Yippee! This will be a pre-holiday week.
And around here we look forward to such events because markets usually firm up ahead of holidays, although in the final hours of the lead-in to the holiday, there are also those who get cold feet and won’t hold through the holiday because of perceived risks.
That said, ideally this week would see a solid market rally, through Thursday, or so – along with some fresh market highs – and then a slight decline on Friday as the cowards of the Hamptons bail out being risk-averse as many are.
News to drive the market this week should be pretty good, too.
Let’s start with the two numbers out this morning: The first is Durable Goods orders:
New Orders New orders for manufactured durable goods in May decreased $2.5 billion or 1.1 percent to $228.2 billion, the U.S. Census Bureau announced today. This decrease, down two consecutive months, followed a 0.9 percent April decrease. Excluding transportation, new orders increased 0.1 percent. Excluding defense, new orders decreased 0.6 percent. Transportation equipment, also down two consecutive months, drove the decrease, $2.7 billion or 3.4 percent to $75.4 billion.
Shipments Shipments of manufactured durable goods in May, up following two consecutive monthly decreases, increased $1.8 billion or 0.8 percent to $234.9 billion. This followed a 0.3 percent April decrease. Transportation equipment, up following four consecutive monthly decreases, led the increase, $1.5 billion or 1.9 percent to $78.8 billion.
Unfilled Orders Unfilled orders for manufactured durable goods in May, down following two consecutive monthly increases, decreased $2.3 billion or 0.2 percent to $1,120.1 billion. This followed a 0.2 percent April increase. Transportation equipment, also down following two consecutive monthly increases, drove the decrease, $3.4 billion or 0.4 percent to $762.8 billion
The second is the Chicago Fed National Activity Index – CFNAI – and it also failed to trumpet the end of the world:
“Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to –0.26 in May from +0.57 in April. Three of the four broad categories of indicators that make up the index decreased from April, and three of the four categories made negative contributions to the index in May. The index’s three-month moving average, CFNAI-MA3, declined to +0.04 in May from +0.21 in April.
Futures up 72 by the Dow…
Which gets us to sizing up the rest of the week, starting with Housing from Case-Shiller (S&P, Corelogic, and the pizza guy wandering by). We don’t expect a downside surprise because it is summer – prime time for house deals. And because of the low rate on the mortgages.
This latter is something of a problem, however. Since the Fed supposedly raised at their last meeting, you sure couldn’t prove it by the interest rate on the CBOE-traded 10 year Treasury. See here for a chart.
Don’t worry if the chart looks all red – just means today’s trading isn’t up yet. So go on and click a 1-year view.
What you see here is what I think my deflationist pal (Dr. Jas Jain) would likely circle as a mere bounce on the way to the ultimate long-term long wave washout in the Greater Depression to come.
His view (bottom not in, fake-out stock rally in play) is supported by clicking max – the long term view of the 10-year – over here.
Our bottom lines are similar. I’m having fun playing the last of the highs which could continue (ideally) to the August 21-24 period. And from there we will site back in an initial mix of 3X bear ETF’s initially, and then – before it becomes too obvious – we will roll into reasonably priced put options for the year-end or early 2018 period.
All of this is discussed in a lot more detail on the www.peoplenomics.com site which is less interested in politics and much for focused on quality of life, bang for the bucks you have, and keeping a step ahead of the wolf.
The REAL story in finance – which no one is bothering to report – is how the US Fed is running a marvelous experiment in Modern Monetary Theory. The short Wikipedia of it is:
“Modern Monetary Theory (MMT or Modern Money Theory, also known as Neo-Chartalism) is a macroeconomic theory which describes and analyses modern economies in which the national currency is fiat money, established and created by the government. The key insight of MMT is that “monetarily sovereign government is the monopoly supplier of its currency and can issue currency of any denomination in physical or non-physical forms. As such the government has an unlimited capacity to pay for the things it wishes to purchase and to fulfill promised future payments, and has an unlimited ability to provide funds to the other sectors. Thus, insolvency and bankruptcy of this government is not possible. It can always pay”.[
The Wikipedia entry which mostly ascribes magical properties to MMT is that at some point, a realization comes to people that their money has been hollowed-out.
As of this morning, the U.S. Dollar has only 4% of the purchasing power it had in 1913 when Congress threw in with the banksters.
What we spend on a steak dinner today ($25, not a Ruth’s Chris, lol) would have bought TWENTY-FIVE such dinners in 1913.
The deal with the monetary devils is while maintaining full employment may sound peachy – as does the rest of the Fed’s dual mandate, the facts suggest someone ought to have mentioned retaining purchasing power might have been a useful deal point.
But such deals, Jekyll Island, and all that,, which leaves me (at last) at the point:
We can see in the M2 Money Supply figures (up 6% in the past year) evidence of DEFLATION running about 4%.
Any fool (which ought to include most economists, but seemingly doesn’t) ought to be able to figure that “If CPI inflation is only one-third of monetary inflation.
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.9 percent.
In other words, since we can see 6% more money sloshing about, but prices are up 1.9%, then deflation is really (6-1.9=) 4.1%.
As long as there is plenty of money for loans, and as long as consumers don’t all sober up en masse one morning, everything will go fine here in the financial Titanic.
But mass awakenings have happened before. Around 1637 – when Tulip Mania ended and in 1920-1921 when the Weimar Republic was forced to pay off war reparations they could ill-afford and so they just printed to oblivion.
The result of current Fed policy is the velocity of money has never been lower…not in our lifetimes, and not in the Great Depression, so we have to respect the wildly deflationist point of view and remember to take off the print-colored glasses now and then.
Global bankers warn next global crash could arrive with a vengeance” is making the rounds today. Gee, wonder where I’ve heard that kind of talk?
Move Over S&P 500…
Here Comes the Lynch Mob
A fine example of how sometimes the real news gets buried is going on before our eyes.
As we see it, the real story involving someone named Lynch is reflected in a couple of articles in the NY Post: For instance:
But the BIGGEST deal out of the Post this weekend was the revelation that the Trump-Russia story is looking more and more like the DNC was involved as they report: “Sketchy firm behind Trump dossier is stalling investigators.”
As we’ve said (I’ve lost track of how many times) this looks more and more like a dissention psy-op run by the Obama government-in-exile, et al.
The NY Times, which was quick to question Trump and slow to question Clinton is still soft-peddling with “Senate Panel Seeks Details on Lynch Role in Clinton Inquiry.
OK, break, full-stop.
How does this relate to my assertion that the Lynch news is getting buried?
Well, a Google News search lead result is how ‘Twin Peaks’: David Lynch Upstages Nine Inch Nails With Sprawling …”
Second place story was how Broncos’ Paxton Lynch making push for starting QB.
In fairness to Google, David Lynch and Paxton Lynch both have higher search scores…but my, ain’t that one to notice on the way by?
I can hardly wait for the Lynch-Clinton talk on the airplanes in Phoenix to come around again…