Fed Steps On Gas: Market Going Higher

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You ever see one of those movies where a really hopped-up car (usually with either a supercharger of nitrous injection system) is “lit up” with the wheel cranked over…and then goes around in tire-smoking circles?

That’s about as good a mental picture as it gets to explain what’s going on with the U.S. economy right now.  We have a Fed that has stomped on the gas (the money supply) while holding the wheel over (unloading its balance sheet) while entertaining and sending a message to the viewer that Modern Monetary Theory work…and to prove it, we’ve turned on the nitrous…

The reason we can semi-confidently look for the market to go higher is the discontinuity disclosed in the latest Fed H.6 Money Stocks report.  This weekly confessional takes a bit of reading to understand, but once you “get it” one aspect of investing becomes much clearer.  Specifically, the old Marty Zweig rejoinder to “Never Fight the Fed.”  So solid is his advice that it’s the #2 Stocking Stuffer this year (after a subscription to our www.peoplenomics.com site): Martin Zweig’s Winning on Wall Street.

(Continues below)

 

Let’s tear into what the Fed has going on in the H.6:

There are two sliding windows reported each week.  The earlier one covers through the end of October – which they muddle for the non-bankster priesthood by calling it “To November…”  The key numbers to watch are the first line and the last.  As you can see, through the end of October (above) the annual M1 was up 6.0 in the short-ter,m and 8.2 in the long-term.  Let’s compare that with the more recent data:

In this view we noticed that M1 was gone from a 6% rate of increase to a 7.1% rate,  In other words, they have stepped up money creation.

We can then look at the 52-week view of M2 (the broader measure of money) and see that a month and a half ago, it was being increased at a 4.7% rate and now it’s up to 4.9%.

What would worry the Fed, however, is that the short-term rate of rise for M2 has only gone from 3.5% annualized to 3.9…and that may not be enough for the illusion to hold up.

I see a hand?

“Yes, professor Ure:  If the Fed really wanted to force rates us, why wouldn’t they just freeze the rates of increase…and some lower level…and then just let the market forces drive rates up?”

Ah…as savory a question as my filet mignon last night; with a dusting of Johnny’s Seasoning Salt (3 Pack) and a fresh-ground pepper medley with a side of….oh, wait, that’s for my next class…home ec!

The problem of the Fed is that if they don’t increase the money supply – and a good bit – that long-term M2 number will come down.  As it does, the economy will cool and the Trump Bump will be over.

Already, there are lots of Social Security recipients – including Ure’s truly, who are pissed with how the FedGov is screwing us little people with double-talk and lies (our next topic).  But the main thing is that with sacks of “assets” in the form of no-doc loans they need TONS of “easy money” so their assets can be sold off.  And they enough money sloshing around so that people will spend, spend, spend.

That’s the “magic” of MMT  (sadly, not the Mirac le Money Technique – which really works):  We’re talking about what we proposed back in 2001 when the wreckage of the Internet Bubble collapse was all over these pages.

The simple answer (as we explained it then, and 16-years hasn’t revised the right answer):  The Fed no doubt has a backroom with economists brighter than me who have modeled (like I did) and decided that the way to avoid a calamity (Second Great Depression)  is to flood the world with money at just the right rate.

Oh, sure, in reality the forces of pernicious deflation are still at work.  I mean, you can’t just wish the Economic Long Wave away.  But, imagine if the 1929 experience had been different (because this is likely where we’re going, so pay attention):

What IF in 1928 the back-then Fed has printed the bejezus out of money.  So much that the market would more than have doubled?  Say the market quadrupled…

What would have happened then (done fast enough) we would have seen a CRASH alright, but because the price levels would have been back to something fairly recent (like 1928 prices), it would be simple to maintain control and “talk-through” the problem.

What A Super Blow-off Could Look Like

This is really “thinking the unthinkable out loud” but here goes:

Suppose the Fed noticed as we have pointed out that the Bond Market isn’t playing ball with the Rate Hike Illusion?  Remember, going into the rate hike,, the 10-year Treasury wasn’t intimidated.  In fact yesterday the 10-year note fell again!!!  Down to 2.35%.

What’s happening right now (and it’s hard to wrap your head around it) is that we in effect now have two interest rates.

One is the nonsense the Federal Reserve talks about.  The OTHER is the one my deflationist pal Jas Jain cited – which is the REAL interest rates which are down around 2.35% now.  Jas, by the way, expects a market decline in 2018 and is back into bonds realizing that despite the Yellen yellin’ their is too much “money” out there and rates will stay low.

A lot of people won’t comprehend this:  But for those who do, the answers are pretty simple:  Watch two sets of indicators and try to figure when it all hits the fan.

As the rate of rise in the stock market (and Bitcoins which we expect over $18,000 by Christmas and maybe $30,000 by February (at these rates) stocks will continue toward lunar orbit.  Think 2,800 and higher and possible on the S&P.

At the same time, however, the Fed will talk-through as best they can.  ]

What’s missing is that “oldie but goodie” called M3.  it’s a much broader measure of the economy and sadly Alan Greenspan whacked that because it made playing “Follow the dancing Fed’s lead” too easy.  People were able to “bet with the house” and that tended to speed up the social escalator.  Not something you want if you’ve already got a home in the Hamptons.

That’s our “thinking point” today:  What would have happened in 1929 if instead of actually tightening – which we know made the Great Depression greater, the Fed were to go the other way…and print and flood while talking the inflation side?

We know inflation is coming back…but will it be enough to ensure that we don’t eventually get to the wash-out (and negative rates anyway)?  A fine question.  But it’s one that if you still own  a home that’s paid-for, you don’t really need to answer.  If you’ve got five years of taxes in dependable assets?  That will get you to the timeline front porch of World War III.  If there’s a tax collector on the backside of that…let us know.

The Social Security Screw-Job

I got my annual benefit change notice in the mail this week – and it’s another fine example of government double-talk, or more correctly government double-cross.

Here’s how the game is played.

Social Security gets adjusted for what?  Inflation.

So the top line went up as it’s supposed to.

Here’s the gotcha:  The Medicare expense went up much faster than inflation.

As a result, the Ure household didn’t get anywhere near the REAL inflation as reflected in the latest CPI data out this week.

Had it done so, we should have seen a rise in take-home of 2.0 percent (roughly).

Instead, by jacking up medical costs, our net increase is 1.19%.  Looking at the Food costs in the CPI (up 1.4%) we should still be able to eat.  But with energy up 9.4%, we expect to be colder in winter, hotter in summer, and not going anywhere!

Do I sound bitter?  Who, me? Naw…I never planned on SS anyway but it does beat scratching dirt and selling onions..

Hollywood Pay Dirt

You need to flip over to Variety for today’s latest installment of the entertainment world in collapse as “Dustin Hoffman Accused of Exposing Himself to a Minor, Assaulting Two Women (EXCLUSIVE).”

The “Iffy” Mainstream Media

After revelations that a couple of key DOJ/FBI types were plotting to stop Donald Trump from winning the White House, please notice today how many of the MSM puppets have had their strings pulled by the Deep State to say things like “Oh, these people were entitled to their opinions…” and other such pap.

Fact is, when DOJ employees on government time plot in ANY way involving political figures it’s a Hatch Act violation and many of our readers have bandied the word “treason” about, as well.

Today, notice how the Deep State has orchestrated the “walk-back” stories.  Try “DOJ now says early release of FBI agents’ private texts to reporters was ‘not authorized’ by the department.” for starters.

Ure, for one, thinks all employees of Justice and the FBI should abstain from voting during their tenure.  Just like some A.P. reporters (and me) back in the day didn’t vote in order not to have “skin in the game.”

I may go back to that, all the good voting has done…

Nowadays, reporters and officials are all fundraising partisans, seems like…

Tax Bill on Ice?

Thin ice at that as Marco Rubio may not be “sold” on the contents.

I haven’t figured if this is a plot to hold up the lobbyists for more “support” but it’s clear from reports like  “With Billions at Stake in Tax Debate, Lobbyists Played Hardball” that America isn’t run by Americans anymore.

It’s bought and sold by Washington “law firms” who can deliver anything the corporates want, given enough time and money.  Am I the only one who read Jack Abramoff’s book Capitol Punishment: The Hard Truth About Washington Corruption From America’s Most Notorious Lobbyist?

In today’s world, a better question might be “Am I the only person left who can read more than 200 characters?

I’m not kidding…Zeus the cat has a longer attention span.  We should be feeding kids mice instead of drugs….

GOP Sellouts: Stealing the Net

Speaking of crooked:  Your Internet has just been stolen thanks to the clown posse led by Ajit Pai at the FCC. The FCC just killed net neutrality.

Credit to Obama here:  This is one of the few things his administration got right.  Wrong on open borders, unmasking, trying to get Trump embroiled in the Russia narrative…but THIS one they got right.

Not that it matters:  The media is complicit.

I have a bone to pick pick on media coverage.  Take the story by Josh Barro of Business Insider who claims “If Net Nonneutrality turns into disaster, we can reverse it.”  Oh?  Outbid corporate interests that have more money than the Almighty Itself?

No, kids. This muddled thinking is tantamount to saying “If we give the Mafia control of the web, we can always get it back.”  Good luck with that.

WTFU.  This read like the handiwork of corporate happy-talkers who have already overthrown democracy…(In fairness, for the reporter the flip side is access, but it’s a deal with the devil, especially in a press release-driven world.)  I did mention the Abramoff book, right?

This is why I’m so skeptical of younger reporters. (And all of ’em are these days, come to think of it).

Whazzup Today

This is quadruple witching day.  Quarterly, bonds, yada, yada.

Empire State Manufacturing data from the NY Fed just out:

 “Business activity continued to grow at a solid clip in New York State, according to firms responding to the December 2017 Empire State Manufacturing Survey. The headline general business conditions index, at 18.0, remained close to last month’s level. The new orders index and the shipments index both showed sustained strong gains, with the former holding steady at 19.5 and the latter edging up to 22.4. Delivery times were slightly longer than last month, and inventory levels were stable.”

Going into the open the Dow futures are up another 90, S&P also set to rise. Bitcoins are nearing $17,700.

What could possibly go wrong?

42 thoughts on “Fed Steps On Gas: Market Going Higher”

  1. As per usual, most bills are the opposite of what they are named. I have a feeling the “Net Neutrality” was anything but…and had more to do with censorship than anything else.

  2. G – U are tracking nicely on the market going higher.Still looking/nibbling on Mar/Apr/May out of the money Puts on big market cap companies in S&P 100.
    Wonder what will happen to Bitcoin once the big banks and hedge funds get involved. CME futures go live Sunday night. Banks tend to blow enormous bubbles into Assets/Asset Classes. We could even see Bitcoin (B-mini’s)mini futures..its going parabolic G, the green candles are getting taller and coming faster. HODL for the Holidays!

  3. George, there will always be a tax collector. Now, whether he’s a henchman of the local warlord, in the employ of the regional military governor under martial law, or from the ‘federal government’ is another question. My guess is that it will be one of the first 2 after WW3.
    James Johnson, ex-nuke

  4. When have government regulations ever been a good thing? Calling the regulations “net neutrality” is like calling a chicken farm a rose garden just because some weeds grow in the manure.
    The two most fearful statements in history:
    We’re from the government, and
    We’re here to help.

    • A legitimate government lays out a framework for commerce that’s fair and open. All parties adhere to it because it’s obviously fair and enforceable. That includes the government itself. The internet is an information sharing scheme in a similar way that the telephone is. Telephone conversations can carry any information the parties choose, without interruption, consistent with available bandwidth. The internet can and should remain such a utility, without regard to whatever content one wishes to share. I won’t be watching CNN and such ilk even if it were to be free, but I may well wish to check out SCMP or Xinhuanet.

  5. “The Fed no doubt has a backroom with economists brighter than me”

    I very much doubt that, and if The Fed did, these economists are useless. We need a new paradigm!!

    • Bruno, a new paradigm? Really? Did you think that through or is that just free floating bitching? That’s what they said about the last election, and we got an incompetent rookie named Trump. George is only miffed at net neutrality because now it’s his ox getting gored. (Don’t worry George, we’ll stick with you through all the buffering. Ha.) Mike.

  6. Bitcoin double topped George. We should see a decline next week or so. That is my assemwnt.

    Currently in an ongoing dialog with the fire. With a definitive date for collapse as may 19th, 2019.

    I did post an excerpt on the dogs comment section…. But I am waiting for more information… and am for the most part silent.

    There is a possibility of a false flag attack before Christmas and maybe as early as today. For there is a sense of urgency with the hot word of fire/rape.

    At our current trajectory right now we are still right on schedule for Trump to be left holding the bag and a great diaspora from the markers and the dollar may 19th, 2019. Also there is some indicators/atributed that there will be a huge data breach related to bitcoin in the next 6-7 months.

    I don’t give predicrions much anymore. I am aware of such things and I let them flow.. But I rarely put it out much.

    In the next few weeks I will give you what I got.. as for now. May 19th, 2019 is the date. May 1 is a huge date as well..

    Also at our current trajectory there is another crypto currency that will surpass bitcoin within the next 11 months. All indicators point to, etherium.

    I do not give trading advise. However… I am get accurate at SEEING things…

    Off to grab 18 years.

    P.s. I am banned from posting on a few venues.. But I can observe on them. Not sure what’s the deal with that. Lol

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      • And yes after goes to the roof those other ones will come up and surpass Bitcoin temporarily close all about trading the stocks if we can just get George to put his charts out there for all the Bitcoin stocks instead of the regular stocks that people want to invest in then we’ll make a hundred times more money on those Bitcoin related stocks.
        But remember there’s those other stocks I mean if you followed the charts those other stocks will make more than Bitcoin in short-term periods I mean you can put $5,000 in Bitcoin and in 10 years become a millionaire but if you follow George’s chart on bitcoin and other pieces that are rising you can make more than 10 times that

      • “Housing prices never go down.” Lol

        What we are witnessing is a huge money grab. Bitcoins total currfent value is $100 billion less fhan the totality of all Microsoft. And it has no real product.

        I have read thousands and thousands of comments about bitcoin. No matter what price it his this weekend. I see massive decline next week.

        I keep seeing ‘fire sale’.
        Maybe I’m wrong. Maybe I’m right. I am not emotionally attached to bitcoin. I am not emotionally attached to any of it. I’m just telling you what I see.

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    • George I have been around woo woo world for many years. O s predictions may be of value and also 180 degrees off. Time will tell. Hope you and your lady have a great day.

    • If it does not go up this week well I guess we’ll just have to serve you breakfast lunch and supper

  7. George, was wondering if they’re having to whip up this new tax plan in secret because it is SO very beneficial to the Middle Class, that they’re afraid it will spark too much shopping this Season? M.

  8. Wow George you’re all over the place this morning so in order to get you back on track take us low even long breath and think about everything you said and make one declaration make it simple make it sweet make it so it defeats all the other complications in your life.
    I can say it and give you the solution the remedy but you already know it and so does most everyone else they just want confirmation what we need during these periods of super excited Tatian that is being super invested into our minds.

  9. The secret to success is it one thing two things three things or a million things.

    The secret to failure is thinking that you’re going to fail and thinking you want to give up.

  10. George, I see net neutrality different. We don’t need the government once again taking control of something that they have no business trying to control and at some point tax as a utility. That’s where we were heading. Yes there is some big players on the net but everyone does have access and using a government to “regulate” never works well long term! Why are you so sure Obama’s and his crew got this right? I didn’t like it when they were trying to regulate it. What am I missing??

    • Corps wouldn’t be going for it unless they planned a tax (via fees) of their own.

      What you miss in corporations and governments aqre merging. When corporations see repeating revenue (a monthly hold-up of the bank cards to pay for reasonable net spee34ds) they see themselves as further emasculating government and replacing it…

  11. Not being able to vote as a legal citizen because of your job (or any reason other than being a felon), is a ‘slippery slope’ . . . Voting is a right held dear by our constitution – this ‘idea’ could lead to military (for instance) not being allowed as they ‘affect policy’ etc, etc – and while you might already believe that the USA is a banana republic, this 66 year old fool disagrees!!

    • Is it “fair” to prevent “felons” from voting? The idea of social ostracisation and untrustworthiness may be reasonable for some of the people convicted of a felony but is that “fair” across the board for all things that are now a felony?

      • I’ll not deny that the justice system is ‘messed up’ – a process intended, inspired by the Quakers to reform lives has descended into a ‘machine’ designed to punish. Many minor crimes are given too much weight while others that ruin lives and property aren’t.

  12. What does Dick Clark the old songs that they clerk East play MTV in your younger day how does that relate to the stocks how they correlate to the stocks how does that unrelated to the stocks

    • Has anybody ever seen or met Satoshi Yakamot? Isnt he the fictitious character that supposedly created bitcoin? Catherine Austin Fitz basicalky says bitcoin is a beta test for the one world crypto currency. Its in the public domain to get private developers to created the networks, software and hardware products necessary for the transition from paper cash to crypto. This way the govt doesn’t have to pay for the R and D and new millionaires are made in the mean time.

  15. Would it make sense to combine the 17 week PNO & the 9 day experimental PNO on the same chart to use it as a predictive stock market chart as the 9 day crosses over the 17 week on the upside & downside. This would be similar to the Stochastic Momentum Indicator.

  16. “What would have happened then (done fast enough) we would have seen a CRASH alright, but because the price levels would have been back to something fairly recent (like 1928 prices), it would be simple to maintain control and “talk-through” the problem.”

    Hmmm.. I tell everyone there’s no blue sky.. Now the problem I see is money is moving fast they are tossing it out the windows.. those getting it are not sharing it. the only ones really benefiting it are at the top wage increases are not keeping up with the cost of living.. and IMHO the fed reserve should hire a five year old as a consultant, since the five year old will tell them right away you can’t pile all the blocks on top.. it will eventually fall over…

    • For the same way that you can’t buy coffee by owning real estate or stocks or bonds or gold or silver less course you want to pay $20 for a piece of coffee.
      They are called belief Bliss systems yes and they’re called tangible systems and then you put another system in there between the two or after or before so we can make five different systems but the fact is what’s the best system the best system is when someone gives you something and you acknowledge that because when someone gives you something and that’s what the government is trying to do is text you giving to other people which needs to be thrown out the window because the future is with what we already have plus Bitcoin Plus Goodwill Goodwill yes that’s going to be the deciding factor after 700 years of Bitcoin will be good we’ll of course you can use Goodwill now it’s used to be used and the 16 17 18 hundreds before the bankers got involved Goodwill was what you did for other people and they remember that because you lived in the community what you did for others came back at you the more you invested in something that goes against the grain

  18. It’s bought and sold by Washington “law firms”

    Lawyers are .004% of the population. (25K of ’em in WI and population of 5.779 Mil) The group promoting lawyers says 1 in 9 people in DC are lawyers.

    14% of the WI legislature and the WisBar magazine whines about the low level of ’em.

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