Not sure it’s a word, but….After showing signs Friday that someone in the financial world (besides Ures truly) had brains, the market this morning is set to bounce hard and high while reality sinks in.
And the reality is what?
Well, in case you missed it this weekend, the IMF movers were warning us all that they are going to print more and pump just like we are, so the global printing festival – driving markets higher – will continue at least a while longer.
What is some of the “sand in the Vaseline?”
To start with, the IMF is scared that Greece will stiff them on payments. So our favorite financial dom is pre-scolding the petulant Greeks.
Filed under “50-shades of Euro” we can almost hear the Bankster’s telling the Greeks “Vee are go-ink to vip you and you vill like it!” Uh-huh…sure. Greeks aren’t buying it. Why should they be screwed so a banker gets a payday?
Since public opinion is easily spun, the next ham sandwich of distraction will be delivered in the form of boats of immigrants who are pouring in from Africa and points east…Sorry to hear about the dead in the capsizing of a ship this weekend, but it’s an ongoing problem because not many people want to live in war zones
Meantime, one of our well-informed readers suggests:
“Turkey and the Saudis will show their power.
This coming week Obama is having a meeting with Middle east leaders to discuss his Iran deal.The Turks and Saudi’s are as worried about Iran getting a nuke as Israel. If they come away from this meeting. Feeling betrayed by Obama. They may well make some preemptive power moves against Syria or Iran themselves.”
And that moves our scan of the World Messuation along to the Middle East. Saudi officials are just waiting and defending against a homeland oil processing or mall attack, because that is the likely blowback from going into Yemen.
The Houthi’s are thumbing their noses, and we await the arrival of the Iranian supply ships for the next outburst of break dancing on the military front.
Oh, and lighten up on your lib/dream bet on an Iran Deal: The head of Iran’s Revolutionary Guards isn’t biting on any kind of inspection plan. Is our imperial what’s his name gonna buy off on blind faith? Nothing surprises us, anymore. But congress? Not frigging likely.
Our sage reader is right: If the Obama administration doesn’t get their Iran deal, the whole thing could “go Chihuly.” (If the reference doesn’t make sense, click here and put Ure thinking cap on. Puddles of glass…OMG, are you like NOT on the bean yet, today?)
(cue some transition music)
Continuing our morning travel/news/log eastward, we find the Chinese have cut key reserve requirements, but as this CNBC report says, it sure looks like a desperation move.
The reason is simple: In just over a month, the Hang Seng has gone up almost 14%. Go ahead, annualize that…I dare you. And that would be a classic market bubble.
Globally, the (wink-wink, nudge-nudge) competing banks are all worried about what happens if something blows out the top end like this – and then collapses.
Or, (going a bit more east) something like Japan re-implodes into another bout of deflation since they are having a real bitch of a time with hitting inflation targets.
There’s an interesting bet here: The gnomes of Credit Suisse think Japan could fall back into deflation – and there’s good reason to think that. But, the head of the JA central bank says “Naw…nothing to worry about – we got this…” or words to that effect. I’ll take the gnomes and 10.
Fun little trip around the world this morning, huh? All circular references because in a complex but still-closed system, anything blow up here will lead to a ripple or a nuke there.
As my deflationist pal Jas Jain writes (and he has been impeccably right about deflation so far, and sees much more to come…)
What is going to happen this time around is going to be lot different than the Crisis of 2008. I will shut up if the global depression doesn’t begin during 2016-18. China would be a big contributor to the coming crisis and would take the house (the global economy) down.
During the worst depression in centuries, democracies would fall one by one and many countries would disintegrate. India and Pakistan are top on the list. Democratic dopes, including born-and-bred American dopes, are unprepared for the political revolution to come. Enjoy the elections while they last! Bringing “change” by elections is like curing a disease by changing the clothes!! Money and propaganda rule under a democracy.
Jas, a damn fine retire PhD DSP engineer from the “router ranch” applies the same thinking to markets as noisy digital issues and expects we will see sub 1% 10-year note rates.
We share revulsion at the power money wields in politics in ‘Merica.
Here’s the problem: There’s a good chance he’s going to be right. In fact, I’ll up that to likely.
If you look at the longest zoom-out of the 10-year Treasury, you will see that where we are going is to a goal-line stand at zero percent interest , or near enough to it that we will be in Ure’s Discontinuity.
The Discontinuity I have described for you many times is really simple: When companies are making only a few percent profit in a zero percent interest rate environment, they become infinitely valued by stock markets. Look around you: This is the bubble we are in.
The problem is that as consumers stop spending and all companies begin to lose money, they you have a terrible long-term vicious decline (massive depression) of the sort that takes out governments. After all, what happens to government when the real paymasters go away?
Changes what we think of as “money” and worse: Global wars get fought at the bottom of economic long waves. It’s easier for people to get angry and get even than face their own failings…which we do have a few of yet to be reckoned with.
So that’s where she sits this morning: World goes around, illusions of progress are still on for this week. Hardware and software updates on the outside are more than offset by continued operating system issues on the inside.
Over time, the whole system reboots…we run out of papering over our delusions. While it’s not there yet, it sure seems to be coming. And we like the play-by-play as a pastime.
It will be a soggy run in Boston this morning. If you’re on hand, send us some snaps of the Beach Aero Club contingent’s formation flight that usually goes over, although weather might scrub that. We might have gone this year, if the wing attach bracket rivet issue hadn’t sidelined us.
The good news about heavy rain during the run? Well, do you really need a shower after? Hell, a bar of soap at the 10 k mark and just rinse to the finish line…
A couple to keep an eye on: (click below for the USGS site)
Buzzfeed’s Corporate Censorship?
Wonder what Microsoft, Pepsi, and Axe body spray seem to have in common? A read of this NY Times piece will explain.
Misadventures of SOWWDS
Meantime, Jon Corzine is reportedly thinking about another hedge fund. Like MF global wasn’t enough?