Crisis Mechanics: How Moving Pieces Fit

imageThe new year started with a near 7% drop in the Shanghai stock market, so thanks for that, China.

The tumblers in the great lock of history are falling into place quickly.  With the Dow set to open down about 300-points and the Eurostoxx 50 was already down 4%.  (In fairness it bounced so as to only be down 3.5% a few minutes later…)

Just to keep this in perspective, 4% of last week’s closing Dow would be almost 700 points to the downside, so even if we drop, oh, 350-points today, there’s not often a one-day drop of this magnitude without follow-on selling into the next day.

How this all works out – and how important it is – depends on what you do for a living.

Since much of UrbanSurvival and our subscription www.peoplenomics.com is future-oriented (so you will be rational when the irrational happens), we see this as a precursor to violent conflict to the two factions of Islam.

It is a precursor because the Sunni Saudis have broken relations with Shiite Iran and it doesn’t stop there:  Bahrain this morning (also Sunni) threw out relations with Iran.

If you are looking at things from the strategic Saudi angle, this makes a lot of sense. Because the price of oil is so low (and as the late Matthew Simmons pointed out in his landmark book Twilight in the Desert years back) the Saudis are getting killed to the tune of perhaps a billion dollars a day by low oil prices.

Water-cut is their problem – that how much water comes up with how much oil.

Since the Kingdom is run on a kind of royal welfare system that money shortage from cheap oil and water-cut is a major problem.

We see in the context of great books (like Report from Iron Mountain)_ whether useful fiction or a leaked and changed around playbook, that the Saudis have a serious issue in keeping their civilian population under control.

That – sadly – is one of the traditional uses of warfare:  To keep civilian populations under the thumb of government. 

In the current case, a “good war” with an “evil empire” will be quite saleable within deeply polarized nations of Islam.    It will not only be a war (really caused by low oil prices) but a war during which control of their civilian population will be key.  As we told you long ago, never forget the Saudis were buying at least one atomic bomb from Pakistan.

We are also looking at this as a stock trader this morning.  Since 2015 was a “”whole freaking year” of no real advance in prices, we should be seeing in here a  major decline I have been warning Peoplenomics readers about for weeks.

imageIn fact, here’s a chart with my green target area for this week’s close circled, as well as a yellow (worst case) level.

As we’re currently expecting things to roll, the decline this week (and perhaps next, but less likely) will be brief and hard, hitting one or both of our targets.  I suspect both, but I’ll update the chart tomorrow to see which target is hit, although if money (and hanging onto what you have) matters, you’d already be reading Peoplenomics so this stuff wouldn’t come as  Monday morning shocker.

But from there, we should see a major turn of fortunes as the commercials load up at bargain prices over the next couple of weeks and then run things up a bit as they did in the late fall of 2008.

There remains a good chance, though that optimism  will persist through the presidential follies, although if they don’t, then Depression II could be along in just a few minutes time.

Our best guess, however, is that the current escalation path toward war will be shortened because neither the U.S. nor Russians (who are backing the Shiites by backing Assad and selling nuke plants to Iran) will stand for it.

In many ways, the U.S. is acting as (language alert!) the Saudi’s bitch…and when the Russians started actually attacking ISIS they set a real crapstorm in motion. 

Which brings us to this morning.

We will start the New Year with a likely decline of around 250 on the Dow today.  Maybe another hundred (or more) tomorrow.  Then cooler heads will prevail, as soon as commodity and stock traders can take profitable positions….

In the meantime, ADP jobs data Wednesday, the Challenger job cut report Thursday, and then the real-deal “Officious” numbers on Friday morning. 

Seems to me this will all drive the Fed to distraction:  They are trying to bump rates up, but with a dump in the market this morning, it’s less pressure on bond yields to rise, which means holding bonds is still a good strategy at least until the stock market bubble begins to form later this year.

But it won’t be this morning, although if you like “bottom-fishing” and buying low,. selling high, 2016 is likely to be just your kind of year.

If you want to see the future, look at the interests of the money players.  Either that or keep drinking the Kool-Aid and believing the headlines that Someone named Manning did something of importance this weekend.

The rearview media always get it wrong.

One last point:  Don’t forget that things can still get out of control.  The Iranians could be goaded into an attack on the Saudis or their key allies, Yemen could be in play, or the Saudis could “drop a big one” on Tehran.

From there, we would be on the dangerous slide into global thermonuclear war.

We note that while Vlad Putin is backing the Shi’ites that both Indonesia and Kenya are overwhelmingly Sunni and that may influence Putin’s North American opposite.

Being ever the optimist, though…I figure the side with the most money will win in the end.

Our prescription for Wall Street today may be found here.

Yeah…to stop the bleeding.

Stand-Off

FBI Monitoring Armed Standoff in Oregon National Wildlife Refuge.

One has to wonder if the PR lessons of Waco will be remembered.

Promoting the Gun Grab

Yep, this CNN email popped in promoting care to guess what?

President Barack Obama will join Anderson Cooper on CNN at 8 p.m. ET Thursday for a live town hall on gun control called “Guns in America.”

The full-court press is on to turn the Right into a privilege.

Meantime, it is now four days into Open Carry here in Texas and no sign of any additional dead people yet.  Gosh, ‘magine that? 

Waiting for a Quake?

We’ve been waiting for something to happen in here – see Patrick Geryl’s heads-up to us recently.  Now, approximately on schedule:  Quake strikes northeast India, Bangladesh; 11 dead, nearly 200 hurt.

Take it as a 6.8 (*early data) or 6.7 (later) but about on schedule.

Comments

Crisis Mechanics: How Moving Pieces Fit — 8 Comments

  1. The Russian SS-400’s in Syria preclude the Saudi’s dropping one on Iran.

    You think those 4 guys disappeared into a virtual world! That’s exactly what you do when you focus on the markets, which is nothing but a virtual reality. The markets don’t even involve paper any more, much less any market fundamentals, nor do government statistics. That world is no more real than a video game.

    When you go virtual, it is like making a road trip by viewing the countryside on a screen connected to a camera on top of the car.

  2. Hi; Was talking to Zeke, he’s about our ages. Seems that when he was young he purchased several firearms of various types. Now at that time registration was not needed. Moving forward to today. There were many Zeke type folks who did the same, so we can imagine a large amount of firearms of the unregistered type are out and about. Zeke purchased a British 303 from American Auto for under $10.00 while barely in his teens. No questions asked, paid cash, got a register receipt. Had to take it home on the bus, as he was under the legal driving age. Stuff has changed, hasn’t it ?

  3. also seems like that there is a lot more to the ranch standoff than first appears. apparently near the old bundy ranch and some news that there are gold, oil, diamonds and minerals/uranium very close by. seems blm needs to get ‘control of it’ at $ome point.

    • Ah, the ‘ranch standoff’ is in Oregon and the Bundy ranch is a good distance away in another state . . . they need to go back home!

  4. Ties back to GeoUre’s comment on his vacation and the 4 dudes on cell phones at lunch and…narry a word betwixt nor between. This spans all income, social and educational levels.

    Yeah, I know it is the Nat Geo. But still…

    Jan 2016 new issue on Parks. Just talk to a WW2 vet era Cherokee with a purple heart or two and a college degree. Some Seagram’s along, will work wonders for ya! Talk about survival skills!

    Anyway…

    YellowStoneNatPark: most people do not get further than 100 yds from their vehicle. Sweet Jesus! It is Yellowstone!

    HenriDavidThoreauMantra: Only 10% +/- of Merikan teenagers get outside each week.

    Survey Says: 70% of USA moms got outside as kids. Their kids? 31%. We Are Toast.

    I retired from teaching college full time. I gave up about 2005 in asking my students to write essay exams. They could not do it by and large.

    Politicians are not stupid. Merikans are! I used to wonder as a kid in college how in the hell could we get from Greece and Rome to…the Dark Ages. [Now I am chock full of Viking and Celtic DNA, so no snide comments. Folks, we sacked Paris, Easter weekend 846. By hand. No mod tech there. Neener, neener.]

    WTFH! In just a few decades we have “lost” it. I once talked to a ROTC instructor, family big politicians in our state. And he said…one thing that concerned him was that in his parent’s gen, everyone had a garden and chickens. Also said, shades of Merl Haggard – that in general the young males and females of today could not “survive” in a melt down world. They have no real skills. Downloading NetFlux is cool, till the lights go out.

    Get ready to Rokn’Roll

  5. Just a quick note George regarding your QuikClot® hemostatic devices.If you don’t happen to have these items available and you can’t stop bleeding, if you have sugar handy, just stuff the wound with it. Bleeding will stop almost instantly, not that this is medical advice.