(updated as caffeine soaks in) Till opening time…..It is Columbus Day and that means the U.S. banks are closed in honor of something – maybe the beginning of the North American genocide which is which is how unabashed history informs us.
Why we would celebrate the arrival of European disease laden Spanish imperialists is beyond my comprehension, but I don’t make up trading schedules.
Fortunately, we can still see bits of reality in the global futures market…
A glance at them reveals in a flash why the price of gold is up another $11 bucks and why the price of silver is getting comfortable above $16 here lately.
The good news – and bad – of it is the US dollar is cratering.
The Dollar and stock prices have a contentious relationship.
When the Dollar is strong, it doesn’t take as many of these higher-powered pieces of paper to buy so much of a fraction of the American consumer market. As a result, since things are measured in dollars, it seems like the market is going down when this happens.
The flip side this morning (see the Euro to Dollar chart at the top of this page) is that when the dollar goes down in purchasing power, the number of Dollars to buy the same slice of Americana goes UP. And that means (since it takes more scrip) it seems like the market is going up.
It’s not unlike inflation: When there is more papers chasing the same amount of goods and services, prices seem to go up. Or, more accurately, they actually go up since you can’t walk out of an auto dealership paying last year’s prices.
So that’s where we are this week. The dollar is declining relative to everything else on the planet, seems like. Does that mean the US is “leading an economic recovery?” Absolutely not. But it does make the prices of foreign markets cost more scrip here which is why Japan seemed to go up 1.64% overnight while the Chinese SSE was up 3.28%.
European markets were stable though, after the run-up in Asia, so we shall sit back and see how the rest of the week develops.
The Week Ahead
The main thing to be looking at in market action should come Thursday when the U.S. Consumer prices for the month just ended will be released.
I’m thinking that a surprise bout of inflation would be a fine thing to anticipate.
One reason will be found in the Triple A gasoline price survey (here). Prices are putting in what can be envisioned as a long slow “cup” formation and at some point, the Labor Department numbers will begin to reflect the oil price lows being in – at least for a while.
This gets interesting: Kuwait is talking about higher prices of oil to come and in part, we suspise that is because the giant fields of the Middle East – the Kings, Queens, and Jacks – are actually running into the water-cut problems that were so clearly spelled out in the late Matt Simmons book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.
The book was a landmark in laying out the hard data. And although Simmons’ death was ruled accidental, I’ve always had a gut feeling to the contrary.
Call it the “old reporter instinct” but when people die who are in process of making major revelations, I get….well….suspicious.
The core point of Simmons work (and it’s echoed every time I talk to Oilman2) is that yes, Peak Oil is real, but it has been masked by short-term energy breakthroughs. But when I talk to people around here in the oil and gas business, it’s all the same thing: When the fracking has reached its limits, the path down to a much lower-energy lifestyle will be along to smack us all.
And things won’t be pretty.
The War for Syria
This longer-term reality of oil (spare me the abiotic crap – I won’t even discuss oil with anyone who hasn’t read Simmons and the long term – since 1970 – U.S. production data.) is what drives events in the Middle East for China and Russia.
Called the Levant Basin, you can see on the map to the right that Syria has some front row real estate and this is why the territory is being so hotly contested by all the major world powers.
However controls this – and the undeveloped areas of Iran and Iraq will hold the keys to the future. Having energy is necessary to make the conversion to a sustainable energy future.
With one small problem, or course: We don’t have an economic system which is sustainable – it requires growth or death – which is a secondary problem and has been all along. That’s where out planned obsolescence came from that we’ll dig into in the Coping Section in a moment.
For now, the two major concerns are that China is “all set” to join the Russians in fighting ISIS and the [stupidly] American-backed anti-Assad forces in country.
You would have thought the U.S. might have learned a thing or three from the disastrous “regime-change mentality” that can mostly be laid at the feet of Paul Wolfowitz and a nest of nasty neocons who didn’t understand how only strong hands rule in the Middle East.
As Chinese naval forces are reported nearly enroute to the sea lanes off Syria, we figure it will only be a matter of time until global markets figure out that we’ve blown it again and the absolute price paid in script for a segment of America will be discounted – a process which should clobber the markets.
The reason global markets are not already in the crapper today is likely reports that Vlad Putin is not contemplating putting ground forces into Syria, although misdirection is a favorite move in international chess play.
Stupid American Politics
Looks like the Clinton Big Checkbook is still there. We notice that president Obama has weighted in with his pronouncement that while Clinton’s email server (mess, disaster, or whatever you want to call it) was dumb, it didn’t represent a security threat.
This is a fine example how if a Big Lie is repeated often enough…
RealClearPolitics collection of polls show that the bounced SecState (who still has an appearnace on the Hill in a couple of weeks to traverse) is still out front of Bernie Sanders (a more forthright socialist) and Joe (“will someone make up his mind for him?”) Biden.
Trump and Carson are still leading the republican side.
GOP is a POS
I should mention that the repugnican party is still in process of blowing up. After the disaster with the speaker and the resulting power vacuum, there’s still no sign of a new Speaker.
US Snooze figures Paul Ryan could win the job, but that would just add to the evolving odor around the Washington Cabal’s Obama-Wing of the Republican Party which spawned such poor leadership as we’ve suffered through lately.
When a democrat starts endorsing a repugnican, you know the fix is in and the “opposition party” has already been to the veterinarian’s to be neutered. The New Old is the Same Old among this self-serving gathering of anti-Constitutional sell-outs.
Ryan is another disaster in the wings: He’s been a backer of Secret Trade Sellouts and Open Borders, which may be good for his personal finances, but it’s the same hackneyed K-Street String Pulling that continues to move America from the Great column into the also-rans.
Suggested Reading: The Great Paul Ryan Sellout.
The land of the free and home of the brave has, as should be obvious, been compromised.