China: Economic Witch Hunt

China has just revealed itself to be very anti-free trade.

They are going after short sellers.

If you’re not a serious investor, here’s how short selling works:

If you think a stock will go up in price, you buy the stock and sell it when it goes up a ways.

If you think the stock is going down in price, you sell the stock high and buy it to cover the position, when it has come down.

In options trading we have two kinds of options: 

Call options bet the market will go up.  Put options are a bet the market (or stock) will go down.

This month, the Shanghai stock market did terribly.  And as you can see on a one year chart (over here) it has seen something like 30% of its value whacked.

Rather than let the market work things out, however,  Chinese regulators are going on a witch hunt.  They are pressuring both foreign and domestic stock outfits to turn over records on who made money by piling on to bloated, overpriced, supersaturated market and made a few Yuan.

There are two ways to make money in any market:  Spot a good deal before anyone else and ride it up making money with a long position and call options.

The other way is to spot the moment of absolutely loony behaviors and sell short and own a bunch of put options.

So a simple note to the government of China:  Don’t fall into the danger of rigged markets where only good news is allowed.  You want to see real market panic?  Just go after short sellers and everyone else will quickly figure out that the country doesn’t really want winners…it wants something else.

Raw naked power and control.  And that’s not how free markets work.

As someone who made a little money in 1987, 2001, and 2008, I can tell you that short selling is a vital function in markets since it keeps everyone honest.

Would you gamble in a casino where winning more than $5 dollars would lead to a back room shakedown?  “You’re welcome to win as much as you want, but if you bet against the house, take your action elsewhere.”

No worries – The market will.  And Shanghai’s decline doesn’t look complete, to my eyes.

Cancer In Your Ear

We knew it:  New report out says yes, cell phones do cause cancer.

Sometimes being a Luddite pays off.  Everyone laughed at Ure and many went away when I decried cell phone dangers 10 years ago.

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Coping: Friday at the Dart Board

Hand me a dart, would you?

(A bad throw, I’m afraid.)

The first dart lands on the new Costco ad for computers which just landed in the inbox.

$849.99 for a touchscreen laptop with 16GB of ram, a terabyte of drive on an i7 platform.  Yes, computer prices are coming down.  Granted it’s only 15.6” and the 17” is easier on aging eyes, but one of the nice things about computers is that the price/performance number continues to get better.

Real computers are getting cheap while phones are going up.

Another dart?

(Yikes!  That throw just missed the cat…)

Second computing note is to visit www.securitytango.com

They have a fine assortment of “How to” pages on how to really clean a computer.  And it’s all listed as different styles of dance.  So  it’s the Windows Waltz, and the Macarena, and the iPhone Pavane…with more for Linuxers and Androiders.

It may seem like a lot of work, but I went through all the Windows steps and found one (fortunately benign) rootkit on my traveling machine, so it’s definitely worth doing even if you think your computer is clear.

And I don’t want to hear the Macinpreach types telling me Mac’s don’t get viruses.  Of course they do.

Dart?

(Maybe Elaine won’t notice the hole in the white leather sofa or I can blame the cat…)

Weird dream recall:

Many months back, I had a dream and there was something in it about a large bomb going off – generally in the north/northwest direction from us – at about the time the MH-370 wreckage was being fished out of the ocean.

Not that I put any stock in it…probably a bunch of leftover thought stubs and having read about OKC follow-up and how there was likely a government perp/insider who was never brought to justice.

Nevertheless, it was strange and no, I have no idea why.

It was some months ago, but it (in this weird dream) sets off some kind of sequence…so who knows.

Hand me another dart, quick.

(Lamp shade this time…coffee must be kicking in.)

Only five weeks to go until we set sail on the Peoplenomics Cruise.  Panama, the brother-in-laq who lives with us on the property can hardly wait for us to go.

Zeus the Cat is anxious, too. He’d put on a pound, or so, during our last adventure.  Since we came back, we’ve both lost about the same amount of weight which says a lot about him, but not much about me.

Dart…

(One of these days I will put up a dartboard instead of throwing them randomly around the room, but that seems like too much work.)

Summer Housekeeping:  Tidying and Bloatware America

New reading material:  The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing which is pretty good.

The book looks at hoarding (if you’re young and don’t have much, the problem of being overrun in your life by too many things seems absurd, but trust me – it happens.).

What’s different is this book really starts with the view that before you start organizing, you need to go through the process of throwing a bunch of stuff out.  eBay it, take it to Good Will…the more stuff you get rid of in life, the less work to organize and so on.

I can see how that would work for people who are single-dimensional.  You know:  Have a one bedroom apartment, work most all the time and have one hobby.  Like my son – skydiving.

His “org problem” is really small:  A couple of computers (iPhone and iPad and a work laptop) and a jump suit and chutes in the closet.  Simple.

The problem for me is still too many interests.  I’ve got a computer dedicated to futuring which is off running missions most of the time.  There’s a music computer.  A writing computer.  Media computer.

Then there are the books.  Elaine likes art, interior design, Trompe-l’œil, oplus books on health, exercise, anti-aging, politics, and….

And there’s my collection which ranges from hands on machine shop practice to engineering to psychology, investing and business, accounting, and off into spiritual realms.  I mean we have one hell of a fine collection of books we are constantly readings and referencing,. and many of them …no most of them and not available in electronic form.

Take the airplane for example:  It has paperwork, computer gear, charts, parts, oxygen system, flight simulator station and more.  Regulations, shop manuals, yada, yada.

Then there’s the ham radio department.  This is one where I am going to really focus this weekend on weeding down through things.

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Gross Domestic Product and the M2 Velocity Crater

You know you’ve been out on the ranch too long when “fun” is an economic news release from the government.

But it’s sort of like a New York Times crossword puzzle…you play them for the challenge of figuring a few things out.

So this morning’s test in referential lingo goes like this…

“Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 2.3 percent in the second quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 percent (revised). The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and “Comparisons of Revisions to GDP” on page 10).

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Coping: GOB Networks Vs. the Internet

Turns out it’s another “Ray & George” column this morning, since my friend Ray picked up on my discussion of the Good Ol’ Boy Network here in Anderson County, Texas which has allowed opening of an open pit (rock) mine just down the street from us.

The good news, such as it is, is that Wednesday the road was watered a couple of times, a stop sign that had been torn down was back up.  But we shall see how long it takes for oiling the road, replacement of trashed paving, and restoration of my property value (due to the torn up road) takes.

The county was no doubt aware the open pit operator had been previously fined for environmental concerns in another county.  But nevertheless, split the big between the open pit here and another one which (more research pending) isn’t how things are normally done.

But then this is the land of the Good Old Boy Networks.

Which gets me to my buddy Ray who wisely notes that the GOB nets are not a purely Southern phenom:

George, I think it’s cute that you think the “Good Ol’ Boys network” is a Southern, or a Texas, aberration.

AFAICT there is a “GOB” network in every county of every State in the nation. Sometimes it’s a Democrat machine, sometimes a Republican machine, sometimes there’s one of each, and sometimes it’s politically amoral, but it exists everywhere.

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How to Slaughter the Bond Bulls

While the Fed announcement today is not likely to see an increase in rates (fall is more probable) there is still a very interesting bit of learning to be had by graphing out the ultra long-term Velocity of Money.

Not surprisingly, the Velocity now is wose than it has been at any time in the last 115 years.

That is a terrible structural problem for the Fed to deal with – and in this morning’s analysis we’ll explain why and how it will impact you personally.

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Housing Data

The reason this is such an important number this morning is that the Fed is meeting and they are expected to raise rates this fall and that should trigger a wild blow-off top in the stock market which will make us (even more) fabulously wealthy.

Thing is, if housing is looking to get too hot, it will be a bubble and that’s bad.  Except, of course , what no one mentions is that the way you end the Housing bust is by starting a new bubble, but this is a quibble and everyone knows quibbles are just 43.6% the size of bubbles.

New York, July 28, 2015 – S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for May 2015 show that home prices continued their rise across the country over the last 12 months.

Year-over-Year
The 10-City Composite and National indices showed slightly higher year-over-year gains while the 20-City Composite had marginally lower year-over-year gains when compared to last month.

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Coping: With Bad Local Government, Open Pit Mine

Usually it’s because there isn’t anything to write about. But Monday, Elaine and I went to the county council meeting (In Texas this is called “commissioner’s court”) with a bunch of neighbors because an open pit mining operation (sand and gravel, crusher) has gone in down the street from us. Aerial photo is from February 19th of this year.

Bengkui for Breakfast

With apologies. the word bengkui may not be  a household word at your place, and it sure isn’t here.

But it’s the Google Translate idea of how  the word “Collapse” rolls into simplified Chinese.

The Shanghai composite (SSE) dropped an amazing 8.48% overnight and, in doing so leads us to concerns that the overblown Chinese market may be attempting to replay the role of the US market in the 1929 crash.

It has been obvious for almost a month to professional chartists (take Kimble Charting, please) that things were on the edge of a slippery slope.

The somewhat more sedate Hang Seng index closed down more than 3%, as well.

To say things are not happy this morning in China is a bit of an understatement.  And with the USA Fed meeting kicking off tomorrow, while there’s virtually no chance of a rate hike this meeting, there will be lots of hard talk about the dangers of collapsing inflationary pressure.

We’ve recently been quietly chanting our own words of warning, too;  In our Peoplenomics columns we have noted that imports from Asia are actually down a bit by container counts this year, and making things worse still, exports are down dramatically as well.

This kind of imbalance  shows up eventually as a major increase in the balance of payments deficit.

The other thing that should happen will be another leg down for gold.  I don’t like predicting such things, but when we are close to end-of-month deliveries, and when world markets are falling, and when oil is down into the $47’s, what do you expect?

Whistling in the graveyard continues with the EU chiming in with the latest version of “Good times are just ahead…”

But the reality is that the futures tells us nothing more than what our Peoplenomics Trading Model told us last week.  Short or cash is how to sleep well at night, nowadays.

Me?  I wouldn’t be surprised to see the down drop 150 for the day and gold down $10-$15.  The big winner today could be the volatility index.

Durable Goods Report

Just out in the past couple of minutes:

New Orders
New orders for manufactured durable goods in June
increased $7.7 billion or 3.4 percent to $235.3 billion,
the U.S. Census Bureau announced today.

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Coping: With the Self-Writing Column

It was another scorcher here in Texas this weekend.

Got up to go flying.  Crack of dawn Sunday.  Wanted to get balloon racing pictures at Longview.

Taxied the airplane over to the fuel dispenser.  Shut down airplane, attach ground wire, reel out fuel line, swipe card in machine…

“Sorry Credit Card could not be Validated.”

“Try a different card,” suggested Elaine.

Same result.  I tried a second credit card, a Texaco card, and even the discount card from the liquor store…all with the same result.

Called the card company with the “WTF?”

“No Mr. Ure, you card is fine. “

Great.  So it’s the  Robots are out to get me.

Came home (still fuming) and called our still-bonding Amazon Echo a few choice words – all in the name of science, mind you.

“That’s not very nice.”

No, I suppose it wasn’t.  “Alexa, I’m  sorry.”

“That’s OK.”

Such is life in our voice-controlled home. 

The voice recognition system in the car is acting funny, too.  “Zoom in!”

Showing POI icons for fast food.

I have a huge list of Echo’s shortcomings, but it does do simple math problems so I don’t have to look around for a calculator which is nice.  And the conversions are useful, too.  Old airchecks of KFRC are there, too.

So are Rush Limbaugh and Michael Savage on command – haven’t checked on Tom Hartman, yet.  Something more than NPR news – without having to plug in an iHeart call would be nice, but it’s coming along.

One of these mornings I will plug in DragoonSpeak and see if a column done that way makes sense.  Last time I tried, there were fewer spelling errors but more contextual ones.  With yet another upgrade, we shall see.

The point is with an Echo listening for commands, and two computers equipped with full-on voice recognition, the talking car, and a one armed bandit that won’t let me fly, I figure it’s only a matter of time until the essence of Ures truly will be immortalized to silicon; a fact which Gollywood is quickly monetizing.

We’re enjoying watching the new series “Humans” but it’s like I told Elaine…how many people will simply give up trying to find the show because they won’t be able to find the upside-down “A” on the keyboard?

I even went to my Amazon Associates account to see how they’d handle the riddle of the upside-down A but they only refer to the show as Episode 1 [HD].

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Sunday Special: The Art of the Future

While you’ve are enjoying the weekend, the brain cells here have been working overtime on various aspects of the “Futuring” problem that was discussed in Peoplenomics Saturday.

Without giving away the whole story the problem for most of us is how to collect and assimilate sufficient information (when making investment decisions) so that we are not investing our life savings in a crooked game.

Let’s just say the term “crooked” means investing where:

a)  Insiders have significant advance information or

b) When pending orders are used by high frequency trading outfits to “front-run” trades and skim a bit off every legit trade or

c) When significant information asymmetry is involved in release of information such that only certain classes of investors know about pending price moves, management decisions, or other key variable before us “dumb” investors.

Grady (chief coder guru of our www.nostracodeus.com project) and I have been slapping this problem back and forth this weekend and we’re coming up with some novel ways to approach the knowledge engineering side of things.

One way we can do this is to “bit bucket” all currently scheduled events by using time domain statements in news stories to sort them.

Let’s say we took all news stories that have the words “this Wednesday” in it.  We already know from our news “tickler file” what some of the items will be making headlines by the time you get done with work Wednesday.  Hell  – half that newscast on Wednesday’s drive home is in the can right now.

For example, the Fed decision will be announced about 1:30 Texas time.  And that will be preceded by the release of petroleum reserve data a few hours before that, the Case Shiller Housing data on Tuesday morning.

But it goes deeper than that:  We know, for example that  Bernie Sanders will have a Washington State meet-up and both Calloway Golf and Facebook will report earnings Wednesday and that will give us additional insight into how people are spending their spare time these days.

Of course, the art of the future is being right over the long haul. Ures truly warned in December of 2014 (back here) that social media wasn’t going much of anywhere.  and sure enough, in April of 2014, SOCL went to near present levels, then again in July of 2014, and then in November of 20914, and quick- look surprised – we are there again…

Which makes it hard to just park some money – you are being squeezed into a trade to win regimen and that, in turn, makes you hamburger for the high-frequency traders.

All of which is why we spend so much time pondering the future and working on how to beat it.

We’re thinking about an adaptation of the Delphi Technique for a limited set of participants (like Peoplenomics.com readers) because there seems to be some magic in using feedback to develop a keen sense of what’s going to happen – before it does.

But even the Delphi Technique, which is described in Wikipedia this way

“The Delphi method (/?d?lfa?/ DEL-fy) is a structured communication technique or method, originally developed as a systematic, interactive forecasting method which relies on a panel of experts.[1][2][3][4] The experts answer questionnaires in two or more rounds. After each round, a facilitator or change agent[5] provides an anonymous summary of the experts’ forecasts from the previous round as well as the reasons they provided for their judgments.

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Quest for “The Signal”

Forget about UFOs, ETs, life on other planets, or putting a few bucks a month into a SETI fund.

Not that these aren’t fine ways to spend money, after you have saved for retirement, paid off your car, student loans, and don’t owe anyone a dime ands have burned the mortgage… I mean they’re nice and all.  But where’s your priority?

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Sorry About That Gold Prediction

I don’t make the future.

I just report it, although often before it gets here.

Easy enough to do:  All you need is proprietary software (as used on our www.nostracodeus.com website), a sense of how to read charts using just three main tools:  Trend channels, MACD, and Elliott wave theory.

And a long-term commitment to working the problem every day, looking for big changes in how the world operates.

Oh, and the next time Janet Yellen says “stocks are over-priced” – or words to that effect – realize that Janet may not be speaking just for herself.  She may be announcing something on behalf of the G20 central banksters.

The whole world is adrift when it comes to values, of course.

You can see that in the sale of fetal tissue, in the mass marketing of gender change, and in the pabulum called politics where the only person with normal testosterone levels seems to be The Don.  (And maybe Lindsey Where’s my hammer Graham, now…)

So how has gold done since our column last week when we warned of a serious move toward $1,000 gold?  (You can read last Thursday’s forecast piece here.)

As you can see in the chart over here, gold was around $1,143 when I made the prediction.  Immediately thereafter – a day or two – every pundit in the world jumped on the bandwagon and started throwing gold darts all over the board.  Including one who (stupidly I think) called for $250 gold.

As of this morning, the spot market was around $1,080.  In other words, since my prediction of a decline 8-days ago, gold has dropped a little more than 5%.

We can look at some of the other commodities out there *(yes, gold is a commodity kids) to see how other goods are fairing.

Bitcoins dropped from from the $288 range down to $276.  That’s worth mentioning because this is the only planet in the known universe where a digital signature performs better than a precious metal with a 10,000 year history.  And Bitcoins are bouncing strongly this morning…up to the $284 range.

On the other hand, copper is tanking in a serious way.

My consigliore called t’other day and suggested I line up the S&P and the price of copper over the long-term because there is a relationship there. 

I would do that for you this morning except a) I am too lazy and b) everyone knows that an imminent collapse of the economy is NOT why copper is dropping.

OK, wise guy, why then?

Two reasons:  First is that growth is falling.  Well, I guess we really can’t call it growth then, can we?  Seriously?  The imports through our ports and the latest rail traffic data, which we summarized for our Peoplenomics.com readers, showed there is no growth in physical goods to speak of.  Like none.

The second reason for copper’s decline is Iran.

That’s because one of the major commodities used in wars (hint: think shell casings, please) is copper. 

You may not like the Iran deal, and I think it’s stupid beyond belief to sell inspections with 21-days of notice so they can play “hide the centrifuges” is absurd,  but Barack Obama is determined to do for foreign policy what he’s done for trade (with that secret disaster) and what he’s done for the border (that other disaster).

The fact is that this is not a Treaty per se.  It’s a “something else” and the occupant of that high rent place on Pennsylvania Avenue is going to implement whether the Fools on the Hill like it, or not.  And that’s just the way it’s going to be, kiddies.

You see, we don’t live in an honest country, anymore.  That’s why The Don is so popular.  He’s calling BS where he sees it…which means he’s got a wide variety of targets that people are ticked off about.

And the phony corporate parties?  You know…..the ones who buy and sell favors for campaign contributions from the sleazy big law firms in Washington infested with lobbyists?  They are being cast as losers – which they are – and when the peaceful revolution in America back toward clear thinking happens at the polls, the mainstream media will bemoan the loss of their paymasters.

Except, of course, it will never happen.

Voting machines.  Right?

The Real Battle is in Austin

There, Dr. Laura Pressley lost a contested city council race a while back.  Thinking December of 2014 was when this first popped.  And she is appealing a court decision that sided with local elections officials who produced an electronic record, but not statutorily required images of ballots in the contest.

Pressley’s June 15 press release on point explains it this way:

When Pressley asked Travis County to produce statutorily required “images of ballots cast” from the Hart InterCivic voting machines for the recount, the clerk was unable to produce the ballot images that voters saw in the election booth. Instead, what she received were Cast Vote Records (CVRs), which are computer-generated templates of tabulated votes — not the statutorily required ballot images required for manual recounts of electronic voting machines.

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Coping: With “Sky Friday”

A buddy of mine from the local ham radio club sent in a fine picture of events over in the Longview, Texas area where the Great Texas Balloon Race is being held.  (Hat tip to en B for the marvelous pic!)

Balloons have always held a certain fascination for me.  Can’t say whether it was because of Jules Verne’s fanciful “Around the World in 80-days” or something else.

The first time I saw a large number of balloons was in Anchorage, Alaska, years ago. And a lady-friend from the distant past had always been intrigued with the annual event for balloons up in the Albuquerque, NM area.

Today, there will be an emphasis on special shape balloons.  If you drive around Longview starting around 7 AM you should be able to see some real dandies.  A sampling of where to go, and what to see, is on the Great Texas Balloon Race website.

So are the official standings.

We’d like to extend our congratulations to Joe Heartsill who racked up 1,000 points in the Wednesday flight for a perfect execution of a balloon  maneuver called the  “Hesitation Waltz R15.3.”

Hmmm.  What is a hesitation waltz, you’re wondering?

Authoritatively, the UltraMagic Balloons page explains it this way:

Competitors attempt to drop a marker close to one of several set goals. The result is the distance from the mark to the nearest target, if displayed, or goal.

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