We need to go over three charts this morning because somewhere in them, there’s a message, but damned if I can figure out what it is just yet.
The three charts are the M2-Velocity of Money. This one says, in so many words, how often money is “turned over” during the year. The second chart updates our comments of Thursday because it now looks like (at a minimum) Bitcoin is setting a new higher-high and that brings either another stunning up-move, or at a minimum a huge head-and shoulders peak.
The third chart is where the stock market sits. While yesterday was a “smoker” of a rally (and a finely sprung bear trap) we note the Fed has backed off the manic creation of money – and that argues that they will try to time (arb’ing up) the rates in January (*or so) when the possibility of some tax changes comings along. That’s something of a long-shot, given what the Senate is looking likes – and that get’s us into a discussion of how both political parties turn out to have their own skeletons in the closet – some of which will talk – and some will talk for money. Sleeves rolled up?
So here are the charts and discussion starting with Velocity:
The Velocity of Money at M2 essentially explains how much money is in “real circulation” in America. In other words, you can print money all day long and if the money isn’t turning over – and in the process chasing goods and service – then you will NOT have inflation.
We know from looking at the latest Fed H.6 money stocks report that the Fed has dialed back a bit at M1 in the latest reporting period. So that may prevent the stock market from getting too manic in here. Also, when the Fed eases a bit at the printing press, it will result in a slow increase in the “cost of money” – which is why interest rates in here should firm and move a bit higher.
In the meantime, the Fed is trying to sell off sacks of troubled assets it bought in the wake of the Housing disaster – and when these are sold-back to investors, then the Fed will be ready for another crisis.
We don’t honestly anticipate the Big One (depression) to really get organized until mid next year. We note the departure of three top Fed officials will be done by then, and a new round of Fed management will have been installed. That will give the current round time to get to the rocking chairs before “the music stops.”
When it does, there comes to be a “perfect storm” of Wave 5 – the all-time final blow-off setting up. It would come in the fall of 2018 when the oil glut is gone and we move into that horrible period of more demand than available production. At that point, auto and travel in general/use will collapse. Might be a fine time to short the hotel stocks and such.
On the other hand, since oil is out of favor right now, putting a few dollars into oil companies that have the largest proven reserves might be an interesting strategy – but more on that for Peoplenomics.com subscribers. This is the “cheap seat in the bleachers” version, lol.
Driver? See: Fork talk lifts bitcoin to all-time high near $8,000
In yesterday’s report, we were speculating on how low Bitcoin could go IF there was no quick, sustained up-move. Specifically, what I said was:
The good news is there is still a count where what I have labeled wave 1 up on the left there doesn’t count and we need to look as a different count starting with the bottom of wave 2. This underscores one of the weaknesses of Elliott in irregular markets.
So, this morning for your dining and dancing pleasure, we have the Bitcoin chart updated to show the break *(at least momentarily) to higher prices.
I also included the high and low lines for Wave 1 up, applied them so you can see how Wave 3 met the Elliott test of “larger than 1” and then, from the bottom (for now) of 4, we offer than since under Elliott, wave 5 must be at least as large as 1, then we can begin to sniff around the $9,500 Bitcoin dollar spread.
I know that’s going to make coiners deliriously happy…
Then we’re on to stocks. Again, this is one of the charts updated for Peoiplenomics.com subscribers that we usually don’t share with the bleacher seats, but we note that the manic (bear-killer) rally of Thursday did NOT put a new all-time high into our Aggregate Index approach to markets.
What it did do, however, was generate a close above the red line, which is a 9- moving average. We will have this all updated tomorrow on the subscriber side because it’s axiomatic in our work that it’s pretty damn tough to make a real “call” on market trends until the Hot Money has called it quits for the week and has their money back safely in banks and longer-term positions for the weekend.
Then, the silliness will get underway again next week. But for next week, we actually EXPECT the market could move higher because that’s what holidays tend to bring: rallies in stocks.
Turkey Day rallies are not usually as robust as the Santa Claus rallies that come next month. One reason those tend to really “get legs” is that a lot of upper echelon Wall Streeters have their bonuses based on December levels and performances for the year. The higher the better.
Expect a possible adjustment in late winter as prices could go down (thinking in terms of a macro-trend wave 4 down) to set up the all time high which would be a monster wave 5 which would bring the huge rally in oil, and gold, and another real estate bubble kind of top.
For now, the country has a shorter term set of problems: The price of real estate in some of the especially bubbly markets seems to be softening a bit. Elaine and I have been watching Seattle and Phoenix closely. And then there’s the problem of consumer super-saturation. That’s the “what’s left to buy that we actually need that’s out there?
Answer all of these correctly, figure how to lever them all to the max and good luck.
Our stated goal in life has been, and continues to be, to invest with the idea of better inflation by a fair bit and we continue to meet that objective. Overly cautious at times, no doubt.
But that’s why young people can “take a flyer” on something like Bitcoins – because if they drop to nearly zero it doesn’t matter if you still have 30-years of work life ahead to recoup the loss and go on to more rational investments. But the world is changing and more on that for subscribers tomorrow…
Let me see if I have this right: If a republican – like Roy Moore – is taken out of a race because of allegations of chasing after under4-aged girls, how come the Washington Post is rolling with a liberal apologist piece when democrat Al Franken is the poser in the photogs?
Yet there it is for you, another case of liberals defending their own in “I’m a feminist. I study rape culture. And I don’t want Al Franken to resign.”
I’m a normal senior male, I study liberal issue-manipulation, and I DO want Franken to resign.
The democrats have a “double-standard” take-out window. Which is why Uranium One is still not being probed. Teflon spray, perhaps?
No, not a sex story. Instead this is about how the “World’s first human head transplant successfully carried out.”
(You didn’t really think we would blow our PG-rating, did you?)
“Totò is another nickname for “Salvatore”), was an Italian mobster and the chief of the Sicilian Mafia, known for a ruthless murder campaign that reached a peak in the early ’90s, when the deaths of Antimafia Commission prosecutors Giovanni Falcone and Paolo Borsellino caused widespread public revulsion and led to a major crackdown by the authorities. He was also known by the nicknames la belva (“the beast”) and il capo dei capi (Sicilian: ‘u capu di ‘i capi, “the boss of the bosses”),” says Wikipedia.
The Sicilian mob also has its own 10 Commandments:
- No one can present himself directly to another of our friends. There must be a third person to do it.
- Never look at the wives of friends.
- Never be seen with cops.
- Don’t go to pubs and clubs.
- Always being available for Cosa Nostra is a duty – even if your wife is about to give birth.
- Appointments must absolutely be respected. (probably refers to formal rank and authority.)
- Wives must be treated with respect.
- When asked for any information, the answer must be the truth.
- Money cannot be appropriated if it belongs to others or to other families
- People who can’t be part of Cosa Nostra: anyone who has a close relative in the police, anyone with a two-timing relative in the family, anyone who behaves badly and doesn’t hold to moral values.
Just so’a you know.
The passing of Toto, however, doesn’t impact the operations of other Italian mobs and the Ndragnheta in particular:
The ‘Ndràngheta (Italian pronunciation: [(n)?dra??eta]) is an organized crime group centered in Calabria, Italy. Despite not being as famous abroad as the Sicilian Mafia, and having been considered more rural than the Neapolitan Camorra and the Apulian Sacra Corona Unita, the ‘Ndrangheta became the most powerful crime syndicate in Italy in the late 1990s and early 2000s. While commonly tied together with the Sicilian Mafia, the ‘Ndrangheta operates independently from them, though there is contact between the two, due to the geographical proximity and shared culture and language between Calabria and Sicily. A US diplomat estimated that the organization’s narcotics trafficking, extortion and money laundering activities accounted for at least 3% of Italy’s GDP in 2010. Since the 1950s, the organization has spread towards Northern Italy and worldwide. According to a 2013 “Threat Assessment on Italian Organised Crime” of Europol, the ‘Ndrangheta is among the richest and most powerful organised crime groups at a global level.
Now you understand a bit more about how The Network operates…
Las Vegas Leftovers…
Speaking of conspiracies and such…
While the change in command of Saudi Arabia has been making headlines, watch the video over here on YouTube because it lays out how the LV Shooting may have been fallout from a failed attempt to kill the incoming crown prince of Saudi Arabia.
Which, brings into focus the idea that some of the “soon to be removed” princes at the time may have gotten wind of the pending changes in Saudi and planned the “hit” in LV.
When that went south, a mass shooting ensued to “cover up” the failed attempt on the crown prince.
It makes for “who done it?” conversation at the Thanksgiving table. Gone are the days about talking about uncle Herman, eh?
To rejoin the games in play, click Saudi offer in corruption crackdown: ‘cough up the cash and go home’ and then Saudi Arabia Faces Pressure To End Blockade As Crisis Worsens In Yemen.
Just Out: Housing Starts:
Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,290,000. This is 13.7 percent (±10.5 percent) above the revised September estimate of 1,135,000, but is 2.9 percent (±10.1 percent)* below the October 2016 rate of 1,328,000. Single-family housing starts in October were at a rate of 877,000; this is 5.3 percent (±12.1 percent)* above the revised September figure of 833,000. The October rate for units in buildings with five units or more was 393,000.
Dow futures down about 40 – so we may end the week right around the 9=day moving average. More tomorrow for Peoplenomics subscribers…and let’s all meet up here Monday, shall we?