Fed Week: Effects of FX

We think it’s a pretty safe bet that the Fed won’t raise rates this week when their decision is announced on Wednesday.  But it’s also clear to us that the Fed is definitely grinding its foot into the floorboard with printing to keep this ol’ pig of a market going up – for just a while longer.

As a result, we would look for the Fed, while not raising rates, per se, to perhaps indicate a “minor” change to their trading desk in order to move things gently toward the “detox” that will lead to problems as easy-money becomes less ease -ee.

Let’s look at some of the market drivers this week and you’ll see how FX (foreign exchange) is likely to be a big factor…

(Continues below)

 

Today, obviously, we don’t have too much economic news, but there is one hold-over item from last week to consider now that we are past the typical monthly minor manipulations that occur around options expiration (last Thursday for indices and Friday for stocks).

That is the Federal Reserve’s report called H.6 Money Stocks.

Unfortunately, while non-government agencies like the Fed talk a good gamer of Obamian Transparency, the fact is that the Fed Money Stocks report would be a lot more useful if it was published writ large with as much emphasis as it paid to the closing Dow.  Regrettably it is not.

What we note in last weeks data, however, is worth thinking about.


The date-wording of the top rate is important.  When they say
“TO June 2017” what they are really saying is “Here’s what we did in March, April, and May…”  Note that M1 was going up 6.7% (annualized).

The current information is in the lower part of this combined graphic to keep things simple:  Notice the date here is “ending July 10” and then look to the right where you’ll see M1 going up at a 9.3% rate (again, annualized).

If you’re a math genius, you will immediately see what we’re talking about:  the Fed has jumped all over the ‘money pedal’ and that likely accounts for MUCH of what we see as a market price increase.  Simply:  When more and more money is pumped into the system, a good portion of it will “leak” into the Stock Market and a rally will result.

The opposite will, of course, also be true.

When the Fed turns off the money supply, then we will see a decline, as well.  In our view of things, we are very close to a SIGNIFICANT MARKET TOP here.

While we have some colleagues who thing we are already there, we would direct subscribers to our Peoplenomics.com premium content to look at the 12th chart in Saturday’s ChartPack and compare the minimum forecast top (under Elliott fifth wave rules) and look at last weekend’s Peoplenomics Index number (20,260.57) and judge things for yourself.

Admittedly, our way of looking at things is different that most, but we continue to hold that an aggregate of multiple indices will always be more accurate assessing the social (and hence, investment) mood than singular indicators such as the Dow Jones Industrials which is a mere 30 stocks deep.

Consider Europe,  As Well…

In doing so, perhaps a mental exercises that I developed to help me quickly assess foreign exchange moves will help clarify why it SEEMS stock prices are down in Europe today.

Let’s begin with a box of “something fungible..”  It doesn’t matter whether it’s a box of wheat, oil, silver, gold, gunpowder, or Christmas tree lights.  Just a box of something that has intrinsic value.

Now we are going to “buy” that box with Euros.

Let’s say that Friday there were 1,000 Euros in all of Creation and the cost of the box was 1 Euro.  In other words, this box was worth 1/1000th of the available Euros.  (I know that would never happen in Reality, but this is a thought exercise and I’m making a point.)

Now fast-forward to Monday.  Only because of currency manipulations we find that there are only 996-Euros in all of Creation today.

What happened to the “price” of the box?

It went down.  That’s because we know that given static valuations, the price of the Box will be 1/1000th of all the Euros in the world.  But since there are fewer Euros, the price of that box will now be 0.996 Euro.

What has happened in Europe is the value of the Euro has gone up (it doesn’t take as many to “buy the box” today) and as a result, Euro demoninated “boxes” – which look a lot like stocks  – are down.

While is the underlying mechanistic explanation of what’s really going on behind the scenes when you read headlines like “High-flying euro pushes down European shares.”

Bet you feel better, and smarter, now!

Does it mean the US will go down today?  Yes.  That’s due to inter-market arbitrage and linked markets.

But while the US market may go down a bit, as we pointed out in the opening section, the US Fed (which will likely announce “No Change” on Wednesday) is printing for all they’re worth.  And making the money chasing “the box” become more plentiful, it means that higher prices are still ahead, more than likely.  But not without a short-term pullback to what in Peoplenomics’ world is a mid-channel trend line and what is in Elliott terms, a possible Wave 2 of V forming on the way to our August 21st region expected high.

We do note that other very savvy traders I know think we are in the final highs now, but in Aggregated Market Theory (which we invented), the large Elliott waves must be obeyed and it makes both time and price a bit more reliable than other methods.  But we won’t know for sure, obviously until we get to September.  So it’s a fun game to play: “Call the Market High.”

Balance of the Week

We will have a two-part regular post tomorrow as the Case-Shiller Housing data comes out.  The continuing low rates seem to be good for housing start data, but since we have been watching real estate prices  in a possible grand Elliott Wave 2 bounce from the 2009-2010 lows, and we see some softening in Western markets, it is possible that a topping process for Housing is starting to form at recent prices.

We shall see.

But there is some ancillary data and comments suggesting that cities where the minimum wage has been raised to $15 and such, may have priced “the help” too high and that may let “some of the air out” of the western tech- centric markets.  Again, we will await data.

Durable goods and International Trade data highlight Thursday and we finish the week with GDP…which should be instructive.

The market should be higher by now, but the abysmal mess in Washington as the Swamp Critters have done noting of substance (substance to us in healthcare reform and tax rewrites) we may see the Market Peak coming in at the low-end of expectations or even failing in its scheduled fifth wave up.

News to Blame It On

It’s always fun to see the headlines when markets are under-performing since people love nothing more than a good excuse.

In Europe see: French President Emmanuel Macron’s Popularity Is Plummeting.  Oddly, the French market is up today while the British market is down almost a full percent.

Baked Immigrants

We were appalled to learn of the deaths of illegal immigrants at the hands of human traffickers in San Antonio.  Nine dead as of this morning’s count.

But before you go getting political and hand-wringing over the need to “open our borders” consider this:  ENABLES SMUGGLERS’ Top Texas official blames sanctuary cities for deaths.  Liberal’s are going to applaud that view.

Today’s Homework Assignment:

Go read the story Robotic Process Automation Market to Reach $5.1 Billion by 2025, According to Tractica.

Then pencil out how many displaced humans are generated by $5.1 billion per year in robotic process automation.

Answers due by midnight, winning answers will show up in the Comment section.  (So will the losing answers, but then we really do walk the equality thing here…)

Dems “Kill the Golden Geese” Plans

Oh yeah:  Democraps are up to it again with plans to punish success in their lefty-leaning world as Democrats take aim at big companies in economic blueprint.

Oh yeah…WTFG:  Demonize success…the same weak-brained bullshit denying that there aren’t winners and losers in school is now being extended to corporations.

Who are these people and where are our Leaders who should be calling this out?

The only things that need to be killed to save America?  Prohibit lobbying in Washington – and make all legislative contacts with industry groups searchable online and in writing only.  Then maybe the Fools on the Hill will judge on merits, not political payoffs.

Oh, sure, no money from outside any political district, too…

Apply firmly and see Ure country evolve…

DON’T READ THE BILL

Even as LAST-GASP EFFORT? New health bill a mystery; Trump urges GOP action. we note that there isn’t enough time to give a thoughtful READ and ask INTELLIGENT QUESTIONS.

More important, WHO HID THE SAUSAGE WHERE? In terms of an unwarranted “bail-out” scam by the crooked insurance companies who have turned the FedGov into a captive payday-loan type collection outfit…  (but don’t get me started, lol)…

Third World Thinking:

Can’t Afford a Toilet? ‘Go and Sell Your Wife,’ an Indian Official Suggests…”

Monetizing the Weather

Think we’re kidding?  Here’s an inconvenient story that goes along with the narrative:  A Comic Strip Mirrors the Ravages of Climate Change.

If I could handle a pen and ink, I’d do the Daily Doofs strip.  Maybe teach people statistics in it…

Comments

Fed Week: Effects of FX — 15 Comments

  1. Whoah, Jeff, big guy, big little hot head, see how do you like them pears, baby? jonny boy is a paid troll, can’t you see the obvious? You don’t know that there is a LOT of money in trolling, many corporations AND a few countries hire legions of trolls to do their bidding, even our own country. Time to get on the troll wagon.

    Come to think of it, who is paying you to insult George? Or did you think of your George bashing all by your little lonesome?

  2. George, last week you referenced an article about Sessions resurrecting the civil forfeiture laws, now I’m reading that Sessions is tying violence to marijuana and will be targeting grow operations even in states where its legal. Its to be rolled out July 27. Intetesting timing on the forfeiture news last week. I wonder how states that are reaping huge tax revs from legal mj are going to act?

  3. So, here is another article on the UN Replacement Population schema, which was planned 17 years ago. You know all they had to do is encourage pregnancy in the young couples in the nations that they say are not reproducing enough. You know come up with “A FAMILY PLAN,” like “The Marshall Plan.”

    Can you understand the dysfunction in the elites brains? Abortion in America good; babies in Africa, bad. Illegals and refugee reproduction in America, good; American citizens reproduction, bad. Gay marriage good. The world is overpopulated, bad; we hear this over and over and all the scaremongering, yet, here we are 17 years later and massive amounts of people who were born in AFRICA and the MIddle East, I might add, not a robot, not a clone, being used as a population destruction strategy for Europe and the USA. So, all that over- population production was REALLY GOOD, Good for
    a culture destroyer of Europe and a seeded future divider of the USA…. Crazy, just plain crazy, and where is one population replacement country getting a chance to stick up for themselves? They are being brainwashed to allow their own destruction.

    Yes, jon, I got this from infowars.com – https://needtoknow.news/2017/07/united-nations-planned-current-massive-migration-17-years-ago/

    “Reporter, David Knight, shows that a 17-year old UN Agenda 21 document planned ‘replacement migration’ as a solution to declining and aging populations. The UN recommended massive immigration for eight low-fertility countries including France, Germany, Italy, Japan, Republic of Korea, the Russian Federation, the UK, and the US. The document says that, in order to keep the population constant in these countries, 6.4 million migrants would be needed by 2050. Wars have been used as the excuse for implementing this plan.”

    So, now we find out further why our borders have been wide open. 2017 minus 17 years, gets us right around 2000, nice planning right before 911 and the gateway to the illegal wars in the Middle East. Nice timing and planning, isn’t it?
    How many years ahead are the elites and our own military industrial complex from what the citizens wildest dreams and nightmares are not even made of yet?

  4. George –

    I don’t go to sites that force you to give up for subscription or disable your adblocker. Last time I disabled, most sites were hitting 30 requests – many are well over 50. And most are trying to pop a cookie tracker on you too.

    The Atlantic is such a site.

  5. “Robotic Process Automation Market” includes most anything using a numerical controller or PLC logic that physically moves a thing. That is a very broad category. Actual discrete robots are a tiny fraction of that.

    If you look at the global market for NC machines, it has been growing quickly. Those countries where they were using cheap labor and manual machining are dying, being replaced by NC equipment because it is much more efficient. Technically, this huge market can be included in the RPA thingy, and nowhere in the article is it defined so as to exclude it.

    Technically, they are correct. But the headlines are leading people to think of humanoid or arm-wielding robots with hands replacing people. I’m not so sure that is the case, and the jury is still out on how small a company you can be, and still afford these robots; or have them be more economical than a person, who can perform multiple tasks.

    ‘ware the hype, folks…

  6. A person should be only allowed one six year term for any public office. You pick the office and then you are done with public office. So if you pick school board. You can never run for another public office. That will get rid of term limit problem and people in office getting campaign contributions.

  7. Fed does not print money.

    Was the time they purchased

    it from the US Treasury at cost

    or is that no longer taking place?

    • They purchase some cash, but they also have the ability to make stuff up – as in all those juicy cmos they’re holding.

  8. Loss of 245,200 jobs per year at 5.1 billion divided by $10 per hour.
    Less as the robots take higher paid jobs.

  9. And while everyone is twitting and blogging about impeachment and Russian collusion and Spicer leaving, while repugnicans and democraps endlessly hurl friendly dollops of harmless excrement at one another, here is what our senators are actually doing:

    https://www.congress.gov/bill/115th-congress/senate-bill/722

    And for the record here, Iran has met all conditions for the nuclear agreement, and the President conceded that last week. The CIA got its pet jihadis stuffed into a box by Russia and Syria and Iran, and then Turkey outed the locations of our illegal military bases within Syria. In the process, Iran battle tested a conventional missile, and it worked flawlessly, hence some of the items in this insane bill.

    So now we decide to completely cut off Iran from the Western world, as we did NK. How has that worked for us? I guess the next step is for us to steal frozen Iranian assets, just like we did with Cuba?

    I don’t know how the echo chamber gets shattered, but it will – either by Americans or everybody else in the world.

    • Urbansurvival is about surviving the Urban environment.

      Part of survival is remaining free and autonomous.

      True believers of any stripe become cannon fodder for causes. See history books.

      You and the bvashers are more upset about Trump winning than Be3rnie being screwed.

      Ergo, it follows you really have no clue – and why Debbie and hill aren’t in jail – a provable crime – instead of trying to make something out of nothing and sending Mueller fishing says to me you are in this for entertainment and control.

      We are going to reduce the political load and stick more with economics and futuring. This is NOT – nor will it become – a Trump-bashing site. We didn’t bash Obama…

    • No worries Jon, I have your rant covered for you:
      Blah-blah-blah Trump bad.
      Something-something-something Trump evil.
      Yada-yada-yada Trump is a danger to the country.
      I know a guy in Atlanta.
      ;)

    • You are so full of crap George, prending you are not biased, and not an Obama-basher. In this very article you even use “Democraps”, and you’ve frequently used similar types of handles for Obama in the past. You’ll go to great lengths to keep a Clinton body count narrative going (Hal Turner? Really? What a piece of work that guy is), and speculate ad nauseam about pizzagate (nice vilification, btw); and Bernie getting screwed? Last time I checked he lost the primaries by millions of votes… and about that tired old right wing wet dream that HRC should be in jail… despite optics of a sitting president prosecuting his political rival (something that seems like you don’t care about as long as it’s an R going after a D), what for this time? Emails (mishandling classified documents)? If so, suggest to spend a few mins reviewing the past 6 or 8 prosecutions from the last 20 or 30 years to understand the standard… but you’re so frothed up on the issue I doubt any of that reality to have an impact.

      Mueller? Fishing? Ha! Guess you forgot he’s a Republican. Just like the Dep Dist Attny who Trump now basically accuses of being a D. Mueller has got a long way to go to match up with Starr in time and scope… I suppose the shifting narrative from team Trump on their Russia contacts & collision don’t bother you one bit. Here we are, months in and we’ve gone from “no contacts withRussians” to, “we didn’t collude – they didn’t have anything to give us”. Oh yeah, and “it’s okay, everybody does it – it’s just politics”.

      Too bad about banning Jon, but I’m not surprised. He has been having his way with you for a while. Maybe he is a paid troll. Maybe he has a whole team behind him. I doubt it – I suspect there is not much money in that kind of work, and his responses were too detailed, etc (meaning in my mind he would be too employable elsewhere). Plus, maybe I’m missing it, but Ure sure not important (or popular) enough to bother.

  10. Can’t be fixed, because it’s US, and US don’t want to change ;-)