We begin the week with an interesting thought-problem rolling around the mind.  If someone asked you what would you like to make more of in life,  sense or  money, what would your answer be?  Pretty sure mine would be “Sense.”  

The logic is simple enough:  If you have  logic and can  make sense of things, the money becomes pretty easy.  So never seemed to worry much, about it.  Especially today, when thanks to CV-19, there’s no incentive to travel, much.  This old rock will pass 24-million  cases this week.  And shortly, from 809-thousand cases now, the million victim level seems like a slam-dunk for September.  We shall see…

The Monetary Impacts of MUM

Making-Up-Money: The price of gold (and silver) has rallied a bit today.  At the open, the Dow is set to soar another 250+ points, as well.  But are these “gains” real – or  illusory?

It’s really an equation of competing valuations, as much as financial miracle.

When the market was feeling under the weather for a while last week (Friday), the USD trade was going off at 93.48.  However, this morning, the USD traded down  to 92.88.

As a result, the dollar only buys (on the global scene) .99381 times what it did Friday.  Which means the closing S&P from Friday (3397.16) should be “influenced” by the currency trade to head for 3,418.32.  As a result, when we inspect the S&P futures price, 3,421.25 earlier, we reckon there to be about 3 S&P points of “trader noise” in the equation.  It will likely run up more, as short traders get creamed again.

I bet you can count the number of people who understand this on, oh, maybe one finger, or so….

Our solemn duty is to remind you that markets are in Lah-Lah land, having seen the purchasing power of the dollar collapse since March highs.  From the Fed’s Making Up Money solution to financial calamity.

Sizing Up Fresh Data

Next task is to consider what’s for breakfast, in a computational way, for the balance of the week: Chicago Fed National Activity Indicator (next story) today, Case-Shiller Housing tomorrow, so a two-part report then.  Wednesday rolls with Durable Goods and Business Uncertainty (dessert first!) followed by GDP Thursday.

This one deserves a special note, since GDP is the basis for calculation of Velocity of Money, and we can readily find M2 on the Fed’s website, we ought to see if the turnover in the economy is getting happier or more depressing.  Happy would be moving “turning over more often” and my sense is that it is not.

You’ve got to be guarded with your interpretations of GDP, M2, and Velocity, though.  Since money is being degraded over time (somewhere around 3.25% annually since 1913 – we will update that one of these days) you need to use either constant or PPP dollars.  Since M2 is current dollars and GDP rolls along those lines.  Truth comes out, but it’s like breaking the table when playing pool on a table with some tilt to it.

Friday we get advance trade and personal income.  The latter is a joke (since we’re living in a police-virus-state).  But, advance trade is useful – though again – swayed by dollar valuations which “tilt the pool table” month-on-month.  Falling dollars look like exports going up (counted in made-up-dollars).  What would be far more honest is to provide both units of imports AND average unit pricing.  Say, there’s a wet-dream about honest politics, isn’t it?

On to the CFNAI

Another financial wet-spot then:

“Led by some moderation in the growth of production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) declined to +1.18 in July from +5.33 in June. Three of the four broad categories of indicators used to construct the index made positive contributions in July, but all four categories decreased from June. The index’s three-month moving average, CFNAI-MA3, rose to +3.59 in July from –2.78 in June.

The CFNAI Diffusion Index, which is also a three-month moving average, moved up to +0.62 in July from +0.14 in June. Fifty-six of the 85 individual indicators made positive contributions to the CFNAI in July, while 29 made negative contributions. Twenty-five indicators improved from June to July, while 60 indicators deteriorated. Of the indicators that improved, nine made negative contributions.”

Those kind of gains don’t keep pace with the monetary injections, though…  Is it me, or does this look like a completed bounce?

Who needs Ray Bradbury and Isaac Asimov when we have a Fed, right?  All write  space fiction.  It’s just the first two were honest enough in their fiction to use  spacecraft, not piles of notional digidollars.  What can we say?

Blow the Town Down

Not telling how wet things will get about Wednesday, down in the oil patch.  Houstonians and from NOLA west are placing bets and preps on how bad their double-header storm will be.

Friday, we discussed hysteresis in weather forecasts.  The Saturday local East Texas outlooks included 35- MPH winds for Thursday, but no rain.  This morning, the wind has gone, but now it’s a 1-inch (plus) of precip.

Back upstream – at the National Hurricane Center’s “mother computer” that we assume feeds data into the National Forecast Monster models, here’s where the “cone heads” are looking:  (Pay special attention to the Wednesday AM locations!)

Note the “D” at 1 AM Wednesday, right?  Now check out Laura:

Remember, the remnants of Marco will be spinning counterclockwise as will the hotter Laura (in a manner of speaking).  I’m trying to visualize which of four possibilities will happen here – and you’re welcome to place bets, too:

  • One idea is the storms peripheries will be additive in some manner.  More rain, wind, and such.
  • Another is subtractive (canceling out one another).
  • Cancellation is another idea.
  • While the fourth is there’ll be enough separation that in the Beaumont, Texas area, it may just be a 2-3 day long-ass rain event.

Our utmost respect to the Cajun Navy for being readied.  When it gets here, I’d like to see any federal rescue boat pictures.  Not sure we need 50-cals for this…

On the other hand, oil glut or not, never let a good crisis go to waste, right? Oil prices rise as twin storms shut in more than half of Gulf of Mexico production.

And in Other…

I must not be the only one taking cynical meds.  As  Salon writes Get ready for TrumpFest, America — there’s no Republican Party anymore.

People who went to “protests” may have not only ID’ed themselves to government surveillance, but now comes this: “Protest app” Bridgefy is full of flaws that threaten users everywhere.  Cool.

If you still believe the “peaceful protester” lies in the left-leaning mainstream, you must have missed latest haps in the communist uprising zone formerly called Portland, Oregoon.  Where Building awning set aflame; police declare riot, deploy tear gas in 88th night of Portland protests Sunday.  Nice going, Marxist stooges!

In socialist Seattle, meantime, the mayor can’t figure out (yet) how to talk the talk of the left-wing defund the police nonsense on the one hand while facing the political reality of being thrown out on her ass come election time by 46 still- reasonable people in Seattle if she does cut police.  See Mayor Durkan vetoes council vote to cut up to 100 Seattle police officers for a fiasco update.

Since we will pass the 24-million CV level in a day or three, pertinent to mention Covid Hits Minorities Hardest, but Data Often Doesn’t Show It.   Wired seems to be making a case that racial statistics about the disease should be kept.  I gotta think about that one.

Run-up at the open is set to roll, so it’s time to get back to prepping for events later in the week.

Write when you get rich,

George@Ure.net