So we start this morning with the futures up – but not much – considering the 265-point downer on Thursday. But it is playing out just as laid out in Peoplenomics on Wednesday.
A couple of days of closing below the 1,965 level on the S&P would send us into short positions and waiting for the world to end, but the flip side is that there is so much money floating around (from the central banks, anxious to flood with liquidity) that there may be no other investment choices to speak of, at least for a while.
Former Regan Budget Director David Stockman was on Bloomberg yesterday arguing the quick collapse case against a Wharton economics prof who believes that we’re going to go higher. Fischer made similar arguments as the Wharton dude in 1929. Colin Seymour’s classic chart of 2001 is worthy of study as you mull over who to follow…
Most people try to forget that Keynes said in 1927 there would be no more crashes…and it’s a testament to public gullibility that he was hailed as a sage by the time the Crash was dragging out. A fine example of stupsheepidy.
The unfortunate reality could be that both Stockman and this Wharton fellow could be right. Maybe a massive experiment at CERN has gone wrong and we can now crash lifestyles while the market goes both up and down. Say, that’s progress, ain’t it?
When the central banks are passing out what amounts to free loans to banks, the banks will put the money wherever they can…and stocks happen to be one such place. It’s convenient and easier to move than gold or silver…and Lord knows the banks own enough housing stock (super low rates from the Fed are keeping those homes off the market) that they don’t need more.
BUT when the rates rise and the banks need to sell some assets off to cover their costs, then the size of the resultant market decline scales geometrically (or better). We’re not too old to be patient.
It’s not a pleasant investment environment, but it’s the one we have, so expect today to be like another day of calling the play-by-play at a funeral.
“It’s still alive…wait, wait…THERE! A tiny breath! How long will that keep this dying market in the game? Stepping up to mound the Fed’s best are tossing in a free throw from the cash line….up it goes…and it’s…it’s… IN! And that market rallies again…”
Yeah, well, whatever….
The next Live or Die level will be the new trading range floor around 1,900 on the S&P and if that goes…1,815 and then 1,740.
We may be poor in cash, but we have a place to live for five-years or longer that needn’t cost us a cent. Toss in the garden and maybe we’re better off than most of the coop dwellers in town.
Gross Domestic Product
Remember that monthly news release that is the most circularly reference work of modern times? You know it as the Gross Domestic Product report and it has more percents than the 99’ers. See if this makes sense to you:
“Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 4.6 percent in the second quarter of 2014, according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent.
The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 4.2 percent. With the third estimate for the second quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in exports were larger than previously estimated (for more information, see “Revisions” on page 3).
The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
Real GDP increased 4.6 percent in the second quarter, after decreasing 2.1 percent in the first. This upturn in the percent change in real GDP primarily reflected upturns in exports and in private inventory investment, accelerations in nonresidential fixed investment and in PCE, and upturns in state and local government spending and in residential fixed investment that were partly offset by an acceleration in imports.
If it does make sense, and if you have a rising sense of euphoria reading those words, get yourself into counseling as quick as you can.
Otherwise they eventually get around to pegging GDP at 17.328 billion. This would put velocity at M2 around 1.516 – so collapse continues under the cover of paper. Last quarter it was 1.533…but hey, don’t le my acidic nature keep you from buying – some one has to be the weak hands in this market and since you volunteer so easily….
Quake
Alaska…6.2. Located 80-miles northwest of aptly named Earthquake Park in Anchorage. One of the radar sites I can as a kid is out that way near Willow. Nice country, 6 months of the year.
Any Excuse to Riot?
Another night of protest in Ferguson, MO. How many times are the news anchors going to refer to the out of town agitators without naming names before authorities wise up?
Meantime, Eric Holder has had it – resigning. This after some extreme poor calls on immigration, as I see it. (Don’t let the door hit you on…)
But that doesn’t mean the Washington Cartel is wising up. To the contrary, they are now planning to allow illegal immigrants to serve in the armed forces.
Wait!
That’s the MSM/BS way of putting it.
The other way of stating this – which is also true and has much bleaker implications is this:
Foreign Army to Occupy USA.
Marshmallows for ATC?
A fire at a radar facility grounded operations at O’Hare this morning. This will likely ripple around the country today due to equipment and positioning to follow.
Brother-in-law and his lady friend are off to Las Vegas this morning – and I have to wonder if their equipment (due in to DFW – will be delayed?
You see, we have this stuff around here we kcall “The Bates Luck.” It’s an odd sort of luck…got him through several combat tours in ‘Nam, Rangers and SF…but when comes to the slowest lines at the checkout stand, road slowed for paint striping, and so on, the Bates Luck kicks in.
A nickel on the side says it will mean flight delays for them this morning…
Peoplenomics tomorrow, More here Monday….do come back.