For months we have been waiting to see how the suspected all-time-high in markets will work out for the final third of August. Now, things are slowly resolving into focus.
The stock market continues to fight something of a losing battle on an aggregated basis (which as you know is all we really care about) and was turned back at the 9-day moving average Thursday.
But the REAL news Thursday was the weekly Federal Reserve H.6 Money Stocks report…
So how big is this story? REALLY DAMN BIG.
Well, it sure as hell is bigger than the Trump witch hunt, the democrats and their government in exile, and the nonsense about Uber’s future. These are footnotes of history especially for the man reprising Hoover’s run from Inauguration (March 4, 1929) to crash.
I would put the Fed story right up with the coming (decades-long) rollover of humans out of the “work force” as robots are coming for virtually all of those jobs. Eventually, you will be replaced by an expert system…but I digress.
There are two “windows” that the Fed publishes weekly in the H.6 report.
The first one is more historical in nature. This report says “TO May.” But in the slippery (yet refreshingly precise) lingo of the Money Masters, what this means is “Here’s how fast we were really printing money…”
You may need a nitro pill as you look at the Table 1 summary because is screams that the ONLY reason there is even a stock market today is that the Fed was goosing money supplies at a 16% annualized rate TO MAY – the February, March, April timeframe:
Over the past 20 years, we have held to the view that when we got to this part of the Economic Long Wave (those 48-90 year cycles in economic matters) we would see the Fed trying to drive by simultaneously jamming their foot on the (money creation) gas while at the same time stomping on the (rate increasing) brakes. Under modern monetary theory, MMT, what could go wrong?
Except, of course, when you do this with your car, you are either going to b low out the transmission or smoke the brakes at some point…but it might take a while.
So now onto the second part of the Fed slider…
This demonstrated the Fed still has an 11.7% annualized “print rate.”
In a perfect (remember the word “transparent” lol?) world, the Fed would just come out and say: “We are going to print like hell, try to avoid sliding into negative rates and get consumers spending again… and then, after a bunch of stimulus, we will switch over into selling off the MBS trash we have on the books and this way will have room on the balance sheet to intervene again when the market tanks this fall.”
But, of course, they can’t say that because that would out the Fed as a private bankster cabal that stole the Congressional duty to control the creation of “money” in this country and they manipulate it for the very rich who understand their gig.
Most people don’t. Even professionals are stymied.
People at the C-level of investment companies write to us questioning the Fed Statement gibberish this week. (“Whatthehelldoesthatmean?) No, not kidding – here’s an example:
“If the Fed raises rates it’s hawkish
If the Fed leaves rates unchanged it is presently neutral
If the Fed lowers rates it’s dovish
You can’t raise rates and make a dovish statement, nor can you lower rates and make a hawkish statement – it is just talk
The Fed has talked about normalizing the balance sheet – unless and until they do – it doesn’t mean chit. They will not sell securities………. It’s a fairy tale
OF COURSE they can’t sell the MBS crap. If they do, it would compete with bonds (much of which includes their own government’s bonds) and that just would never do.
But no worries…yet. As long as the Fed window shows the 3-month rates are running ahead of the 12-month rates, life here in Financial Wonderland will be “steady as she goes…” Up.
It’s like of like the old joke about the man jumping off the (1,454-foot high) Sears Tower with a cell phone.
On the way down he was being interviewed by one of the Chicago all-news stations.
“I’m just passing the 20th floor now and everything is going fine…”
So that dear reader, is where we are this morning. Down to the 7th…no make that sixth floor. And everything is STILL going fine.
Until the second half of August.
(Let me pause to huff some china board marker….there, better now…)
Economics is very similar to the study of free-fall. We have been in a long-term cyclical bond market decline since 1981/1982. Apparently, you didn’t get the memo. Or, if you did, you didn’t pay attention to the fine pint.
It’s not the rate declines that kill economies. But, like our hypothetical Sears Tower jumper, it’s the sudden stops that kill.
We are witnessing the oddest damn phenomena ever: Tap-dancing on policy while trying to tap both the gas pedal and the brakes.
You can work out the odds of “performance success” from here, without too much coaching, I trust?
Which is why war on the Korean Peninsula looms as a bait-an d-switch along with “domestic terrorism” this fall…
We now return you to the usual crap for the NTP (non-thinking public).
Housing Starts – Miss You a Million
Now the press release:
Building Permits Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,168,000. This is 4.9 percent (±0.9 percent) below the revised April rate of 1,228,000 and is 0.8 percent (±1.1 percent)* below the May 2016 rate of 1,178,000. Single-family authorizations in May were at a rate of 779,000; this is 1.9 percent (±1.0 percent) below the revised April figure of 794,000. Authorizations of units in buildings with five units or more were at a rate of 358,000 in May.
Housing Starts Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,092,000. This is 5.5 percent (±11.9 percent)* below the revised April estimate of 1,156,000 and is 2.4 percent (±11.4 percent)* below the May 2016 rate of 1,119,000. Single-family housing starts in May were at a rate of 794,000; this is 3.9 percent (±10.4 percent)* below the revised April figure of 826,000. The May rate for units in buildings with five units or more was 284,000.
Housing Completions Privately-owned housing completions in May were at a seasonally adjusted annual rate of 1,164,000. This is 5.6 percent (±9.2 percent)* above the revised April estimate of 1,102,000 and is 14.6 percent (±10.9 percent) above the May 2016 rate of 1,016,000. Single-family housing completions in May were at a rate of 817,000; this is 4.9 percent (±11.6 percent)* above the revised April rate of 779,000. The May rate for units in buildings with five units or more was 335,000.
Yes, living/renting in those convenient in-city human coops is running tough competition to owning your own.
Dow and S&P flat, NASDAQ down 11…
And In Other Snews
Washington Post Takes Another Leak: This as The Hill writes: “Trump’s backers are furious about a story that appeared Wednesday in the Washington Post, in which five anonymous sources alleged that the president is the target of an obstruction of justice investigation for allegedly trying to bury an FBI probe into his former national security adviser, Michael Flynn….”
Even one of the Justice Department types is warning on unnamed sources…
Also on the dance card: