Yes, I sadly must confess to capturing a little “paper” in the wild gyrations of Wednesday. (I may be a Capitalist. Or wild-eyed gambler.)
But, as the action later today will reveal, the Fed and ECB combined have not gotten “mean enough” to frighten off the Hyperinflation Bogeyman.
Based on the early futures pricing before today’s open, here’s how our Aggregate Index is looking since 2009 compared with the lead-in to the Great Depression:
Remember, in our approach, we still have about 9% down to fall (from Wednesday’s close). We’d like to see 28,700’ish in our Aggregate. Even with the early bummer, we’re still in the 31-thousands.
Thursday’s ponder? “How far is down?”
Fed’s Big Deception
Raising rates? You do know the Fed is buying our own Bonds to make ends meet? So they actually have some “skin in the game” when comes to rates. Unfortunately – renominated or otherwise – Jay Powell still has political masters to deal with. And the Reality is democrats haven’t done anything to really fix directionless America. Hence, the Washington Witch Trials continue where the FBI’s inside warlock STILL hasn’t been made available for cross…
But what is the lie Mr. Ure refers to? From the implementation note:
- Conduct overnight repurchase agreement operations with a minimum bid rate of 1.75 percent and with an aggregate operation limit of $500 billion; the aggregate operation limit can be temporarily increased at the discretion of the Chair.
- Conduct overnight reverse repurchase agreement operations at an offering rate of 1.55 percent and with a per-counterparty limit of $160 billion per day; the per-counterparty limit can be temporarily increased at the discretion of the Chair.
- Roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in the calendar months of June and July that exceeds a cap of $30 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
- Reinvest into agency mortgage-backed securities (MBS) the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency MBS received in the calendar months of June and July that exceeds a cap of $17.5 billion per month.
Which on the surface doesn’t seem too onerous – yet. The problem is that this won’t lighten the Fed balance sheet far enough (in my view) to really be ready to step in and deal with that evolving recession beginning in Q3 which will turn into Depression in mid 2023 (e.g. next summer) when the “recession” bites deeper due to wrongheaded policy blunders from the What? House.
While the recession is denied (“Powell: Fed ‘not trying to induce a recession’ with interest rate hikes) our view of reality leans more toward What is the yield curve and how could it warn of the next recession? Just as you can’t yell at the tide to turn, I can’t remember a single recession ever being stopped by raising interest rates.
What makes this (arriving) Depression so interesting is that in 1929 (for example) people losing their shirts in stocks could go into bonds. OK, a few small muni bonds failed – poor counties in the midsection – but Bonds were the Out.
Thing is – with bond RATES going Up, it means the underlying VALUES are going down. Chain that fire door closed.
Alt. Money is also imploding – as seen in Bitcoin which was back down to just over $21,000 very early today.
“The Simpleton” Looks Ahead
Me. This is easy. Remember that circle on the declining trend line? Not trying to frighten, but I moved it down below that trend line to where we should end 3 of 3 down in Elliott terms.
Actually, even lower (on some downside overshoot) would not surprise us at all. Looks to us like 3 of 3 down is at hand.
This actually gives us a great deal of knowledge of Likely Future. Because we should collapse promptly to the circle and have a bounce ( a minor *(iv) up into mid August, and then (ta-dah!) Taiwan goes, Ukraine blows, and investors hosed as 4 (v) breaks this fall. Fifth waves down kill.
Top to first bottom will time out from November 2021 to, oh, how does Nov. this year sound?
With my consigliere’s precursor wars wrapping up by year end (or Q1 2023) we will then have an ugly depression generally, but the stock market would have a 1-2 years Mega Wave 2 (irregular/complex) into 2025-2026.
See, what most people can’t even begin to imagine is that there are larger wave counts beyond the 9-15 year cycles. And the entire decline into lows this fall will be – talking larger picture here – just a LARGER Wave 1 down.
The two will be an order of False Peace and then a surprise attack to end all in 2025-2026. Sneak Russian Chinese pre-emptive war. You don’t really think the Chinese are building bunkers to store Apple product in, do you?
Of course, this is all just central tendency stuff. Toss in the usual standard deviations and there’s a lot of drift. Which is why we write this reports so you can follow-along at home.
Betcha feel really good now, huh?
All that matters right now is whether the S&P can hold above 3700 today. But even more important, above it tomorrow. NASDAQ under 10,000 within 2 weeks or less?
Data, Data, Data-Day
“Line ’em up bartender!” We have U.I. filings, Philly Fed, and Housing started to deal with. U.I. first, since it’s the “lightweight.” In other words, the Covid-pumped number has fallen into what we consider a “trading range.” Bad news for the Joe and Jerry Show:
But hey…just because filings are up on a weekly and four week average basis, let’s press ahead.
Second dose of Reality is the Philly Fed report. You may wish to turn on a vacuum cleaner as you read because these numbers plain suck:
“The diffusion index for current general activity declined for the third consecutive month, falling 6 points to -3.3. This is the index’s first negative reading since May 2020 (see Chart 1). Although most firms reported no change in activity (64 percent), the share of firms reporting decreases (20 percent) exceeded the share reporting increases (16 percent). The indicators for new orders and shipments decreased more sharply: The new orders index fell 35 points to -12.4, and the shipments index fell 25 points but remained positive at 10.8.
Then there’s the Housing Starts. Remember just a few short months back, the Fumbler-in-Chief was going to amp-up Housing starts? This was the most God-awful policy blunder in real estate in quite a while, as we see it.
As we have been reminding people since God was young: Legit real estate growth depends on family formation. Plant seeds, increase crop of humans. Increases demand.
What the Slow-Joe-Way-to-Go Party has done (*with their PC-BS selling personal plumbing checks to children) is ensure no one wants to have kids because somewhere in high school or shortly after, kids can smell a Rat.
Supply and Demand matter hugely, you see? As in Property Values Fall Across US, Europe on Bite From Inflation.
So here’s the data:
OK, black line in the chart gets glossed-over but here, and I quote:
Privatelyowned housing starts in May were at a seasonally adjusted annual rate of 1,549,000. This is 14.4 percent (±8.9 percent) below the revised April estimate of 1,810,000 and is 3.5 percent (±10.7 percent)* below the May 2021 rate of 1,605,000.
We also STILL have fewer people actually working today than in the fall of 2019 before Covid. And that is with another what? Million, or more, border-jumpers?
Eventually, fiscal conservatism will occur to the drug Cartels in Mexico when they figure out there’s nowhere to really “invest” their money other than crooked schemes into the failing Political Facade. Not in time for 2022 or 2024, but Return on Investment gets to be a real problem, as Jacob Soll’s book (Great Reckoning) pointed out in the case of Rome and how drifty accounting accompanies collapse. (Anyone else remember EBITDA?)
This may seem a bit far afield – which is where extensible thinking pays off (seeing future in advance and making a few shekels on it) – but supply and demand (with rising rates) smacks your eyeballs reading Property Values Fall Across US, Europe on Bite From Inflation.
The Conundrum of Complexity
With these three data pins alone, we can begin to see the larger context. Specifically that even as the forces of Collapse are gathering – due to unsustainably increasing complexity – the human’s who should be tasked with solving second and third order complex problems have been replaced with the Magic Bullet class of political hacks.
Bring rich won’t fix things, being Black, White, or Brown won’t help. Border-jumping doesn’t replace the breaking supply chain and making up even MORE money because the Fed’s rate charade just continues the “serial shit-show.”
It’s OK. Makes it a breeze to write columns.
US Dept. of Hip Quip
I prior to this morning had failed to appreciate the two-way refugee traffic with Cuba: Florida fraud suspect arrested on a Jet Ski, feds say – The Washington Post. Trivial point: When Seattle radio legend Robert E. Lee Hardwick and I were inventing radio-based software delivery (*Sofcast) in 1986, or so, he told me about what it was like to ride a jet ski from Seattle to Ketchikan. (He also flipped an ultralight float plane in northern B.C. in the middle of nowhere on one of his many other exploits….Ultralight from Nome to Seattle… (Remember when people had stones and dreams in America?)
True to what reader Mark mentioned – rest of the country may have issues but not the Bay area, so much. Backup: What Economic Slowdown? This Software Company Expects to Add 30% to Its Sales Team This Year.
We keep seeing the monetization’s of race and gender seems like they’re everywhere, anymore. Familiarity with Juneteenth grows in year since federal holiday designation: Gallup | The Hill Federal Holiday? ViseGrips No mail next Monday, no federal offices open. Maybe math is racist, though. Juneteenth is on the twentieth. Federal employees now cush with 11-paid holidays per year, get a fat retirement outside of endangered Social Security, plus personal time, and healthcare usually for the family. If someone had told me this in high school, I could havebeen a retired GS-13 by now. Don’t mean to whine, but doesn’t it matter that June 16th is the 299th birthday of Adam Smith?
In the interest of civilian equality with Fedds, how about we don’t pay taxes for Federal Holidays? Equal protection, anyone?
March of Idiotic Correctness continues: George Washington University drops longtime ‘Colonials’ nickname after deeming term offensive. GTFOOH.
Biden-Jacked at the Pumps: OPEC+ crude oil output boost undershoots targets in May | Reuters. So, which part of surprised are we NOT. Engineering Famine is the Globalist plot. You’ll lay down your arms for food when time comes.
Of Course, No Arms by then: Red-flag gun control laws raise red flags – Washington Times. But hey, who needs a chance to cross examine accusers, anyway? The Napoleon and Stalin models are in play.
Drought Impact time: Starving monkeys have started attacking children in Ethiopia amid extreme drought. (At least they weren’t after sex…)
Speaking of Dis Ease: We’re watching for reactions as NIAID Director Fauci Tests Positive for COVID-19 | National Institutes of Health (NIH).
Don’t blame Putin – blame India??? Global food shortage: Are US, IMF barking up the wrong tree? India’s end of grain exports does impact the U.S.
Does this make sense to you? In the story European leaders meet Zelenskiy in Kyiv for first time since war began | Reuters we read how “leaders” show support in a heavily damaged Ukraine city. But, if they had, would there have been a war? (Scratches head, looks bewildered. Is tardiness and stupidity going pandemic? Maybe I’m over-thinking this.
Can’t they Read? Israel says U.S. should help Mideast build-up against Iran. Why? So, we can do as well as we have on issues like bringing down gas prices, fixing public health, fighting inflation, securing the border with Mexico, and fixing the baby formula shortage??? AYFKM?
Speaking of NOT listening: See if you can follow the puppet strings back to China as you read Biden must reject China’s illegal claim over the Taiwan Strait. Any sane president would have…wait? Think I just made the point.
ATR: A World String Contest?
So, there we were with the afternoon libation after a hard day of sweating through Hell Months in Texas.
“You know the world is crazier than ever today…” Elaine mused over her tequila.
“But is it crazy enough for a Pet Rock-type “marker fad?”
“Well, I was thinking of the World String Untying contest. I spent 10-minutes today unraveling a 6-inch ball of string mess from the shade cloth greenhouse project. Here, take a look at this:”
“How would it work? I mean practically speaking?”
“Here’s the Rules” I made up. Government has rules for everything, and we don’t have a Federal String Bureau, yet. FSB is what Russia calls theirs, I think.”
World String Untying Congress Rules
Objective: To reunite humanity by untying gobs of string.
Competition: Rankings are assigned based on both shortest time to unravel a “standard ball of string” and “lowest blood pressure from the effort.”
Inclusion: All races, all over the world use string. String can hold the world together. Use of colored string is encouraged. Black string for Black stringletes, white for White stringletes, and brown string for Brown stringers.
Pro Correctness: The String Untying Congress (SUC) allows anyone or any age to play. Thus, string is an international sport for all.
Playing Equipment: Standard Challenge String is 75 feet of nylon. Regulation diameter is 1/8th inch. (3.175 mm in metric countries.) In addition, a calibrated blood pressure meter is used to measure stress. A referee (stringeree) controls a competition timer.
“Hold it! Have you ever written about how changing a countries measurement system is how to foist Globalism on everyone? Harmonized food and drug codes, mandatory metric?” 6-points for the blonde! I continued with the rules.
Order of Play: The Stringeree yells (String!)
- Immediately, player blood pressure is recorded.
- The Referee reviews the entire 75-feet of Regulation String with the player.
- The player may then either accept the string offered or propose a replacement.
- When the player accepts the string (and yells “String!) the stringeree has 90 seconds to ball up the string in a most horribly contorted way.
- At the 90-second mark, the stringeree tosses the string (ball) in the air before the player and yells “String off!”
- The beginning jumble of string is called “the ball.”
“Goose! Call the ball!”
- Play with the string continues by the player until completely untied.
- At the end of unwinding the player yells “Shit! “
- Immediately thereupon a second blood pressure reading is taken by the stringeree.
- Scoring is as follows:
- Time is seconds taken to untie the string ball.
- PLUS 60 seconds for each one point of systolic blood pressure change if the pressure is higher.
- MINUS 60 seconds for each one point systolic if blood pressure has decreased.
- Competition string meets are called “ROPES” (Real Optimism Playing Excellent String.)
- At the end of a day’s competition, the stringeree enters all the player (*stringster) data into the Federation’s online database.
- The global finals are held each year at an event called the Super Ball.
“All sounds good, dear, but…” I hate it when Elaine is thinking ahead of me…
“How do WE get fabulously wealthy off this?”
I was thinking about selling global TV rights to a Russian oil-garch. They have to be looking for next con after BTC. The Next Big Thing is String!”
“I guess,,, It certainly makes more sense than social media or daytime TV…Maybe I could outdo Jessica Simpson by coming out with a StringTease fashion line…hmmm…”
“Twining or pining?”
“I was thinking more Tie One On…which would be a good positioning statement.”
“Someone’s bound to steal it before we can get it done. Freshen up that tequila, dear? ”
Write when you get rich, (Now where did I put my meds?)