Welcome to one of last remaining outposts of rational thought on the web. We are here to “speak-up for sanity” because, frankly, most media is corporate controlled – which means censored – and it’s feeding an alt. reality of the flimsiest sort. DMR: Digital Mob Rule. We pretty certain that >50% of what’s on social is robotic…but you knew this was coming if you read my 2012 book Broken Web.
Mass delusion is running. If you’re confused, no worries. It’s going to get worse. So here’s our latest play-by-play action…
The Fed: Making Up Money
A remarkable event happened in our Aggregate Index chart Monday: The CHART shows the overall stock market making a new all-time high.
A REAL new high? No….but that takes some thinking.
What happens next is anyone’s guess, though.
People who follow Elliott wave theory are in a fascinating conundrum. “Does the amount of money sloshing around matter?”
Let’s look at why this is so important:
The last time our Aggregate reached these lofty levels, February 19th, the Fed was reporting M1 (Table 1, H.6 Money Stocks report) $4.0099 trillion.
The most recent reading of M1 (Table 2, H.6 Money Stocks report) was?
$5.24870 trillion bucks. It was even higher the previous week: $5.3308 – trillion.
For this morning’s thought experiments, let’s use the latest number (bold) and not get into the hysteresis discussion. Which is where we run off into the economic weeds about how long it takes The Fed to “put the rudder hard-over” before any effect is noticed by “the peeps.”
Now I’m going to sling some of that high-power mid-90’s MBA math at you, so be ready to duck: The MONEY SUPPLY has increased ($5.2480/$4.0099 trillion) – a whopping 30.876%.
Let’s just see where the Dow would have to be (on a monetary-indexed basis) to equal it’s close of February 19th. If you forgot, it was at 29,348.03. The S&P? Well, try 3,386.15.
What does this make our “money-printing adjusted targets?”
For the Dow, try on 38,409 for size. Or, for the S&P how does 4,431 and change sound?
Chicago Fed National Activity Index just out:
Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +4.11 in June from +3.50 in May. Three of the four broad categories of indicators used to construct the index made positive contributions in June, and two of the four categories increased from May. The index’s three-month moving average, CFNAI-MA3, moved up to –3.49 in June from –6.36 in May.
The CFNAI Diffusion Index, which is also a three-month moving average, moved up to a neutral value in June from –0.45 in May. Fifty-four of the 85 individual indicators made positive contributions to the CFNAI in June, while 31 made negative contributions. Fifty-one indicators improved from May to June, while 34 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.
Good for Trump…if he could just go on a tweet-diet.
Dow futures up 166 after this and the EU financial hype.
No, not really. It’s just that central bankers around the world are trying to keep the whole international house of cards from caving in.
We call it the “symmetrical hyperinflation response.” A little more academic sounding than former Fed Cheese Ben’s Helicopters dumping money. But, that’s the idea.
Last week, the IMF revealed how this “papering over disaster” would work. Essentially, if the local GDP of a county went down 10%, there would be an offsetting domestic inflation of 8%. Result? People in the trenches, not realizing what was going on? They’d see a continuation of a previous 2% inflation rate and reach the obvious conclusion.
“Everything is Still NORMAL.”
It is not, of course.
Because while the nearly 31% increase in money supply is real enough, the rate has to be taken in terms of the market lows.
March 23, when our Aggregate bottomed? The Dow kissed 18,591.93 while the S&P was down at 2,237.40.
Let’s see what happens if we take these two numbers as the starting point and tack on the 30+ percent slosh, shall we?
18,591.93 turns into 24,332.37 while the S&P becomes 2,928.22. See how we’re still between extremes?
A person with a little patience (and a calculator) could figure out how much higher this pig of a market could rise, buoyed by massive global paper-hanging.
We’ll do a little bit of this tomorrow on the subscriber site.
In the meantime, though, rest assured Your Federal Reserve (really controlled by the Bankster class) will not let any opportunity to paper-over disaster go unused.
We’d just offer one more point: March 23, while the U.S. (on an Aggregate basis) was notching the lows, the morning fix for Gold in London was $1,494.50 an ounce.
When we add on the currency printing? $1,955.94 comes into view. Which may help you to understand why gold is up another
$14-bucks $23-bucks this morning around $1,831 $1,841 and change. See Silver Is Soaring Again, Citi Sees $2000 Gold Imminent for thoughts.
We’ll be keeping a close eye on the Fed’s H.6 report in coming weeks, though. Since it was down last week, it could mean their taking their feet off the gas pedal. Which would set up an ABS-screaming braking ahead of the election.
And THAT would collapse the market thus making “you know who” a one-termer.
As always, not investment advice…just some things to think about as the bubble overshoots.
Market outlooks are like “behinds” – everyone has one. Here’s a different view from mine: The stock market is positioned to rally if it can clear this low bar, fund manager argues.
CV-19: Stack ‘Em High
There is so much fluff and bullshit around it’s rather pointless for us to prattle-on about it.
Instead, our “forecast” of numbers to come since I ran these out for my son Monday.
What the mainstream is not yet yammering about is that we’re in “Million Cases a Day” being found globally. And no one seems to be suggesting more than 50-million U.S. cases by year-end and maybe over 700,000 deaths.
Oh well. Masks have become political.
Out here in the Outback of East Texas, we don’t wear masks except for the 10-minutes every other week when we actually go into a public place. We do the “glove and grab” and Clorox the hell out of everything before it goes in the house.
19’s Economic Fallout?
A very good view (expected, of course) from Mohamed el-Erian in “U.S. Must Do Better on Its Second Covid-19 Test — The nation needs to incorporate lessons from its first “natural experiment” about policy relief, social distancing, testing and contact tracing” which is worth a read.
This goes double for Trump…botch what’s just ahead and he might as well start packing. Check with the Clintons on how to pick things out?
Mating of Slo Joe
(That’s a grotesque visual, ain’t it???)_
Everyone seems to have ideas on this. Miami Herald is wondering Who will Joe Biden pick for his running mate? and therein is a list of possibles. Or, you could try the
Amazon Daily Washington Post‘s “Joe Biden says four African American women are under consideration.” Is Joe being discriminating or wise? I don’t think anyone can tell, anymore.
Besides, you can just wait till it happens, since there’s nothing actionable for we wee peeps to do…
When we read that Biden Unveils $775 Billion Plan For Universal Child & Elder Care, we shudder to think this is more Stephanie Kelton-style MMT at work. Modern Monetary Theory is Marxist for Making Up Money, of course.
Speaking of MUM…
I haven’t abused Bitcon for a while.
Don’t need to: While markets and metals scream skyward, BTC is languishing around 9,395.35 this morning.
-In Ure Shorts
Terrorism alive and well, is it? Armed Man Takes ‘Around 20’ Hostages on Bus in Ukraine.
Road to War with China is still warming. Pompeo Meets UK PM In Heat Of China Standoff.
Move over Musk? Ford reveals an electric Mustang Mach-E SUV with 1,400 horsepower.
Cause du jour: (Leave it to CBS, huh?) “Two different realities”: Why America needs environmental justice.
Whatever. Off to round up oatmeal and get back to tree farming.
Write when you get rich,