First thing out of the rack this morning I popped open the futures market and our Aggregate Index Daily view of things, including our “red line” indicator. Here’s what it looked like:
Based on what I saw, the “rumors of trade” had hyped the market to the point where two important things MIGHT happen.
First, if the early futures levels can be held into the close, and a similar big move engineered for tomorrow, the monthly closing of out index MIGHT turn positive. Last day of July closed at 25,319.27 so even with the early futures pricing the Aggregate at 24,716.43 (based on the Dow futures, among others, being +261 at the time I rang things) that would still leave a 600-point :”wall” ahead. Not likely but possible.
On the other hand, IF the trade rumor is substantiated with a second source, or another official, THEN we might see a pop not of 250’ish points today, but something like 500. SHOULD something like that happen, then all it would take would be an announcement of a meeting and the words “breakthrough” or “likely” to be tossed around. If so, we just might make it.
On the other hand, since near as we can figure, the the only source so far was “… Gao Feng, spokesman for China’s Ministry of Commerce, says Thursday, according to a CNBC translation of his Mandarin-language remarks.…” color us skeptical. And writing a novel outline based on things.
All Mr. Gao (allegedly) said, essentially, was that China could resolve trade differences with a “calm attitude” which sounds as much like China feeding democrat presidential hopefuls “proof” against Trump, as any substantive change of Chinese position. People hear what they want to hear, don’t they?
Moreover, indicators that might move a lot on a substantive breakthrough – like gold and silver – were mixed with Kitco quoting gold down $3.30 earlier while silver was up 11-cents.
More to the point, if China was really changing anything substantive on Trade, we would expect it to warrant mention either on the Ministry or Commerce site, or at least make the front page of Xinhua.
The only substantive trade movement was in China’s official press was this:
“BEIJING, Aug. 28 (Xinhua) — China on Wednesday announced it will soon start accepting applications for exemption from its second-round of additional tariffs on U.S. imports..”
That was in the markets yesterday.
Without a major player making an announcement, we sense the “herd” might be a little too anxious for a rally. It’s the way herds operate sometimes, ahead of major holidays. Like this weekend’s.
We have to critically ask “Is someone working the herd?” Novel outlines appear. Paul Erdman would be proud.
Mutually Assured (Financial) Destruction
In case you hadn’t figured it out yet, the US and China both have everything to lose if a trade deal isn’t nailed before year-end.
- Donald Trump stands to lose his re-election bid.
- China’s president Xi stands to lose face and lead his country into a major slow-down and that could cost him “leader-for-life” if it’s not sold as in China’s strategic interests.
- China stands to lose a food source.
- The U.S. dollar, for now a safe-haven as Europe’s in trouble, might begin to wither…
- China, looking for a “news distraction” might become more adventuresome.
- And it’s a cinch that North Korea will track to be more of a PITA.
The real problem for every government (on this fox-uniformed planet) is properly answering the question we’ve been noodling recently on our Peoplenomics subscriber side: What’s worth buying, anymore?
The world is awash in paper. Goods, too.
We need China (and others) to keep buying our bonds (because we can’t keep buying from ourselves in circular economics few comprehend). China needs to keep exporting because their middle class isn’t yet big enough to consume all their own output and retain enough pent-up demand to drive internal growth and kick-off the virtuous cycle.
Thus, we can see how the global issue of “consumer super-saturation” begins to loom large. The virtuous cycle only works if you have planetary resources to strip.
How did we squander that? Key economic context here:
Globalists made a major decision in the 1960’s when eyeing the future of the Second and Third Worlds. The problem back then was “If the First World feeds the Third World,they will breed and eventually we (the whole planet) go into over-consumption. Until all the resources are gone.
Which is where we’re headed. In slow-enough motion though, so it’s not apparent to the phone-faces (derr public).
The economic terror-ahead (and one point of my next book “The Hundred Year Toaster” which has been rolled out in chapters for Peoplenomics subscribers) is this:
The World has “Ridden into a Box Canyon.”
The “Box Canyon” looks like this: One wall (let’s say on the right) is economic. If there’s a global decline in consumption, that wall comes crashing down on the inhabitants of “world in box canyon” and “kills everyone in the canyon.” Virtuous Cycle goes Vicious Globally.
Think previous Depressions were bad? Hahaha! Global Depression is simply unfathomable. Water and infrastructure failure alone will kill a billion.
On the other side, the left wall, is Resource Depletion and Environmental collapse. They’re two sides of the same coin. This left wall is only holding momentarily because of fracking technology and more lines of code. OK, plus endless hype about 5G and lambdas on the phone. Eventually, the left wall will collapse as we “eat the agar” and run out of resources on Petri Dish Earth.
Being ten-times older than America, China is already conditioning people to events this fall. “Xi Jinping to give important speech at National Day celebrations” reports Xinhua.
Meanwhile, for a country that “invented baseball” America has shown no ability to generalize the game as a “feeder system of farm clubs.” Reading deeper into Xinhua, “Xi asks China, Uzbekistan to promote quality Belt and Road construction” just as China’s Ministry of Commerce announced this summer how “China and Mongolia Signed an Agreement on the Construction of the Erenhot-Zamin Uud Economic Cooperation Zone.” Fram clubs…tracking?
China’s building their analogs to Great Lakes Ore Freighters that once fed Detroit. With American auto leadership dispersed globally, ore freighter futures aren’t much of a market.
One More Problem
Structurally, Americans already have too damn much crap.
My late grandmother spent her closing years in a small studio apartment, reading “The Daily Word: as her eyes allowed. Entertainment was Bingo games around town. Coffee on a small gas stove and pumpernickel with a smear of liverwurst for lunch. A sweet pickle on special occasions.
Two generations ago. Not that far back.
Fast-forward to Present. What does retirement look like?
Now in our 70’s Elaine and I have (going from memory) already outlived the grandmother. Instead of walking to Bingo, we have a collectable old Lexus. Not quite a studio, we ramble through 2,450 square feet under air. 10 computers, and as of this morning 473-books on our Kindles. Tech has run wild – feeding our excess consumption.
Here’s the problem ahead so you see it: The downside is up-scaling people is driving The World deeper into the aforementioned “Box Canyon.”
Three wi-fi networks feed our life. And that speaks volumes: About how “the new consumption is digital” – but it doesn’t eliminate the resource depletion problem. Or answer “What’s really worth buying?” It just flips it into a politicized on-line head-trip. Actual physical craftsmanship must disappear into “virtual crafting” because the planet is no longer Big Enough.
Seriously: Earth is Not Enough! Elaine and I figure our slices in the East Texas outback to be 14-1/2 acres each. Let’s round it 14. If everyone in the world were so blessed, Earth would require 106.26-billion acres of land mass to give an equal amount to the other 7.59 billion other folks in the Box Canyon with us. In square miles? 166-million square miles ought to do it.
Box Canyon Reality: The entire world has a land mass of only 57.506-million square miles. And that’s before discounting, as not-too-useful, areas like the Negev, Sahara, Antarctica and other huge desert areas. Death Valley? Well, people do live there, but at what cost? See, it takes services and that narrows down the available land by what? Half? OK, less if we write off mountain peaks and ranges like the Himalayas.
Don’t mean to get off on a tirade tangent this morning, but the world’s in an Historically Large Global Bubble that has never existed before – and likely never will again. The resources won’t recover for uncountable centuries to make another run at it.
One of these morning’s Ahab Ure will shout “Thar she blows!” and the walls of the Box Canyon will both be seen to be crashing down. Rather than admit to disaster, back-pedal, and re-think? There’s only one way remaining to “thin the herd” and maintain power for the Elites: Global War which will be the existential outcome for all.
Not pretty thoughts, to be sure. Maybe I’d better stick with the China Trade Scam the novel outline I was working on earlier: Where a cabal of government, media, and major hedge funds decide to plant rumors to drive markets. Scamming the herd, funneing more money to the Rich so they can…what? Buy some land? Sheesh.
We will now headline today’s rope-the-dopes.
Today as Two Screen Shots:
Normally about here, I’d pepper some headlines around, but not in the mood for that. Morning’s like this sometimes its best to look out to the horizon…feels like a useful thing to do.
Write when you get rich,