Markets: Fact-Based Fear, Triffin’s Revenge

There I was Sunday: Online shopping.  Odd assortment of things, too:  An old-style clothesline kit with pulleys and 150 feet of line, a 1″X30″ belt sander with assorted silicon carbide blades for knife-making, brass rod for fasteners.  Overall, an eclectic mix but nothing out of the ordinary for a well-prepped, non-urban, survival-oriented fellow who sees the “handwriting on the wall.”

What’s the worry?

The calendar, for one.  We have been covering this on the subscriber side for a while, but since (as Booker T. and the MG’s would play it)  time is tight.

You see, there were (by my count) 82-trading days from the stock market pause in May of 1929 to the market’s all-time high in early September of ’29.  When we pencil 82 trading days into the modern calendar we land about September 26th, a week from Thursday.

So that’s point #1 today:  We have to wonder is there isn’t something lurking ready to surprise by the end of the month – maybe over the weekend of the 28th and 29th?

Second point, then:  Is there anything in our Aggregate Index that hints we could be at a logical topping point in that timeframe?  Well, since you asked….

To understand it – and this is NOT trading advice (you’re on your own there) – we need a discussion of how someone might view the markets today.

There are only a few concepts:  One being the book Trading the Regression Channel: Defining and Predicting Stock Price Trends while the other is our dog-earred copy of Elliott Wave Principle: Key to Market Behavior.

Here’s an example using our Aggregate Index chart, current as of early futures pricing this morning:

Obviously, if the trend channel is broken to the downside, ideally in two weeks, then fear could become a useful reaction.  Let me walk you through my utterly simplistic way of seeing this possible future.

You begin with what looks like a recent high or low on your chart.  In today’s example, it’s the low at “A” which is the blue circle.  Using a graphics tool (Excel charts are peachy for this) you begin at “A” and hit the next major low that appeals to your eye.  For me, that’s at “B”.

Now we turn that line into a color…green…and extend it up and to the right, making sure it’s still exactly touching the A and B points.

With this done, we copy this line and paste it so that possible Elliott stepwise moves become apparent.  I also changed the color of the line to orange, so as not to confuse things.

That’s all there is to it.

If the market drops under the green line for a day or two, then a change of direction becomes possible.  Pie-simple stuff.

Now all we need to do is see if the Elliott wave structure looks reasonable (yes) and whether we could already be done (yes) or if we could go higher, still.  (yes).

One way to think here is that we could drop to the trend channel bottom in the next day or two, and then commence a Wave 5 rally, say late this week, that would carry into next.  In fact, topping a week from Thursday would be splendid.

This is highly speculative, but that could comprise a “finished five-wave structure” from the small i, ii, iii which was the first Elliott up, then we have a larger i, ii, iii which would fit Elliott nicely for a three.  All that would remain (if we get down to the bottom of the trend channel in the next few days) would be the arrival of blow-off finale from kissing the trend channel shortly and off to the final high.

Then get the butter out, because we could be toast.  I won’t roll you through all the “news permutations” of secular events that “will be blamed” because whether it’s a new series of drone attacks in the Oil Kingdom, a health issue for a leading candidate for office, or a nuclear flash in Kashmir – honestly it will make little difference.

Life (and markets) seem  to run on trajectories and we’ve just be biding our time, waiting again for a good time to strike.  And speaking of which, the GM strike is another wild card…

What About “Triffin’s Revenge?”

Got an absolutely brilliant email from a colleague this weekend citing the difficulty of predicting market behavior when the Triffin Dilemma finally breaks.  Because I’m lazy, a longish cite from Wikipedia lays it out this way:

The Triffin dilemma or Triffin paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was identified in the 1960s by BelgianAmerican economist Robert Triffin,[1] who pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, thus leading to a trade deficit.

The use of a national currency, such as the U.S. dollar, as global reserve currency leads to tension between its national and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account, as some goals require an outflow of dollars from the United States, while others require an overall inflow.

Specifically, the Triffin dilemma is usually cited to articulate the problems with the role of the U.S. dollar as the reserve currency under the Bretton Woods system. John Maynard Keynes had anticipated this difficulty and had advocated the use of a global reserve currency called ‘Bancor‘. Currently the IMF‘s SDRs are the closest thing to the proposed Bancor but they have not been adopted widely enough to replace the dollar as the global reserve currency.

(We drop a few bucks as a Wikipedia donation now and then and suggest you to do the same.)

This really cuts to the heart of two concepts we’ve been gnawing lately:  The Global Competitive Currency Devaluation (GCCD) and the matter of value-seeking; acquiring non-financial assets such as us “regular people” can buy.

What’s the outcome when the global economy Triffinizes?  One scenario is that since the US Dollars are central to the global reserve currency game, tons of those dollars could flood home.  Bad money, crowding out good, means that a huge spike in prices might materialize. When more money chases the same stock of goods, prices head skyward in eBay-like fashion.

Bad as that sounds, it’s really worse.  Because at almost exactly the same moment as made-up Dollarized assets return home to roost, the USGov will be required to print money like hell in order to  make payments to bondholders on the national debt and to keep the social safety nets (like social security and oodles of pension crises) from collapsing.  Oh, and demand for real wages are going up already as “Thousands of auto workers strike against GM: “We stood up for GM when they needed us”

Makes a marvelous case for precious metals but just because you have a few rounds won’t save your butt either.  That’s because no one is equipped to handle either a return to paper (fiat in hand) money nor the exchange of goods for precious metals.

But that has to be considered as well, since somewhere in here, the global cyber-warfare should break out and people who have gone “phone-faced” will be at a loss because all of their financial assets are suddenly (pass some more butter) toast, too.

In short, making all the paper money in the world becomes potentially less important in the near future.  Because once the supply chain empties out following a massively-correlated hyper-volatility event (MCHVE) as people go into hoarding mode, it will be then that Triffin’s Dilemma turns into Triffin’s Revenge.

Almost ironic from a historical perspective:  The world’s foremost “expert” in runaway inflation was buried this weekend: Pomp, thin crowds and mixed feelings as Robert Mugabe is buried.”

For those with a “nose for smoke” we can already see the arrival of global hyperinflation: “Venezuela, Zimbabwe, Sudan, Argentina: World countries with highest inflation rate.”  So while there’s talk of massive deflation (exemplified by negative rates by the ECB last week) the Global Financial Discontinuity continues to edge closer.

Not a cheery and chipper discussion, perhaps, but one worth thinking about:  Wondering how America (and world) could survive the wholesale destruction of digital assets could shortly become more than a Monday morning academic exercise.

The pieces are already morning, though: Global Markets Slide, S&P Futures Back Under 3000 On Oil Chaos, China Slowdown.  Now it’s just a matter of the end of the month…if we make it that far.

We now beam you back down to the planet’s surface….Good luck.

Sir Tracks-A-Lot

Speaking of the drone attacks: Trump pledges to help allies in Middle East after Saudi attacks.  While president Trump has been using “hot button terms” like “locked and loaded” in response, a good piece in the NY Times this morning lays out  howThe World Reckons With a New Oil Order.

As mentioned to subscribers, only a matter of time until BATF has to put limits on drone lifting weights in order to proactively limit risk of similar attacks in ‘Merica.

Unable to rattle Trump, or find anything impeachable, we notice the left is now attacking the US Supreme Court in a change of focus: New Brett Kavanaugh sexual misconduct allegations spark calls for impeachment.

In our  Thar she blows department: Beachgoers Warned As Hurricane Humberto Forms Off Florida Coast.

In tech, Apple takes fight against 13-billion-euro EU tax order to court.  The  megalomaniacs of the EU think they can fine an international company for a percentage of worldwide revenues for an infractions.  What they can’t bring themselves to admit is that near as we can figure,  Apple was just working  applicable laws in their use of Irsh tax laws.  A more honest form of government would change laws but not the European Union.  They’re little more than digital highwaymen, as we see it.

Oh, and it makes Russia reforming its satellite states into Buffer Zone II achievable as Russia, Belarus to Form Economic ‘Confederacy’ by 2022 – Kommersant.”  Dandy.

And just out, the NY Fed’s Empire State Manufacturing numbers:

“The headline general business conditions index edged down three points to 2.0. New orders were marginally higher than last month, and shipments grew modestly. Delivery times were steady, and inventories increased. Employment levels expanded, while the average workweek held steady.”

Off to work on  Peoplenomics and practice my caffeine and carb loading skills…

Write when you get rich,

35 thoughts on “Markets: Fact-Based Fear, Triffin’s Revenge”

  1. As I had mentioned earlier any easing of the sanctions against Iran would have flooded the market with more oil killing the Texas Shale business. The Aramco deal was going south in a hurry – if by magic the Oil complex is hit and Oil goes north potentially saving the Shale business and now how much are the Saudi oil reserves worth (The IPO) how much with another attack? Draw your own conclusions?????

  2. Russia and Iran have been partners in crime for ages. You have Russia funding them and now they are united in going after the Saudi’s and I think, Israel next. And another tanker has been seized in Hormuz as well. It is obvious they are itching for a fight and want to get us tied up in some type of conflict. Trump has to do something to nip this in the bud. I hope it is swift and effective to their infrastructure and nuclear aspirations. One swift kick in the head and out. But the crazies in Iran see in action as a weakness, so something has to be done soon. It also has to be seious enough to make them think about doing anything else.


      I believe the writing is on the wall for our economy. the puppeteers have been pumping out money at such a rate that if it was miles per hour would take seconds to shoot a rocket to the moon and back.. our economy and whole way of life is going to tank big time..its the big one coming folks..
      to gain total control over the population and imprison the wealthiest twenty nine percent as in Adolph’s second book.. they have to have the whole population dependent on them for everything.
      almost everything that is made is made outside this country so it wouldn’t take long to do just that.
      I totally believe this is just another false flag to get us involved in a war or wars so that all the blame when the USS America sinks faster than the Titanic.
      If they can’t get us embroiled into a war while DJT is in office then they have to do something to fix it for four years and i believe it is well over the tipping point now..pretty soon the velocity of money and compound interest is going to take over.

      this my friend is just a convenient scap goat to do just that..Iranians are not stupid they know if they did do something just like that and President trump pulled the trigger that the next incoming administration is going to be a member of the deep state that will want the ultimate war to gain their resources.
      the other thing to look at.. is THE SAUDI’S have more money than we do… they have access to the same war lords we do.. yet they are not attempting to spend any money to go after the evil doers. not one dime.. during the desert storm battle that one was real.. they paid the tab for that..not this time though.. so why not pay to defend your own country..why are they hedging on that.. could it be that all of the middle east has signed agreements to Russia and China and the cherished pipeline is going to be under those same agreements.
      that looks like a loss of power for a certain group and a loss of controlling resources as well.. I say unless the Saud family decides lets kick in the coins cash in the silver rolls royce encrusted with diamonds and lets go after them.. then we should back away.. JMHO here..
      I haven’t been really following it since I had already anticipated a false flag event to get DJT to shove us into a war in the middle east.. I figured it would be in pakistan or india.. maybe syria and Israel …

  3. A $6 increase in oil prices in one day can’t be overlooked as a potential big stock market negative. All indicators are pointing up, but with oil & war in the air, I turn negative short term. This has been a very manipulated market the last few months. Maybe the recent rally was to suck investors back in & then hammer them with a large downturn. It doesn’t make sense that the market correction started on 7/31/19 was so short lived. I get the feeling that something is amiss.

    Since investors use real dollars (their own), it behooves one to be cautious.

    • “A $6 increase in oil prices in one day can’t be overlooked as a potential big stock market negative.”


      and another way to shove the economy that has been bouncing alone and not fallen to tank during this administration.. putting in…..


      the deep states boy or girl…. that they have total control over ..

  4. The War Drums beat…by the SAME US Intelligence agencies that want to remove President Trump from office any way possible…AND have spent the past 2 years top to bottom LYING about Russiagate and every dam thing else…..Brennon,Clapper,Comey Pompeo,Bolton,and the list goes on….BUT trust them on knowing Iran was responsible for the drone strike…WTF

    • Honestly, you can bet the vast majority of our intelligence assets are both honest and patriotic. The rot is solely at the top, and is caused by Agencies not being to promote assets above a certain level, because top spots are filled exclusively by career bureaucrats.

      Now, put yourself in Mr. Trump’s shoes for a minute:

      You know this. You also know any action you take, even no action at all, will be used against you as Democratic propaganda. You also know that a response of some type MUST be made, or you and the U.S. lose international cred by abandoning a strategic ally.

      Whom do you trust for accurate intel, and what response do you make?

      • Good Point… Ray.. but thing a minute..

        it wasn’t that long ago there was a major story hit the airways that in lightning speed was hushed up by our very intelligence sources the minute it was obvious that it would include high ranking officials and individuals.. everyone that was investigating it either was mugged or committed suicide.. all those caught were met with some sort of catastrophic incident to.. except one they let him go..
        so who do you trust.. who is telling the truth.. the power of that one small group is pretty big.. and since all these little things all deal with major control over resources.. I am going to bet there is a little misleading information being passed on here..Remember all fiction is based on a fraction of fact deciding what is fiction and what is fact is up to the individuals interpretation.. this has all the markings of a control issue.. get the US embroiled in a war we cannot win.. Now if the Saudi’s were paying the tab.. go for it.. but they obviously don’t see that it is a major issue..

      • LOOB, there must be a response. The questions are: “What?” and “Toward whom?” and the problem is: “If the perp was Iran, which is highly-likely, what possible response can President Trump make which will satisfy both the Saudis and the “International Community,” yet provide little, or no ammunition for the Dem wannabees?”

        My previous post was made to illustrate why Presidents become prematurely gray… ;-)

        …although I would love to hear responses to those two questions from George’s Peanut Gallery.

        Based on my analysis, Trump has NO good choice WRT a course of action on this. Only bad choices, and worse choices. His possible response runs the gamut from “do nothing” (which is probably the worst choice) to “overnight regime-change” and everything in-between. How does one choose…?

        I believe, were I President Trump, I’d have a trusted staffer covertly poll mid-level CIA agents for a “field-level intel report,” and use the polling to buffer (or fact-check, or confirm, as needs be) whatever the top-level brass presented me with, then consult in the same manner with Army and Marine combat command officers, for the same reason, on practicable courses of action.

        Frankly, in the long run I still favor the idea of sending 800,000 M16s and 2000 training SpcOps to Dearborn. That’s a ready-made army of highly-motivated soldiers, just waiting to be trained and airlifted home. ‘Doesn’t help in the short-term, though…

      • BTW, we’d win.

        The Republican Guard are genuinely tough and good soldiers, and their number is {somewhere between 50k and 150k — we, publicly anyway, don’t know.}

        ‘Doesn’t matter. In a Blitz, we’d take them out within hours, ‘cuz our toys trump their discipline.

        Our “problem” with every “war” we’ve fought since WW-II is our “rules of polite disengagement.” Wars ain’t polite. Our Rules of Engagement should be:

        Kill people
        Break things
        Do not rape, pillage, or plunder


        Were I Mr. Trump, I’d make this Military Policy, and publish it for the World to see…

      • Ray, did you ever think that all of this international chaos is the result of worldwide intel that Trump’s weak and vulnerable? He is all talk…and has proven that domestically over and over. His base fails for it..but the international community? Not so much.

      • No Mark, I haven’t…

        But I have considered the possibility that certain facets of Iranian policy are being guided by John Kerry…

    • Drones were apparently involved in the strike, but perhaps just to act to enhance targeting by cruise missiles from Iran. As usual, the fog of war obscures the truth.

      Drone tech is well developed and some is open source. A decent engineer, or even a motivated hobbyist could build something terribly dangerous, and no laws can prevent that.

      We can only hope that we can demotivate such types of people from destruction and give them better things to do with their time.

  5. I always wonder why people have it sooooooo wrong.
    It is NOT about countries — it’s about just a few elites.

    Listen up sheep!! ;-((

  6. Clotheslines. Forget the pulley–just something to either maintain or break. Good old plastic-coated clothesline (I prefer the green) that comes in 50′ lengths. Mine is 25+ yrs old and still as good as new, only needing cleaning once in a while with a damp rag. Attach either end to a tree, or between buildings if you don’t have/want one of those old-fashioned T set-ups.

    It’s nice to have some line under roof where sun won’t fade colors and clothes can get almost dry even in rainy weather. Often only 15 minutes to complete drying in dryer–even towels. And this is in muggy south Louisiana.

    Don’t forget clothespins. Lots. Wooden ones, not plastic–they don’t last. Might lay up a couple extra packs of those, they usually come 50 to 100 a pack. Eventually they will go the way wood goes outdoors.

    Nothing like line-dried bed linens.

    I can recall when the oldsters used to lay white dish towels out on grass in full sun to bleach while drying.

    • A word on clothespins. You might want to reserve a pack for extra-laundry uses. They make good little clamps for all sorts of projects. No regrets if they wind up having to be discarded after one use. I have numerous pins scattered throughout the house, on the workbench, in the studio, in the garden.

    • Calyn – and I STILL lay my white dish towels out in the full sun to bleach and santized while drying. The end result is one that no dryer can ever duplicate!

    • A handy item to have available… You would not get 25 years out of new clothesline, perhaps not even 25 months, unless you sought out an American rope manufacturer and located their distributor (BTDT.) My old one (still going strong) is over 60 years old, and is quarter-inch braided cotton. It also doesn’t get used every week, and gets taken down when there’s rain in the forecast. Asian bamboo is best for fixed clothespins. For pinch clothespins (with springs in them), buy American. The ones nearly everybody sells now are Chinese, and the springs rust to dust within a few months, staining the clothes they’re pinning…

      • My clotheslines are metal wire coated with plastic and they stay outdoors. Something is almost always hanging from them. They are handy for other things besides clothes-drying, such as flopping a rug over for hosing down, pinning light-weight objects to for spray-painting.

        I’ve laid my kitchen towels out in the sun on occasion, too. Sanitizing…remembering that sunshine was the main treatment for TB at one time.

        Yes! Buy American!

      • Ah…
        I keep 50′ hanks of green-plastic coated aluminum wire laying around because it’s amazingly useful stuff — even have a hank in by GO-Bag.

  7. Harvest time….think 1973…..yom kpor…. take your pick, is.17- ez38-39 ps 83. BB gonna take it all. God help us all

  8. The Dems agenda in play…….False Flag Oil field attack…Iran war drums…Supreme court justice attack,,,,Trump Tax attack…Red flag laws….Gun Confiscation….Union walkout….all in one week,,,Coincidence’s…….I think NOT

    • The finish line is coming up fast.. they have to get us into something before their candidate takes office. That way all the blame can be played on our president.
      I don’t know about all of you but I’ve been suspecting it for a couple of years now.. if not this one there will be another shortly after.. whoever’s does will take the blame forever over the things we have all seen coming for over a decade.
      DJT should just sit back quit trying at this point let Congress decide it’s their job..they will waffle it back and forth because they don’t want to be the one to go down in history books as the idiot that did this or that either.

  9. Suzie Orman advises seniors not to be in the stock market because it is too dangerous. She promotes other types of investments as less hazardous. Since you know what you are doing, it is ok for you play, but the average guy is probably better off in tangibles.

    • I am not be fan of Suzie Orman. She is hazardous to your financial health. What does she mean by tangibles…gold, silver, real estate?

    • I agree with her.. usually the stock market is a slow grow ..invest for the future.. when your old the future is in a short period of time. That’s why I tell the kids and grandkids invest in something that will double every seven years.
      IF…. I had invested just what I paid in on social security into savings bonds from day one of my employment Iwith the compounding interest and reinvestment of those at maturity i would have been an extremely wealthy old man.. instead we let congress squander it off.

  10. Read an interesting piece the other day – Iran and China entered into a 25 year $400B deal a while back that essentially permanently ended any dollar shortage problem Iran had an 10 days later Iran attacks Saudi Arabia?

    • I know clawsey… so far all of these countries that have had the serious issues where the talk of war has been about had signed agreements just prior to the issue coming up..
      The coincidence level is just to close to not suspected that theres an alterior motive involved.

      • My hope is that our president doesn’t get sucked into another war.
        Let the next administration or the Democratic Congress make the decision.
        You can already see the waffling on the border.. would you like to be the party that made the decision let’s do this then have it bite you?
        Not me.. my guess is they dont want it to bite them either. That’s why the nightly chant its all trumps fault..

  11. “the U.S. dollar, as global reserve currency ”


    Would the saudi dropping the dollar for the Chinese gold backed currency give the puppeteers a feeling of loss of control?
    Isn’t the saudi backing of the dollar why our currency is referred to as the Petro dollar.

    What affect would that loss have on the USA.

    Just some thinking points. Isn’t it funny that all the dramatic events happen to countries that the puppeteers have an interest in.or can gain them some more power..
    My boy hope is DJT doesnt buy into it all..if the Democrats want to push it the next them take responsibility for their decision to go to war.

    • Being the world’s reserve currency, AND petroleum exchange currency of record have financial advantages…

      Mr. Trump has done a very good job of keeping us out of war. The main reason Mattis went away was he was pushing the “fight” button — same for Bolton, but Trump really didn’t like him, either.

      As I said two years ago: “Trump is a construction worker, from Queens, with money.”

      He’s got a helluva lot of fight in him, but he’s only going to pick fights he can win across the board. Any fight which doesn’t show up as a “win” in every demographic column would have to be pushed on him really hard. So far, nobody’s figured out how to do that…

      BTW I’m guessing his response is going to be to try, through diplomatic and political channels, to get the Urepeeins to back the United States’ sanctions on Iran, and to diplomatically punish Russia and China if THEY violate them. We still have hundreds of billions of “tariff room…” before the room even gets warm — More than enough to break China.

Comments are closed.