Sense or Money? The Currency Calculus of Markets

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

41 thoughts on “Sense or Money? The Currency Calculus of Markets”

  1. so just remember one thing .. the longer shorts are wrong the righter they will be .. and lesson one in shorting .. short on way up .. lesson 2 .. never give up .. lesson 3 one only makes a profit when closing any position . so seek advantage in buying price .. ie short high , close in oblivion and remember the evil and lies they played .. so have your fun. the guy on the cover of mad looked smarter than the punks around today . Alfred e Schwartz I think

  2. Using consumer “credit” takes more optimism than I have had since age thirteen. I have never – never ever had use of consumer credit in all my seventy-six years, full stop. Whatever I cannot pay cash for, ipso facto I cannot afford. So, now, how can I buy over the internet?

    • We use PayPal as a pseudo currency: Transfer some money in and they buy.
      If a merchant doesn’t take PayPal then we use a “buffer card” but pay it off immediately with an online xfr from checking to the card so last year paid abso Zero interest to the bankster cabal

      • Many more vendors use PayPal now days and it is my preferred method of payment but you have to be careful as to what you buy because PP has been virtue signalling lately as to what they’ll let you buy through them. It’s not a definite line in the sand but ammo and firearms related materials tend to be a definite no-no.

  3. George

    “Houstonians and from NOLA west are placing bets”

    Mr. & Mrs. Rocket Mike are hunkering down in Slidell hoping that the winds don’t take too many shingles from our roof! We have been to this dance before and know all too well what a taste of hell is like. If it’s a direct hit then we find out if all the work done by the Army Corp of Engineers was worth it. A miles long concrete barrier was built across the western side of Lake Borgne to prevent tidal surges into eastern New Orleans and the North Shore area of Lake Pontchartrain.

    Electronic Tip of The Day: Never use wire wound resistors in HF circuit designs. The large parasitic inductance cause bad Ju Ju!

    To keep the hurricanes off my mind I’L be reworking a circuit board design this morning.

    Good luck to all in the northern Gulf of Mexico!!

    • On electronic tip of the day, most timely as have been eyeing my Johnson Viking II and debating if I should add additional vitamin c (capacitors to the great unwashed) (all members of the local ham club have been washed, lol) and very good advice on wirewound R values

      • If it’s a tube rectifier, check the tube data sheets. They will have a maximum C value that should not be exceeded. Has to do with peak current in the rectifier tube.

      • The .ee in Ure email address sez it all. What you’re talking of is AC filter inrush current.

        The answer is complex, however, (Ure on my ground here, lol): In most tube type rectifiers, there isn’t usually an inrush current because the thermonics of the tube take up to (usually) 8-11 seconds which spreads the inrush current over time.

        However, if the rectifier is smallish (5Y3 or 6X4 types) and the capacitance is YUGE then the demand for electrons can cause many uglies.

        You’re absolutely right, though, putting >50 uF on a HV supply is a roll of the dice absent some current limiting with a passive in the centertap to ground or on the bottom of a full wave bridge…

        Bless the person who invented current inrush limiting. When I build an amplifier, I try to put a fusing resistor in the B+ line. On a solid power supply, say 3 KV at 1 amp, you want a “fusing resistor” that will blow itself up at 4-5 amps at 3 KV. Which is most of ’em, lol… Ergo the science of “letting the smoke out…”

        The W8JI discussion of fusing high power RF amplifiers here recommends RCD 175P pulse rated resistors. With reference to https://www.w8ji.com/fault_protection.htm

        DO NOT TINKER WITH SHIT LIKE THIS UNTIL YOU HAVE BEEN TRAINED. KIND OF POWER LEVELS HERE, EVEN WITH A WHIMPY 5Y3 IS TILL WAY MORE THAN NEEDED TO KILL YOU. THIS IS SERIOUS GROWN UP SHIT.

  4. So……….

    Everybody who gets COVID. dies, right?

    I mean, Media never EVER mentions the concept that SOME
    infected people get sick, and then recover and become healthy
    again. So, I have to assume none do. Recover, that is.

    Right?

    Because if SOME people survive then maybe it’s more
    like terrible flu outbreaks of the past, and not the end of
    the frigging world as we know it.

    Right? No? Yes?

    • Had it in March. Got over it but did come close to going to the doctor when the chest congestion set in after the fever broke for good. Typical flu symptoms but very late in the usual season for me to get it – plus some very unusual symptoms that I’ve never had or associated with a flu infection which nailed it for me as ID’ing it as Covid. But, healthy body, good diet, no real co-morbidity and letting the fever run its course without slamming it down with aspirin or Tylenol, let it do its job in other words, meant I had a very good chance of getting through it without help from a medical institution that would have probably made things worse. Many horror stories were related on social media about what they were doing to people that went flying off to the hospitals when they were determined to have it for sure – or even not for sure. But what was even stranger was the fact NO ONE else in the house got it. The wife slept with me in the same bed, no one was wearing masks and maybe the barest of social distancing was taking place. It’s a weird bug for sure.

      • Your story mimics my experience with the Hong Kong Flu back in ’69.
        Worked a 30 hr day and when I got back to the apt at 8 AM I was sick as a dog. Went to bed chills, cough, fever (104+) and took no analgesics. Mid PM the ‘fever broke’ in a second or so and all was well.
        I have since read that in the ‘Spanish Flu’ in 1917-1918 aspirin was new and many took it to control the fever, not realizing that elevated temperature is what kills the virus. Aspirin during the Spanish Flu has since been suspected to have caused many more deaths than otherwise would have happened.

    • Some media mention it all the time, just perhaps the media you focus on does not mention it. Perhaps that says something about the media you choose to use. Martenson, has some of the best information based on data and logic, in his bi-weekly updates. – https://www.youtube.com/user/ChrisMartensondotcom

      It does seem about 30% of people already have an immune system primed to fight off this virus with almost no symptoms. Fewer are dying because we know to keep aging groups more secure unlike those leaders in New York filling the nursing homes with infected. A statistic rarely mention is the percentage that take a long time to recover (maybe 15%), they can take months to feel normal again. So yes deaths are declining per confirmed infected person, but this is exactly what we assumed would happen as medical science caught up with the virus spread and treatments. We may see more medical costs associated with these long term people suffering during their extended recovery.

      I have never supported government mandatory masks or isolation. I fundamentally believe we are a free people and with freedom should come some responsibility. So I limit my public exposure and I wear a mask when I cannot fully distance. Not only because I want a layer of protection for myself from those I don’t know, but I want others around me to feel comfortable that I am doing what I can to help protect them in case I have the infection and don’t know it. Might we learn later that masks had little impact, sure, but it is so easy and cheap, and no data I have seen from a reputable source say wearing a mask actually harms a person. People in Asia have been wearing masks in public for many, many years.

  5. It’s a wonder some other non-STD, infectious disease hasn’t hit the locations of high concentration minorities like the ‘jects and old neighborhoods in the inner cities. All the places in the World where this virus has taken hold have been places like China and Europe. Now it’s going through South America and I don’t think they’re telling us what is happening in Mexico at all. Total news blackout there unless you’re looking for it. Any place that has room to spread out with a healthy population is going to be less affected by the virus than other places unless you have a dim-o-@#$! governor or mayor that sends infected people to retirement centers. I wonder if you could find a bottle of vitamins within a couple of city blocks of each other in poor, minority areas.

  6. Dude George – WTF w/ Ure slackadaysical hurrykin attitude?

    We are talking Vorticity Advection! Two vortexes spinning up – Attracting Each Other..

    Holy Sakuei Fujiwarha G-Man – U are going to need an Emergency Extraction Plan..

    Time to think about FRIES and how U & E can “fast rope” Ure asses out of harms way(flood waters). This method can be way more fun and entertaining than FD Rescue Boat

    For Insertion/Extraction purposes – heat resistant gloves extremely important.

    Assuming bro in law or G jr. can handle flying a “killer egg” – MH6M, or if they are predisposed, perhaps local Guardsmen can come in with a Sea Stallion (CH53) – then you will only need to hold onto a suspended/hanging Cargo net..might even want to pre-stage Ure Antenna wire spool.. and kinda hold on to as U lift off over Uretopia Ranch – to be draped nicely over top nearest B.A.T.

    – kinda just weave Ure arms and legs into the Cargo net during Hover and hold on tight. A nice scenic ride underneath the rotor wash of a Sea Stallion helo – sure to put the Starch back into Ure shirt collar.

    On the hyper inflation, worthless paper front – check out the Chapwood Index, if U havent already, pretty solid information regards INFLATION..what happens when Two Hurrikins bump into each other>inflation

    • lol

      Ure (because he’s seen all this a decade+ in advance) knew not to buy property in the Lowlands of TEX.

      In fact, we’re not even on the list of “warning will rogers counties from Gov Abbott. No sir, local elevation here is 550 with 625 just a hike up hill from us.

      No worries!

      Still, loading up on steaks and fresh fruits and veggies…car and truck are full, life is easy…

      Houston is 3-hours from us, or nearly. Remember, Texas is bigger than Joe Bidens list of accomplishments

      • “Remember, Texas is bigger than Joe Bidens list of accomplishments”

        HUH.. you mean Joe did something other than pushups….most politicians dont do a dam thing except pick up their checks. I loved the news the other day.. an emerge8 session.. the news showed there was one person there lol..
        Joe just knows how to work the people and will probably be our next president.. but hey I cant wait for the extra 4 grand in our pockets every month..oh wait he doesn’t have a plan lol lol that was Nancy

      • Huh. Neat site but all it brings up is a thumbnail of the front page. I’ll see if I can find some papers to go to down there and hope I don’t get an “infection” on my computer doing it!

        Thanks.

  7. Last Saturday a bunch of protesting folks in Detroit got the beat down by the police.

    I think what’s happening is Adam Smith’s invisible hand is at work. When the first bailout came, you choose, Adam Smith’s invisible hand started clenching into a fist.

    We all watched Eddie Lampert “rescue” Sears. We all know down in our cockles it’s wrong, but we are defenseless.

    Folks designing Planet Smackers at Boeing get paid, pensions flowing. We folks flipping the bailout bills for Boeing are called Socialists when we demand our fair share. Boeing folks don’t work. Any of us can draw-up a CAD drawing for a plane that crashes. It’s not that hard. Anyone can later rename the CAD file by clicking “Save As” and adding an “8” to the end.

    Most of us have nothing vested. We get the bills which converts into lower standard of living.

  8. Well these protest will probably run up to election time and then all hell will break loose as both claim they won, one in and one who wants to get in,now a duel partnership in the oval office one of Trump and Biden would cover both parties and the VP can go back home for he’s failed to contribute anything anyway,the fighting would stop because its hard to fight against your own man, after all you voted for one or the other and that way you get the lessor of all evils,sounds like marriage made in heaven to me.!!

    • My take on consumer credit is it’s expansionary on the monetary side so it’s effect is inflationary.
      When you go into the marketplace the retailers are paying a portion of their sales to a processing fee charged by the banks. Those fees are passed onto the consumer by the retailer.
      Even when you pay cash you’re being gouged by an added “hidden” inflation.
      I entered the consumer credit card world only when I had the cash in hand to pay the whole balance every month by mail.
      Of course the banks came in with fees later, and offered inducements on the tail end. A lot of good my air miles do now. And my Costco card pays dividends and has bennies. Now I pay the cards off on-line as the “pending” status changes.
      The complexities of life, I now keep a stash and move cash to
      a necessity or hard asset as warranted. I keep a USAA checkcard as ATM fees are reimbursed and they have a feature that allows for ease of balance transfers from bank to bank. So much for velocity of money. And since my wife and I live in the hinterland it’s easier and more economical to shop on line…the new economy.
      Saves time, is time still “money”?

      • “Those fees are passed onto the consumer”

        Exactly…

        Wages stay the same and prices increase. Something isnt going to pan out..
        The curve is lopsided..if the feds raised the interst rates ou n the dollar..even a quarter point i think the spiral would spin out of control. The only options they have is dump more water on the table.. even that wont stop what’s coming..just give you the illusion that we are getting better. The higher it goes the ffg further we fall..
        In the last forty years the gaps have widened to the point where even the upper 29 percent will be approving the karl Marx confect theory pretty soon..
        We can see that pivotal trend in some of those commentors that have decided to support a man that shares that class conflict theory daily on mass media.
        All without a plan of how to achieve the end goal.

  9. IMO the eyes are too far apart and Marco too close to land for the storms to become additive. If Laura were counterrotating there could be an issue as the storms sucked hot Texas air into the Gulf, to feed themselves, but Laura is not, so I think it’s just going to be a longassed rain event.

    However, better safe than stupid…

    • “there could be an issue as the storms sucked hot Texas air into the Gulf,”

      Counter the HOT air. Just make Congress all go to the northeast to counterbalance the hot air …lol lol lol
      If you moved them around periodically and had Cali’s bovine fart bags on them to.. I wonder if you couldn’t control global warming as well lol lol..just being a smart azz..

  10. Speaking of thoughts.

    Antimatter: “In modern physics, antimatter is defined as matter which is composed of the antiparticles of the corresponding particles of ‘ordinary’ matter.”

    – Wikipedia

    “Antimatter is sort of like a mirror to ordinary matter, having the same mass but an opposite charge.”

    – Space.com

    If the above is true perhaps the dream world is a tangible place. Thought is antimatter to this “ordinary” place we find our perceptions.

  11. “the Dow is set to soar another 250+ points, as well.  But are these “gains” real – or  illusory?”

    I think Its all illusory… what gains there have been have been erased by the product pricing.
    I see necessities increasing at a rate I’ve never seen before.
    If it wasn’t for the feds shoving money it the pockets of the unemployed things would look a lot different..
    But if you had bitcoin.. you wouldn’t have to weed worry about the dollar. You would have cute pictures of coins galore. And because you can’t spend them or use them for regular purchases then you get to save them giving you more wealth than you could ever get with the us dollar that you spend regularly for stupid things like rent utilities and groceries.
    If you want to save more and get the cute pictures of coins then buy bitcoin.

  12. George, with all the wind and moisture pumping up the Mississippi valley, shouldn’t that be a recipe for sworms of tornados? Haven’t herd any mention of them. Still working on my Meteorology degree.

    • No.

      Tornadoes form from a multilayered temperature influx. After a TS lands, tornadoes are much more likely, because there’s hot air from the storm, at surface and at storm-top (generally between 50k and 60k feet) blowing predominately from the south or east, combining with hot surface temps and ramming into a continental prevailing cold and westerly wind, plus a low-pressure zone and a LOT of energy. A TS or hurricane can spawn hundreds of tornadoes, but we’re unlikely to see any tornadoes or waterspouts until the eye makes landfall, because it is the updraft between hot & cold boundary layers which initiates the tornado’s rotation, and over water, the “hot” isn’t hot enough.

      Tornadoes form normally from the updraft of moist Terran heat passing through the cool continental wind. “Normal” tornadoes are likely to be much more violent (f3 and above) where tornadoes spawned by TS tend to be less-violent (f2 and below) but much more prevalent.

      I am not as good as “Bill” (Bill Paxton’s character from the movie “Twister”), actually nobody is in real life, but once you’ve been in the field for a while (or simply in “the outdoors” in the Midwest, as any farmer will tell you), a person can actually feel the type of “heavy air” which may spawn a tornado. It is never a definite sign, but it IS a firm datapoint. When the air is right and the winds are right, I start watching critters. Animals (even the most stupid of cows) always know long before the convective shear or hook echo show up on your local meteorologist’s display, when an ohsh!t is coming.

      FWIW animals will also, unless restrained, move inland when a hurricane or TS approaches, and move up until they’re above the storm surge high-water mark…

  13. George, regarding your peoplenomics from yesterday(I am too cheap to pay for) UFO’s maybe from here and someone mentioning 91 trillion missing. Corey Goode has some interesting and detailed testimony out there. Very hard to believe stuff but when you view it with an open mind it’s really the only scenario that makes sense. Especially if you’ve witnessed a craft that the military was chasing. I witnessed that in the late 70’s and it was over a nuclear weapons storage facility. Changed my mind about things real quick..

    • “This forecast is unconditional and final; hence not subject to any updating. It was first posted March 2, 2020, on Twitter. ”

      I think the landscape has shifted a bit in the past half a year.

  14. SPOTIFY=SPOT
    ETSY=ETSY
    THOSE TWO STOCKS WILL MAKE YOU RICH IN THE FUTURE

    DIGIBYTE=DGB
    THIS CRYPTOCURRENCY TO BUY AND SELL ITEMS ON SPOT AND ETSY WILL MAKE YOU RICH IN THE FUTURE

    • I wondered about etsy’s future. Lately I have been getting a great deal from there

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