(Gig Harbor, WA) As we head out for the return to the East Texas Outback – just 2,270 miles, or so, down the road, one of the discussion points will be “What’s ahead for the economy…and how do we model it?”
Take the Fed decision yesterday: It was a foregone conclusion that there would be no rate hike and further, that the Fed will eventually talk itself into a problem. There’s a very thin like between telling markets enough that they will react positively, to telling them too much and panicking people.
The EU seems to have done a reasonable job of market communication of late, by simply saying (in no uncertain terms) that “…we will do whatever it takes…” to keep their economy on an even keel.
The Fed, in trying to telegraph its (eventual someday) rate hike miles in advance so that there’s a smooth transition from holding bonds makes sense to holding equities makes sense, is in a terrible spot.
We’ll get into it more in Peoplenomics this weekend, but the short version is that computers are now spawning disruptive technologies to compete with the established business paradigm and that’s likely to blind-side traditional investment, in the same way autos and radio and mass advertising blinded the economy of the Roaring Twenties.
“So what does a flow-motion Fed Reaction mean?”
My friend Rick Ackerman (Rick’s Picks) told me once about a pattern he saw long ago with Fed announcements. I haven’t talked to him for a few years, but the basic idea was that when an announcement is make, you get a Big Reaction move, then the commercials drive prices back, and then you get the larger move in the direction indicated immediately after announcement time.
So let’s look at what happened on Wednesday: Come Fed announcement time, the market went into a brief but significant rally. But toward the close things had backed off a good bit from the day’s highs.
So come the open this morning, or by the close today, we should see if the theory is still in play. Although, in fairness, back in the day, it was usually on a much shorter time-scale. The initial move might have been 10-minutes of manic move, then a pullback (or pull up) and then the move would resume, usually in the same session.
market patterns change over time, though. And it’s possible that with the advent of more algorithmic trading, we may see some news-reaction scenarios like this one, stretch out more over time, as the behavior of asymmetry of expectation in the markets moves in new ways with computational trading.
I can share that my proprietary Peoplenomics Trading Model is up 311 points for the week, as of last night’s close, and it looks like this week will push us out to 21-weeks of bullishness while other indicators have been indecisive. Not that it’s a sure-fire decision-making tool, but I’ll take any lighthouse in a storm over none at all, any day of the week.
Even Thursdays.
Dow futures were up 40 when I looked and the S&P looked to gain almost 7. So as much as I love to be short, the Trading Model has been a huge help; a kind of sanity support in truly insane global markets. Gold is down a good bit, and we may be seeing the workout of Robin Landry’s long-term prediction of gold under $1,000 before this is all done.
Spider gold share (GLD) was down one percent yesterday and closed at $117.54. With the 52-week low at $114.46, a break lower than that could be ugly and set up a real gold panic. If the big Elliott view is right (Robin’s a patient fellow, like me) then there really is a case for GLD to drop down to the $79-$82 range in the intermediate term. Multiply times 10 and you can pencil out a gold price ballpark. Gold was down $17 on the futures market – a buck and a half down maybe on GLD today…we’ll see. Not investment advice, just talk about chums and a dart toss, yeah?
But, of course, I am not selling my lone gold coin, because things could reverse in a heartbeat. And weith all the counterfeits out there? Yucko.
And despite Max Keiser and other “true believers in crypto money’s fine sales efforts, Bitcoins have fallen back to $447 and there’s now an Elliott case for a further retreat there as well. But, for that to happen the previous bottom in the $350 range would need to fail first. Then the case for sub $100 Bitcoins comes along, but again, time and charts will tell.
Hard to find a winning horse at this-here race track, ain’t it?
Apple’s Elegant Engineering
I’m not going to take back everything I’d questioned about Apple’s decision to make a $400 watch that requires a phone, but iOS 8 has gotten an “atta-boy” from us for their elegant engineering which will keep everyone but the owners of one of their new smart phones from getting at personal data – including police.
There’s a good write up on it in the Washington Post this morning, but here’s where things get interesting: The theoretical question goes something like this:
“If a phone is sold in America, and law enforcement/anti-terrorism wants to get at data (with a search warrant) should the make of the phone be required to put in a back door?”
Obviously, iOS 8 answers that by taking the tools out of even the company’s hands. “We ain’t got access either, boyz…” But the question ahead is whether the three-letter agencies will require an Apple “back door” because they might make a case that Apple security might facilitate money movement or planning by ISIS or whoever…
Damn difficult balancing act, to be sure. A disruptive technology? Maybe…
More after this…
Housing Starts: (1) Ea. Size Small
Turd:
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 956,000. This is 14.4 percent (±7.9%) below the
revised July estimate of 1,117,000, but is 8.0 percent (±11.2%)* above the August 2013 rate of 885,000.
Single-family housing starts in August were at a rate of 643,000; this is 2.4 percent (±9.7%)* below the revised July figure of 659,000.
The August rate for units in buildings with five units or more was 304,000.
This oughta flush out a few bears.
Pick a War, Any War: I’ll Show You the Money
Do I have to do all the work around here?
OK, Ukraine then: Russia seems pleased with the autonomy law for eastern Ukraine – so says the WSJ
Most of the Western world (outside the Washington and Brussels Cartels) think that Ukraine has been about what? Principles, right? Freedom! Uh-huh…you bet.
Wrong, bucko.
It’s all about Peak Oil. Ever hear (in the MSM) about the energy play that underlies all ths war-making posturing on both sides? From a USGS report:
The Dnieper-Donets basin is almost entirely in Ukraine, and it is the principal producer of hydrocarbons in that country. A small southeastern part of the basin is in Russia. The basin is bounded by the Voronezh high of the Russian craton to the northeast and by the Ukrainian shield to the southwest. The basin is principally a Late Devonian rift that is overlain by a Carboniferous to Early Permian postrift sag. The Devonian rift structure extends northwestward into the Pripyat basin of Belarus; the two basins are separated by the Bragin-Loev uplift, which is a Devonian volcanic center. Southeastward, the Dnieper-Donets basin has a gradational boundary with the Donbas foldbelt, which is a structurally inverted and deformed part of the basin.
The sedimentary succession of the basin consists of four tectono-stratigraphic sequences. The prerift platform sequence includes Middle Devonian to lower Frasnian, mainly clastic, rocks that were deposited in an extensive intracratonic basin. The Upper Devonian synrift sequence probably is as thick as 4–5 kilometers. It is composed of marine carbonate, clastic, and volcanic rocks and two salt formations, of Frasnian and Famennian age, that are deformed into salt domes and plugs. The postrift sag sequence consists of Carboniferous and Lower Permian clastic marine and alluvial deltaic rocks that are as thick as 11 kilometers in the southeastern part of the basin. The Lower Permian interval includes a salt formation that is an important regional seal for oil and gas fields. The basin was affected by strong compression in Artinskian (Early Permian) time, when southeastern basin areas were uplifted and deeply eroded and the Donbas foldbelt was formed. The postrift platform sequence includes Triassic through Tertiary rocks that were deposited in a shallow platform depression that extended far beyond the Dnieper-Donets basin boundaries.
You see? Sounds like prime fracking grou8nds to me…
Nothing is as it seems. These wars going on (like Syria) are always about something more than human rights or whatever the MSM wants you to think.
Need Another Example?
OK, here’s how this one plays: Read up on how much call Gaza has on major portions of the emergent Levant Basin…stories like this just disappear because we don’t have news anymore, we don’t have candor, and God help us, no context
Instead we have sheep and narratives.
Now, care to be a brewski on how much unpublicized energy resource may be offshore from Syria?
Australia busted some would-be terrorists overnight, but pay attention to how carefully John Kerry refers to ISIL (where the L means Levant) – how much more in-your-face does it get?
And in Sudan…oh, you should be getting the picture by now.
Scotland Votes
…today so I won’t say anything like “Get off your knees and take the lowlands back…”
But Wait…
In case this is all too much for you, and leaving the flock is not in your blood, try this link and doze off for another nap.
# # #
I’m going to go play in rush-hour traffic now. Ya’ll come back tomorrow and bring your friends with you.
(Don’t have any? Trust me, I understand…the truth ain’t as popular as once was.)—
Captain’s log 17:45 Pacific:Arrived 7 Feathers Casino Resort
