you will find oil is making at least a double-low and could drop into the 20’s.

When energy is dirt cheap and when cargo is slowing, there’s no end of ship operators who would rather operate at break-even and keep in motion, or even at a small operating loss in order to avoid bigger losses…

I will tell you what is concerning:  That is the Harpex Index *(Harper-Petersen container shipping index) which is at 363 when I looked this morning and which bottomed in 2009 down at 275.

But does the world end today? 

Not a chance.  (You can safely go back to bed, read a book, or screw around because you won’t miss anything…)

For one, we have both the Dallas Fed and Atlanta Few presidents out on the rubber chicken circuit.  They can be expected to say things are good and only getting better.

What we don’t know is whether anyone will pay any attention to them, but for now it’s too early for them to talk rates – so I would expect a word like “robust” “firming” or maybe “solid” to dominate headlines.

Later in the week, the Fed will launch additional talking heads to jaw-bone up the market.

Not that they need to, however.  Let’s be practical here, for a moment.  There are plenty of “End of Worlders” who will buy put options (and no did last Tuesday) about when our Trading Model went to the short or cash side.

But think about this:  There is no trading next Monday and we have an options expiration this week.  Do you really think the owners of stocks who pad their returns with a dose of put-option writing really want to have their stock called away from them?

Why, hell no, they don’t.  But since the market is down from the last third Friday in December when the S&P was at 2,005 and change, do you really think the put option-writers want to pay off on 1925 puts?  Or 1950’s?  Or even 1975’s? 

Of course not.

So what we have this week is oil setting up to touch the twenties.  Fed-Heads saying how marvelous this is, and a bunch of option-writing capitalists not wanting to lose their money.

In those charts I showed you last week, we can see what should happen next according to our work (rally) but we shall see what we shall see.

This morning we notice that Shanghai was down another 5% and then some last night…but Europe is starting a small rally and it looks like that will carry over into the US.  One of the great really short-term trades today might be to buy the oversold Shanghai with the happy-talk around the world is setting up for a huge recovery.

What people tend to forget is that a year and a half ago, the Shanghai index was a third lower than it is now.  So does that mean anything to us?

Sure:  China is having a slow-down.  But we can also see by looking at the Shanghai stock market, that they have just been through one hell of a stock bubble bursting and reality could be 30-40% lower from here, still.

You’ll have to pardon me if I don’t get excited about the world ending just yet:  Shanghai is going back to 18-month-ago prices, the Fed-heads will speak (*you may not even see the strings) and the put-option crowd really doesn’t want the 1,975 puts “in the money.”

Can I be wrong?  Sure.  But how often is Big Money wrong?  So this will be a fine dance to watch this week.

Passings:  David Bowie (corrected – coffee sinks in)

David Bowie Dies at 69; He Transcended Music, Art and Fashion

18-month battle with cancer.

Those Changes are coming for all of us…and I’m not sure which hurts more:  The loss of his great music or the realization of ch-ch-ch-changes come for us all.

“…and these children that you spit upon,

As they try to change their worlds…

Are immune to your consultations,

They’re quite aware what they’re going through…”

Ch-ch-ch-changes….

“I said that time may change me, but I can’t trace time…”

But we keep working on it…

A Serious Question Being Asked…

A quote this morning from an article in The Week gets to a very poignant point we’ve been riding herd on:

Does Germany’s leadership class secretly want to destroy the European Union? I’m beginning to wonder.”

Not only is is the Michael Brendan Dougherty article worth a read, while we wait for someone in the MSM to ask the follow-on question here for Americans:  Does the Obama posse secretly want to destroy America? 

Obama the Idiot (II)

Maybe someone besides me should be asking “WTF are we ending the Iran sanctions for?”

OK, I mean besides a dim-witted president, screwing the Saudis, and so forth…Oh, and should we mention the Iranians aren’t follow the “deal” PLUS they still hold four American’s hostage?

Quick.  Someone send Barrack Hussein a copy of the “Art of the Deal.

And we’re bringing in all these military aged Muslim men to America on cargo planes for what reason exactly? 

And that brings us to this from our oak-leafer and military affairs expert “warhammer

Good Monday to you and Ures, George.

It seems the Saudi’s can play a deft, real-life game of Stratego, throwing up a deliberate domestic smoke screen with the execution of Shiite cleric Nimr al-Nimr and 46 others to hide the kingdom’s mounting economic woes. Iran reacts as expected, becoming the kingdom’s new designated regional nemesis (as Israel breathes a collective sigh of relief).

<http://www.defensenews.com/story/defense/international/mideast-africa/2016/01/10/saudi-provoked-iran-standoff/78359480/>

If any of Ure readers are of the opinion that democracies, particular the U.S. version, are immune to such sleight of hand, they’d be wise to withhold those opinions for the foreseeable future. As that old saying goes, “desperate times call for desperate measures.” Economic times are becoming considerably more desperate. The Saudis have chosen Iran as their boogey monster. Putin hand-picked America. China’s shadow boxing adversary is not yet fully apparent, but the U.S. led ANZUS alliance (Australia, New Zealand and the U.S.), with Japan and S. Korea attached via umbilical treaties, is shaping up as a prime candidate.

Who will American politicians and economic leaders designate as their chief security rival? The current administration, led by Nobel Peace Prize winning Barack Obama, is unlikely to join the finger-pointing fray until the election is in the books this coming November. But the dominoes are beginning to fall into place. One would be advised to use a pencil with an eraser when trying to keep score.

Cheers,

As we all recall from “Iron Mountain”  the whole point of war is either a) territorial or b) economic.  And since we don’t have a line to move anywhere outside of The Great Nation, I guess that does sort of distill wars down their economic essences.

Meanwhile, Back at the Ranch

The spectacle continues.

Comments

Can the Fed Talk-Up a Bummer Economy? — 19 Comments

  1. I think the Iran deal is all about strategy, befriend them, somewhat, then do a double cross in 10 or 20 years, worked w/Saddam and Ghaddafi.

    IF the countries of the EU and the USA really cared about its CITIZEN population expanding, it would limit abortions, encourage FAMILIES, and pay citizens to have babies, buy homes, etc. We do not do that, we have made it very hard for citizens to work and provide for their families, form families, buy homes, etc.

    Also, hollyweird would be tasked in impressing upon the culture that stable nations have stable families, that war is not good, that illicit sex, non-stop violence, consuming illegal drugs are not morals/ideals, and that independence and being the best you can be is absolutely critical to a free country. But we know that hollyweird is corrupted and the filth they put out is now considered OUR culture.

    As far as immigration. I do not believe that the EU and America who have opened up their borders and floodgates to refugees, illegals, and anyone who can make it there, is due to economic growth. All of this immigration is not positive economic growth, it is positive economic debt, meaning higher taxes on the countries workers, and more debt on the countries books. It could take 3 generations to make them net producers…and many will never assimilate, or work or produce anything.

    We have already seen that here, as they come for the freebies, and then reproduce, and those kids get the freebies, too, because after all they are minorities and thus eligible to all freebies.

    I also do not believe they are here so as to contribute by paying taxes for the pensioners in years to come. We have already had almost 25 years of them working under the table, and the corporations breaking laws to hire them so no, no new tax base is forthcoming from this onslaught of humanity, even as someone else, pointed out, even if they make $20k a year, with their high childhood reproduction rate, and sharing of SSN’s, they will always take more than they give (they are already draining medicare, food stamps, housing, healthcare, etc.) ….so nope, massive immigration for new taxes doesn’t sit well with me either.

    Thirdly, the only reason left is massive change/transformation of the host societies dynamics. This is the only reason that makes sense, and it is the ONE reason protected BY the politicians, propaganda press, etc., in the article you link to, and by all what is being set up in this country, the former USA.

    A) First you do not know HOW many are coming NOR from WHERE;
    B) YOU do not know WHERE they are being settled to and at what COST to the taxpayer and country;
    C) There is no study to demonstrate the NEGATIVE impact on all the towns, cities, and states where the absorption is going on full-steam ahead due to Federal laws including the ones that all kids deserve an education in the USA regardless of citizenship;
    D) Defacto Amnesty; deportations slowed to a crawl, massive border crossers with no end in sight;
    E) Other Federal programs, not publicized, to make sure all are settled all over the country into every single majority white town, city, state to make sure that white people will be a minority in this country in X amount of years.
    F) Chaos, chaos is coming, our laws will tie up citizens and allow the ‘minorities’ to run rough shod over the citizens, it is already happening in all of the sanctuary cities, now we are adding in the ‘muslim’ criminal element.
    G) These comments do not address the legal immigration, H1B visas, TPP, other laws being passed to continue to carve out America, and take our good paying jobs away, while massively swelling the strains on our society.

    That must answer the question why?

    WHY transform the white countries, Europe and the USA, into a multicultural, multi-racial, multi-ethinic mass of humanity?

    What is the true purpose behind these massive complimentary immigration programs in the EU and the USA?

    Back in 1984, Mary Summer Rain was told of a day in the USA, when whites would be a minority along with all the other minorities, when I first read that 22 years ago, I could not fathom how that could be. Now, it is so easy to see how it has unfolded and will come to pass. Almost with glee, the propaganda press updates us on how soon we will reach that mark as in many towns/cities/states, we already have in the kindergarten classes.

    So, yes, Obama promised to transform America, it is happening right on cue, to an already planned agenda that has taken decades to bring to fruition, somewhere the puppet masters are slapping each other with congratulatory licks.

    • Whoa where to even start?

      How about paragraph 2
      ‘we have made it very hard for citizens to work and provide for their families, form families, buy homes, etc’

      YEP. ‘WE’ have. Everyone wants MORE, BIGGER, BETTER; money, houses, cars, gadgets. In fact we are willing to abandon our children and old people to being raised and cared for by others in order that two adults in a nuclear family can both work outside the home.

      I don’t know how to change things to a simpler way of life where people are HAPPY with less crap; raising their own kids and housing their elders until death. A world with no streaming movies-music-entertainment distracting them and costing a crap load of money per month to some headless, nameless, heartless corporation who doesn’t give a RATS about you me or anyone else. I don’t know how to get people over addictions to bad food and buying new gadgets that are sapping their brain power, making them fat and sick and killing any last shred of their independence at the same time. But I know blaming the latest round of immigrants probably isn’t the answer.

      As to that; my ancestors immigrated here in the 1700’s and either directly or indirectly helped slaughter and displace the natives to get their slice of the pie and they didn’t think it was wrong they just thought it was OPPORTUNITY.

      Same deal now. History repeats itself. Adapt or Die. Get your own life in order and then start casting stones.

      And yes, the puppet masters ARE slapping each other on the back. Why? Because the mass of Citizens (now known as Consumers) LOVE what is being done to them.

  2. Wow, you really got whacked with a golf club over the snafu on dead musicians.

    LOL! *shrug* It happens.
    (The error of our ways… not getting smacked with golf clubs…
    That was deliberate!)

  3. “Passings: Elton John” WTF?! It was BOWIE!
    You damned near gave me a heart attack…

  4. As tribute to rock superstar Mr. Bowie, heres one of his best music video, “Lets Dance” (theres even a guy who looks like goerge in there shakin it! lol)

    https://www.youtube.com/watch?v=B2HWuR2mq5M

    btw-imagine having to change your name to become a “public persoality” aka a rock star? he was actually born davy jones but because of the fame of The Monkees star with the same name, he was not allowed to marquis his real name as such.

  5. UM . . . David Bowie isn’t Elton John, George . . . and while I can’t say that I was a fan of his music (I tend toward classical and folk) – I did really enjoy the Henson movie he was in . . .

    Very much an ‘Original’. RIP, sir.

  6. Geeze George
    I hope your fact checking on markets is better than on dead music super stars.

  7. …..you meant David Bowie died , right? l believe Sir Elton is still kicking

  8. Check Ure caffeine levels; David Bowie lost the fight with cancer. Don’t let Ure candle in the wind burn the funny stuff this early :)