The Games of Options Week

No telling for sure what will happen this week, but we have some benchmarks we’d sure like to see.

For one, with Bitcoin at $5,700+ this morning, we would like to see it hit the upper target we put in Saturday’s report.  That would be especially cool if it happened within a day or two of the stock market hitting new all-time highs.

As subscribers know, this week is when we’re expecting K3 in our work and that might mean a sizeable decline next week after slugging out options Thursday and Friday.  With the market up about two percent in the past month,, the “Buy-the-dips” crowd is likely licking theirs chops at the idea of a Perpetual Rally.  Which will be fine, until it fails.

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In our historical work, however, it is not likely to occur.  So we will be guided – in part – by the Fed’s Industrial Production and Utilization report tomorrow just ahead of the open.

For this morning, the NY Fed’s Empire State Manufacturing Survey will have to appease:

“Business activity grew at a robust pace in New York State, according to firms responding to the October 2017 Empire State Manufacturing Survey. The headline general business conditions index climbed six points to 30.2, its highest level in three years. The new orders index came in at 18.0 and the shipments index rose eleven points to 27.5—readings that pointed to ongoing solid gains in orders and shipments. Delivery times were slightly longer, and inventory levels decreased. Labor market indicators reflected a strong increase in employment and little change in hours worked.

With this is place, and the price of gold back over $1,300, we are in position to hear more talk about the Fed planning to raise rates.

The astute reader will notice, however, that the date of a rate hike keeps pushing back.  Latest speculation places it in December.

Boston Fed boss Eric Rosengren,  however, is telling CNBC that he thinks more in terms of four rate hikes next year.

The problem with such an outlook is that it assumes that economic life will remain stable.  To us, that’s wildly speculative for any number of reasons.

A major attack by “terrorists” (or another false flag to try and ‘let some air out of rising optimism) might be attempted.  And, we can’t forget that as president Xi increases is hold on China, once his 12 new Party bosses have replaced their predecessors, the timing should be about right to pull the strings on the marionette government of North Korea.  (Read: What You Need to Know About China’s Biggest Political Shakeup In Years.)

(Clinton sidebar:  It IS about the money! Clinton Foundation will reportedly keep Weinstein’s donations.  Act surprised.)

China has a long-term agenda that includes “re-unification” of Taiwan, which as you know is presently the Republic of China.  To do this, China will likely employ something of a Blitzkrieg approach.

While the left-wingers of the NE Liberal Press are still selling yesterdays news (like Hillary saying Trump could lead us to nuclear war – perhaps as a salary negotiation for her pending professorship) Left, as is so typical, forgets there is a long game in play.

The Washington Post today chimes in with “If Trump doesn’t want a nuclear war with North Korea, a ‘No First Use’ pledge might work better than threats.”

Again, the hand-wringing liberals forget:  When going to a street fight, you bring several guns, a chain, a knife, mace, and whatever else you figure to be useful.

North Korea diplomacy will continue ‘until the first bomb drops,’ Tillerson says.

What you don’t do, unless you want a thorough ass-kicking, is tell the playground bully:  “You go ahead and throw the first punches…”

This is not to say the Lefties are a bunch of losers, but most of Flyover America would just as soon keep our guns, honest money, and oh, yeah, if the NorKs do another nuclear test, especially with a missile of intermediate range involve, then it’s time to tell the playground bullies a few things.

Write this down somewhere, so you can refer to it in future years:

  1. There will be use of nuclear weapons in our lifetimes, particularly if you are 40, or under.
  2. It will not be the End of the Word.  But it should be here not later than  2025, but more likely 2024.
  3. World Wars tend to happen after huge economic distortions.  Like the arrival of radio (the social media of the 1920’s) and the displacement of the draft animals by new-fangled internal combustion-driven autos, trucks, and tractors around the same time.  The modern displacement is the internet, voice recognition, and so forth.
  4. When the major powers figure their economies are crashing, they will look for scapegoats.  And just as Roosevelt forced the entry of the Japanese as an Axis power in WW II by embargoing their oil supplies from south Asia, we have equal (or greater) vulnerabilities in rare earths and, oh yeah, an inability to make all our own military components.

I don’t mean to start your Monday with such a pessimistic view, but the market is so high that it’s almost impossible to find investments that make any sense.

The problem is that a $1,000 stock that is paying $10 of dividends (1%) looks like a genius investment when banks are playing 0.25%.

But what happens to the wisdom of this investment – still paying 1% – when the Fed has already said, in so many words – that rate are going back up to 2 1/2% and higher?

I’ll tell you:  The stock prices will have to fall for the economics to pencil out.  The $1,000 stock will need to drop to $500 with 2% interest, $333 with 3% interest, and $250 with 4% interest.

What the Fed is saying (and we don’t hear much about this from the parrot media) is that “We’re going to raise rates sooner or later…”  When they do, it will end the current “free money” regimen that has powered a “recovery” and has facilitated the blow-off, including in Bitcoin.

Economic cycles are difficult to beat.  And the Fed is likely to fail as their predecessors have.

When it happens?

Historically, you get first a Depression and then a Global War.

That, of course, means foreplay.  And that’s the role of Kid Korea and the band of NorKs.  China wants to know what we’re bringing to the playground.  And despite the protestations of the unemployed would be professor and her sycophant press, it’s not a good idea to tell ’em.

So, Back to Markets, Then…

Dow should open up 20’ish which would put us around 22,891.  And since the all time high was 22,905, either this afternoon (or tomorrow), we look for new highs.  Which could explain…

E*TRADE Study Reveals Retail Investors See Market Closing the Year on a High Note.

US Department of Useful

Oil rig explosion rocks Kenner, injures 7 people Sunday.  Please note that The Network doesn’t seem to want the mainstream brain-washers to remind you that this is yet-another dirty deed of an Islamic terrorist organization.

Millennials waking up? Austria turns sharply to the right in an election shaped by immigration.

M.E.M (Middle East Mess)

Israeli military strikes anti-aircraft battery in Syria amid tensions.   But there is more to it, offers our .mil expert warhammer:

This incident over the weekend is more than just Israel lobbing a potshot across the Syrian border.

<http://www.foxnews.com/world/2017/10/16/israeli-military-strikes-anti-aircraft-battery-in-syria-amid-tensions.html>

Israel demonstrated air supremacy from afar with a take no prisoners swagger (perhaps  blowing a kiss at Iran in the process).  It will be interesting to see if Russia had, or claims to have had, any military personnel or advisors at the Syrian anti-aircraft site.  If so, what might Putin choose to do in response.  Chess pieces are moving.

Check….

US Department of Useless

Passengers Slam ‘Hysterical’ Airline Crew for Panicking When Plane Suddenly Drops 20,000 Feet

World’s most expensive rice will soon be for sale in Singapore.

100 Women: The ‘right amount’ of panic for women in public.

The women we know never panic…sheesh…what kind of low-level formatting is this? FMTT…

OK, Mor’on the Morrow.

Comments

The Games of Options Week — 19 Comments

  1. Campos is now MIA. Won’t be seeing that “loose end”, um, I mean “maintenance worker”, um I mean “security guard”, whatever the story is it’s changing daily… but now Campos is missing. How predictable!

    • You may find this hard to believe, but that Kenner story was to the Lake Ponch.

      The story dropped by my two-bit editor was the 300 dead in Somalia…for some reason that didn’ty paste right…but a good catch!

      Anyway the extremist move on Somalia is the story The Network is hiding because it goes against their soft-Muslim sell

  2. Geez George, I remember when you were a bachelor living on a boat ! Has it really been 18 years ? Congrats to you and Elaine !

  3. “Would you like to fly in my beautiful Bitcoin
    Would you like to fly in my beautiful Bitcoin
    We could float among the stars together you and I
    For we can fly up up and away

    My beautiful,my beautiful Bitcoin
    The worlds a nicer place in my beautiful BTC…

    #BTFD has now become BTFATH !

  4. “We’re going to raise rates sooner or later…”

    With the economy struggling as it is with the average wage earner..

    Can they?
    Until now they have been printing paper to cover printed paper to keep the illusions that everything’s ok.
    When in reality we should have gone through the correction forty years ago instead of passing the millionaire relief act of the seventies.(which they are talking about doing again)
    And how far of a fall will it be with inflation as it currently is.

  5. Has anyone considered that the quick rise in bitcoin might be the buy up by the PTB for a huge dump and crash to make people shy away from anything more than their fiat currency ever being considered again? Just a thought.

    • Is that the same Krugman that predicted last November the stock market would never recover from Trump’s election?

      • …And the same Nobel Committee which awarded its Peace Prize to a guy with no qualifications, merely for getting elected POTUS.

        Keynes was wrong, and Krugman is an idiot for lapping John Maynard’s eraser crumbs. I would MUCH RATHER suffer through a massive depression, than the Hell-on-Earth which will be loosed when the “economy” as “managed” by Krugman and his ilk, snaps.

        “Credentials” don’t impress me. Successful, repeatable actions do…

  6. I was on a flight from Oakland to Seattle when the oxygen masks dropped down and the plane went into a dive. Kids started screaming because their ears hurt. There were three of us women in the row by an exit, we were all reading the instructions, quietly. No one got on the radio or told us what was happening. We finally leveled off, but we had plenty of time to think about our imminent demise. I called the airline two days later when I still couldn’t hear and was told the flight had been normal! Not normal enough for me!

  7. I read on several sites that the Iraqis have retaken Kirkuk and the kurds bolted.

    Funny how mercs seem to slide away when there isn’t any money to be made – and the Peshmerga been mercs a loong time…

    • Question no American asks, is where does all the money come from to keep all this fighting going in the Middle East?

      It comes from the federal Reserve printing press. When printing occurs to the tune of a $trillion in deficit spending, and another half trillion in trade imbalance, it’s not difficult to skim off a few billion to pay some guys to fight. Take a look at USA arms sales, the largest weapons dealers in the world. They desperately need a market for their wares, thus the fear porn about North Korea.

      When the fighting dies down in the Middle East, it will simply mean that dollars no longer have the value left to purchase that kind of trouble. It’s only a matter of time before that comes home to roost. It’s already showing up. The cultivated mindset is that the stock market is going up. To the educated eye, it indicates that the value of the dollar is declining. Why else would it take twice the dollars to buy a share of a corporation that pays the same dividend when that share was half the price? Zero interest rates are just a way to camouflage that. Anybody out there not want that 5% dividend?

      And if you go to the Chapwood index, you will find the same thing happening to your personal buying power. This has been camouflaged by cheap shoddy goods. The toaster we had when I was a kid lasted over 30 years. Faucets and door hardware used to be engineered to last 20 years, the life of a mortgage. The average length of a mortgage today is seven years, so guess what? When I replace a lock set in our 20 year old apartment house, the new lock set weighs about half the old one. Unless I want to pay triple and get commercial quality. Any of you even able to pay 3x for your stuff to get that quality?

      I guess what I am trying to say is that you can quarterback world affairs with the assumption that none of it affects you, but it does. You simply do not realize it because a lot of (printed) money is spent to convince you it does not.

      • Who needs to skim!!!
        It’s all printed paper only backed by a promise that it’s good. Of course we cannot live without it. But they sure don’t have to skim just print what they want and beck they don’t even have to print.. Just ask Bernie he sent out a piece of paper with some numbers on it.. Bitcoin its an electric number

      • As usual you undermine and think you are talking to ignoramuses. Come on, usually you dish it out better than that. This tripe is beneath you. Tell us something we don’t know.

        -O-, where are you?

    • OM2, I think it would be more accurate to frame the situation as the Iraqi central government wanting to squash the Kurdish drive for independence. The Kurds fading away from the Iraqi Army has a lot more to do with the Kurds having no heavy weapons to even try to counter the Iraqi Army.