As the market is likely to rally at the open this morning, I’m once again thinking about moving to cash. The reason is simple: Earlier this morning the S&P looked like it might rally 7 or 8 points, and although the Fed is not likely to actually do anything about getting off the easy-money addiction of quantitative easing, the new banking rules in China do give some reason for concern.
To be sure, the stories about China’s banking picture do give mixed signals:
All of which casts some very long shadows here in the West, since China is the major player in terms of US debt, despite notions to the contrary. And, China’s economy is inextricably related to the economy of the US>
As you can see in the data that I’ve compiled from major West Coast Ports for the month of December, there has been no year-on-year growth whatsoever in container volumes coming in to the US west coast.
The one (small) bright spot is that US exports to China and the rest of the world is up, but a 5% increase may simply mean that exports of recycled goods (metals) may be up.
This is setting up another devastating round of price attacks on (what’s left of) the US steel industry. The Chinese output of steel was reported up slightly at mid January, but their domestic consumption is tapers off. With no huge auto industry, and with most of the steel for all those high rise buildings in Beijing tapering, we expect to see a continued price decline in Chinese steel.
The other name for this of course is the beginning of pernicious global deflation. And a further indicator of Chinese demand sinking is the report that “Chinese steel firms losing appetite for overseas iron-or assets.”
For now, out expectations are muted: It seems likely the Fed will be forced into a “No QE change” position in tomorrow’s meeting. And, depending on how tough Janet Yellen talks, there might even be a rally of a week or three in length.
But for now, the S&P 1,770 level will be key. If we break that, then there is a fair chance the market could decline a long, long ways. Like 1,640, or even below that to 1,540.
And if THAT last number fails, then our long-predicted return to the 2009 market lows (and lower) along with falling metals prices (under $1,000 gold, for example) might very easily come to pass.
Still, our trading indicator only momentarily dropped below the mandatory shorting level on Monday and ended the session above it.
We also note with growing concern that the Baltic Dry index (BDI) (which will be more widely reported by the MSM tomorrow) is down 40 at 1,177 this morning. Remember, this is the dry bulk cargo pricing and in December the Index was up in the 2,200-2,300 range. So it has been whacked about in half. And the index often moves ahead of the major US indices by some number of months. (Usually around 90 days).
So if I were a betting man, I might be inclined to expect an initially accommodative Fed report tomorrow and that might give the market another month or three to the upside. We’ll just have to wait and see. But the main thing to remember is that calling the exact top or bottom of markets is not necessary to make very good returns in the long run.
The real “skill and art” is to consistently catch the middle 80% or larger, long-term, market trends. If we can do that successfully, then it will be better than most of the ‘herd’.
But for this morning, once we see a substantial rally? Time to be thinking about the joys of cash and looking closely at leading indicators on global trade.
The odds grow by the day that globalism is on its last legs,but that’s just not apparent to many people yet. Barry Lynn, I think, over the longer term will be correct in his assessment laid out in his book End of the Line: The Rise and Coming Fall of the Global Corporation. The book was early (2006) but many of the dynamics have not changed.
And as long as you’re reading about “how the sky is going to fall” be sure to also add Richard Heinberg’s Peak Everything: Waking Up to the Century of Declines. Like Barry Lynn’s book, this is another one of those “early, but watch the data” books that came out in 2010.
After you read them, you may have a better appreciation for our “outback” lifestyle and why we’re planning for a world that will likely be vastly different from the world of right now.
I know of several authors who are standing by in the wings with “after the crash books.” Around here, we don’t hold them in particularly high regard. Reading about the biggest financial collapse in world history may be interesting after the fact, but our focus both on UrbanSurvival and more so in Peoplenomics.com continues to be on the strategic financial and personal lifestyle decisions than may be implemented ahead of events.
That’s where you have the most “room to move.” As always, it’s better to be 8-years early than one year too late. The “prepper movement” sort of get’s it, but most are prepping as part of an “in place” strategy. And for the majority of Americans, that’s not a good thing; fraught with much higher risks.
It’s also why the evolution UrbanSurvival will be to the www.ruralpioneer.com™ website, because this has the likelihood of being the kind of mass migration you want to be at the front of. Not the last one out of Dodge.
Census has a couple of them, including the drop in Retail Sales (down 7%) in yesterday’s report.
Sales of new single-family houses in December 2013 were at a seasonally adjusted annual rate of 414,000, according to
estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 7.0 percent (±17.5%)* below the revised November rate of 445,000, but is 4.5 percent (±19.8%)* above the
December 2012 estimate of 396,000.
We’ll have this morning’s update on the Case Shiller/S&P Housing Index up for Peoplenomics subscribers (hopefully) just ahead of the market open.
And this morning’s Durable Goods report shows an unexpectedly large drop, too:
New orders for manufactured durable goods in
December decreased $10.3 billion or 4.3 percent to
$229.3 billion, the U.S. Census Bureau announced
today. This decrease, down two of the last three months,
followed a 2.6 percent November increase. Excluding
transportation, new orders decreased 1.6 percent.
Excluding defense, new orders decreased 3.7 percent.
Transportation equipment, also down two of the last
three months, led the decrease, $7.7 billion or 9.5
percent to $73.1 billion. This was led by nondefense
aircraft and parts, which decreased $3.8 billion.
Shipments of manufactured durable goods in
December, down following four consecutive monthly
increases, decreased $4.5 billion or 1.9 percent to $232.8
billion. This followed a 1.3 percent November increase.
Just goes to further our view of twilight for globalism in the previous story. I wouldn’t be putting too much stock in future’s reading +70 on the Dow. Look for commercials to run things up so they can short from a good bounce.
More after this…
Will We Be Right on Bitcoin?
Coiners – people who don’t trust the US dollar [not without reason, mind you] have taken no end in delight torturing me in email and on various websites for pointing out three simple facts of life.
1. Bitcoins can be viewed as an attempt to evade paying taxes, and
2. Bitcoins are 100% dependent on the grid being up, the internet working, and all kinds of infrastructure.
3. Government hates and will not stand for competition.
Neither of which make longer-term (10-years) sense to me.
Now we see the results of Bitcoin growth and its infringing of Rules of Ure #1 and #3, as “Bitcoin exchange CEO arrested for money laundering.
What makes the federal move so important is that one of the key charges was against bitcoiners for operating an “unlicensed money transmitting business.” This is all spelled out in 18 US Code § 1960 that reads in part:
(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
Source: Cornell Law reference online.
While the US will (eventually) transition to an all-electronic currency, a concept I detailed in a recent Peoplenomics report (Fed Coins: Peoplenomics Annual Forecast Part 3 #640B) we can see how persons with bitcoin computers running may be accused (similarly) of operating unlicensed money transmitters. Offshore servers next? Sure, of course. But what about the client location?
So it seems to me that if this line of enforcement is successful, it has the potential to stop the explosive growth of coins. But don’t mind me. I’m still waiting for those “fortunes to be made in Iraqi Dinars” to materialize.
Better: becoming involved with online barter systems. It’s much harder to provide evasion when I trade you two dozen eggs for a pound of hamburger that either of us lied when we put a dollar value on the trade of 2-cents…especially if neither of us holds the dollar in particularly high regard.
And that could – give it time – be why prepping trumps coin mining. But everyone makes their own calls on this stuff. After all, Bitcoins were up around $948 this morning, but it’s only money if you can spend it…
How imperial will Obama become in his go-it-alone SoU tonight? Not that it matters with congress negligent and asleep. Still, a few of us old farts remember when congress passed the laws and the president implemented them, but both parties are equally at fault. Which is why third parties are needed…
Presidential Pork: 39% Pay Hike
One thing Obama is expected to do today is announce plans to raise the federal worker minimum wage to $10.10 per hour. That’s a 39% pay hike with – check me on this – no vote in congress just runaway executive ordering.
You gotta find a gig with the tax takers….seriously!
iWear? No, but…
Google has announced that prescription lenses will be available for the Glass frames.