Say “Hi!” to 1,900: The Fed “Unprints” Trying to Save It

Given how the market turned into a trading turd Thursday, and just looking at the futures a couple of hours before the open (down about 9 on the S&P), I’m beginning to think that we will touch (and likely bounce) off the 1,900 level sometime in the next five trading days.

Or (and this is an increasing possibility), we could have a drop to somewhere a good bit under 1,900 by the 23rd, or so.  Then a bounce up to the trend channel, and then a further retreat such that by our November 10 target date, we could be dancing around 1,750 on the S&P.   Or we just crash to that level…my crystal ball short term is in the shop.

Long wave econ argues Toast is the correct answer long term.

Say, that’s a pretty glum outlook!   Yes – including our outlandish 2025  rate :28% unemployment rate forecast, but that’s how cookies crumble.

Well, maybe it’s not so glum….

You see what’s going to happen here shortly (with oil down to $84 and change this morning), is it will shortly occur to someone besides me that deflation is screaming.  And, as it does, what else is likely to tank in a major way? 

In the very short term, gold.  Unlike paper, though, gold can’t be watered down, so I wouldn’t be a seller…a real slump in gold prices could be the investment of a lifetime.

OK, what does Janet Yellen (et alia) do about it?

They MAY have started to “UNprint” the money supply.

The evidence is right there in your face:  M1 is down 1.7% in the last month and if we take the M1 annualized rate, basis the last three months, M1 is down to 2.3%.  That’s a hell of a chance from a 12-month print rate of M1 of 9.9 percent, I’d say.

M2 is down  to 5% from 6.4% over 12 months.

Which means?

We know that money’s cost is a function of supply and demand.  If the rates are low, there’s no real incentive to spend.  Why buy now if things are going to be cheaper down the road?  But with the Fed doing some visible tightening, they’re basic ally saying money commanding a little more interest might be a good thing.

Especially in the oil patch where oil under $85 puts the fear of God in drillers.  At these kind of prices exploration falls apart and if it gets much lower, rigs will start laying down.  And there will go yet another crop of high-paying jobs – off to harvest.

So watch today quite closely:  We have four Fed officials speaking and they may have something to say in unison if we listen closely.

Tomorrow’s Peoplenomics report looks at the “different kind of prepping” that comes into view in the times ahead, if what develops in coming months is indeed “The Big One.”  You may find it useful.

Import Export Prices

Here’s Festive for you:

Prices for U.S. imports fell 0.5 percent in September, after declining 0.6 percent in August and 0.3 percent in July, the U.S. Bureau of Labor Statistics reported today. Each of the 3 monthly decreases was led by falling fuel prices.

The price index for U.S. exports also declined in September, decreasing 0.2 percent following a 0.5-percent drop in August. Imports All Imports: Overall import prices continued a 3-month downward trend in September, falling 0.5 percent. Prices for imports decreased 1.4 percent from June to September, the largest quarterly drop since the index declined 1.4 percent during the final quarter of 2013.

In September, fuel prices drove the decrease, although nonfuel prices also declined. The price index for overall imports fell 0.9 percent for the year ended in September, the largest 12-month decrease since the index fell 1.1 percent in February.

Fuel Imports: Prices for import fuel decreased 2.1 percent in September following a 3.1-percent drop in August and a 1.5-percent decline in July. Lower petroleum and natural gas prices contributed to the September decline, falling 2.0 percent and 5.0 percent, respectively.

Fuel prices decreased 5.8 percent over the past 12 months, the largest year-over-year decline since the index fell 8.1 percent between April 2012 and April 2013. The decrease in fuel prices over the past year was led by a 6.6-percent drop in petroleum prices which more than offset a 35.6-percent increase in natural gas prices.

All Imports Excluding Fuel: Nonfuel import prices edged down 0.1 percent in September, after recording no change the previous month. In September, lower prices for nonfuel industrial supplies and materials and automotive vehicles more than offset an increase in the price index for foods, feeds, and beverages. Despite the decline, prices for nonfuel imports rose 0.5 percent over the past year. Higher prices for consumer goods; nonfuel industrial supplies and materials; and foods, feeds, and beverages all contributed to the advance.

Sure doesn’t read as inflation to me, more like deflation out the wahzoo….but maybe my glasses are dirty.


Nobel Thinking?

I have been a little skeptical of the Nobel Peace Prize in the past because at least one winner hasn’t been exactly the prince of peace (or fixer of economy, either).

And it comes into focus more this morning after and Indian and a Pakistani shared the peace prize that politics – maybe not actual peace – has a great deal more to do with who wins than anything else.


NY Times has a fine explanation of the process and who knew what, when, in the  US Patient Zero Ebola case.

The WaPo meantime reports on the Ominous Math of Ebola Epidemic” which we’ve been going off about for three weeks now.

And here’s a general who says Ebola could sneak in from Mexico. If I were on the general’s staff I’d expect a call from the Gesta  political correctness police.

Trouble for the Boss

It seems a simple enough question:  The editorial board of a paper in Kentucky asked democratic senate candidate Alison Lundergan Grimes if she voted for Obama in the past two presidential elections.  This is some of the smoothest tap dancing you’ll see this week:

So:  Did she, or didn’t she?

Kind of cool seeing someone already talking the talk of an elected official even before an election, methinks.

Obama’s approval rating in Kentucky is reported around 30% so maybe there’s a reason she waffles, but it seems a simple enough question.  A simple Yes wouldn’t have bought the headlines, though…  It is all about headlines, right?