End of the Road
The confluence of factors that influence market prices are vast and variable.  One moment patterns and relationships are so pronounced you can set a cornerstone by them.  The next moment they vanish like smoke in the wind. One thing that makes trading stocks so confounding is that the buy and sell points appear so obvious in hindsight.  When examining a stock’s price chart over a multi-year duration the wave movements appear to be almost predictable.

The fascinating obviousness of hindsight – it is now perfectly clear when one should have bought AMZN. Unfortunately it wasn’t quite as clear in real time. [PT]

Trend lines matching interim highs and lows, and bounded price movements within this range, display what, in

Life After ZIRP
Roughly three years ago, after traversing between Los Angeles and San Francisco via the expansive San Joaquin Valley, we penned the article, Salting the Economy to Death.  At the time, the monetary order was approach peak ZIRP.

Our boy ZIRP has passed away. Mr. 2.2% effective has taken his place in the meantime. [PT]

We found the absurdity of zero bound interest rates to have parallels to the absurdity of hundreds upon hundreds of miles of blooming crop fields within the setting of an arid desert wasteland.
Given today’s changing financial conditions, namely the prospect of a sustained period of rising interest rates, we have taken the opportunity to refine our analysis.  What follows is an attempt to bring clarity to

Orchestrated Larceny
The government continues its approach towards full meltdown. The stock market does too. But when it comes down to it, these are mere distractions from the bigger breakdown that is bearing down upon us.

Prosperity imbalance illustrated. The hoi-polloi may be getting restless. [PT]

Average working stiffs have little time or inclination to contemplate gibberish from the Fed. They are too worn out from running in place all day to make much of it.  This fact accounts for the limited inkling the populace has for why there is a great prosperity imbalance between wage earners and the creams.
If there was a better understanding of the scope and scale of the orchestrated larceny being conducted, practitioners of mass money

Positive Energy
By now, late September of 2018, it has become increasingly evident that something big is about to happen. What exactly that may be is anyone’s guess.  But, whatever it is, we suggest you prepare for it now… before it is too late.

Art auction energizer: Norman Rockwell’s portrait of John Wayne. You can’t go wrong shelling out top dollar for me, pilgrim, can you? [PT]

Several weeks ago, if you haven’t heard, an undisclosed rich guy enthusiastically bid up and then bought Norman Rockwell’s portrait of John Wayne for a cool $1.49 million at the 12th Annual Jackson Hole Art Auction. According to auction coordinator  Bloomberg  reports:

“Major oil trading houses are predicting the return of $100 crude for the first time

Happy Destiny
There’s great elation flowing from the various economic bureaus down through President Trump. They bring us good tidings. If you haven’t heard, here in the USA, we live, work, and play in the dazzle and delight of an economy in which GDP growth exceeds the unemployment rate.

The president has clearly had a hand in job creation. 🙂 Seriously, there can be no doubt that aggregate economic activity has increased as a result of the measures the government has implemented, including deregulation, tax cuts and increased deficit spending. Note that the latter is offsetting the salutary effects of the other measures in the long run, even though government spending is added to GDP and therefore provides a near term boost to official

Misadventures and Mishaps
Over the past decade, in the wake of the 2008-09 debt crisis, the impossible has happened.  The sickness of too much debt has been seemingly cured with massive dosages of even more debt.  This, no doubt, is evidence that there are wonders and miracles above and beyond 24-hour home deliveries of Taco Bell via Door Dash.

The global debtberg: at the end of 2017, it had grown to USD 237 trillion. Obviously this is by now a slightly dated figure, as debt issuance has continued with gay abandon this year. [PT]

But how can dosages of more debt be the cure for too much debt?  Can more Cutty Sark be the cure for a dipsomaniac?  Certainly, in both instances, and after some interim relief, the cure always proves to be

A Fake Money World
The NASDAQ slipped below 8,000 this week. But you can table your reservations.  The record bull market in U.S. stocks is still on. With a little imagination, and the assistance of crude chart projections, DOW 40,000 could be eclipsed by the end of the decade.  Remember, anything and everything’s possible with enough fake money.

Driven by a handful of big cap tech companies, the Nasdaq Composite has made new highs – but the broad market (here shown in the form of the NYSE Index) has not even made it back to the January blow-off peak. It is a good bet the return of the average investor’s portfolio mirrors that of the latter. Such divergences are typically a sign of steadily weakening market internals which are seen near

Squishy Fact Finding Mission
Today we begin with the facts.  But not just the facts; the facts of the facts.  We want to better understand just what it is that is provoking today’s ludicrous world. To clarify, we are not after the cold hard facts; those with no opinions, like the commutative property of addition. Rather, we are after the warm squishy facts; the type of facts that depend on what the meaning of ‘is’ is.

Fact-related pleas… [PT]

The facts, as far as we can tell, are that we are presently living in a land of extreme confusion.  The genesis of this extreme confusion is today’s fake money system.  And the destructive effects of this fake money system have spread out like a virus into nearly all aspects of daily life.
Plain

Financial Potemkin Village
A rising stock market has the illusory effect of masking the economy’s warts and blemishes.  Who cares if incomes are stagnant when everyone’s getting rich off stocks?  Certainly, winning wealth via the stock market beats working for it.

Learning from history, 2018 style [PT]

Without question, the pleasure that comes when opening an inflated quarterly brokerage statement is much more satisfying than a lackluster biweekly paycheck.  But not only does paper wealth grow when the stock market rises, implied intelligence grows too.  The quarterly statements, with growth lines moving up and to the right, prove it.
Why grumble over a labor participation rate that’s at a 40 year low when Netflix is up over 6,000

Cold Dark Clouds
The sun always shines brightest in the northern hemisphere during summer’s dog days.  Here in America, from sea to shining sea, the nation burns hot.  But, all the while, cold dark clouds have descended over the land of the free.

In case you ever wondered – yes, they really did say it… [PT]

For example, Senator Mark Warner – an absolute goober – is currently running interference for the Democrats on a proposal to silence political criticism.  Yet for Warner, and his cohorts, all political criticism is not created equal.  Criticism of President Trump is allowed and encouraged.  Criticism of Washington insiders, like Warner, is what they want to prohibit.

Mark Warner, who at the behest of the leftist lamestream media

Historical Evidence
The world grows increasingly at odds with itself, with each passing day.  Divided special elections.  Speech censorship by Silicon Valley social media companies.  Increased shrieking from Anderson Cooper.  You name it, a great pileup is upon us.

It was probably Putin’s fault (just a wild guess) [PT]

From our perch overlooking San Pedro Bay, the main port of entry for Chinese made goods into the USA, facets of the mounting economic catastrophe come into focus.  These elements, even for the most untrained of eyes, are impossible to miss.
To meet the relentless expansion of international trade, berths have been widened, and channels have been deepened to accommodate the definitive absurdity of perpetual credit creation:

Conditioned to Absurdity
The unpleasant sight of a physical absurdity is both grotesque and interesting.  Only the most disciplined individual can resist an extra peek at a three-legged hunch back with face tattoos.  The disfigurement has the odd effect of turning the stomach and twisting the mind in unison.

Francesco Lentini, the three-legged man. Born in Sicily in 1881 with “three legs, four feet, sixteen toes and two pair of functioning genitals” he made a career of his disfigurement and worked for circus sideshows until his death at age 78. [PT]

After repeated exposure, however, the shock of an absurdity is reduced to that of vanilla ice cream.  Somehow, even the extremely preposterous becomes commonplace after a while.  For

Mud Wrestling: Trump vs. Xi
About 6,940 miles west of Washington DC, and at roughly the same latitude, sits Beijing.  Within China’s massive capital city, sits the country’s paramount leader, Xi Jinping.  According to Forbes, Xi is currently the most powerful and influential person in the world.

Papa Xi, the new emperor of China. [PT]

Xi, no doubt, is one savvy fellow.  He always knows the right things to say.  He offers the citizens of his nation the “Chinese Dream.”  They consume it like boysenberry funnel cakes at the county fair.
So, too, Xi always knows the right things to do.  He elaborates his vision for securing world dominance through something called the Belt and Road Initiative.  His people get behind it without question.

What Is Money?
Today we begin with a fundamental question: What is money?  This, no doubt, is an important question.  And we ask it with clear intent and purpose.  Namely, we want to better understand how it’s possible for America to rack up such a massive trade deficit with China.

China-US imports and exports of goods. It has to be stressed that the most often cited figure is the trade deficit in goods, which is the “scariest” figure. The US surplus in services with China has grown rapidly in recent years. It was $33 billion in 2015, doubling from $16.5 billion just four years earlier. By 2017 it had grown to $38.5 billion. The idea that a trade deficit is somehow “bad” is highly dubious. “Countries” do not trade with each other anyway –

Chest Bumps
One of the more extraordinary things that investors have seen in living memory is unfolding at this precise moment. This goes for business leaders, money managers, veteran Wall Streeters, value investors, 401(k) holders, momentum traders, FX guys, gold bugs, technical gurus, chartists, pork belly speculators, quants, astrologists, Larry Summers, put option sellers, dweebs and geeks, millennial index fund enthusiasts, and everyone in between.

Pork belly speculators were among those waking up to a nasty surprise as China retaliated by imposing its own list of tariff duties. Soybean traders were also forced to rapidly adjust to an unexpected change in export fortunes (see further below). Farmers are presumably none too happy at

Impressive Zeal for Faded Ideals
Uncompromising independence, rugged individualism, and limitless personal freedom were once essential to the American character.  According to popular American folklore, they still are.  We have some reservations.

Rugged individualists suffer mid-life identity crisis. [PT]

The principles that gave rise to the American character died long ago.  Freedom.  Liberty.  Independence.  Limited representative government. Sound money.  Private property rights.  A humble populace worthy of esteem. Avoidance of foreign entanglements.  Rafting down the Mississippi River.  Trim waist lines.
These concepts, in reality, faded away from daily life over the last century like stars in the morning light.  Nonetheless, a

Of No Real Use
A young man might go to business school believing he is obtaining some sort of academic training that will enable him to make a comfortable living.  His degree may gain him entry into a large corporation, where he can work his way up to a good income.  This may even put him on the fast track to what he envisions as success.

Don’t knock it: Being useless can lead to unexpected career opportunities… [PT]

But his academic training likely won’t be of any real use.  He won’t be prepared to create new products or deliver new services or technologies.  He won’t possess any special knowledge that will improve the well-being or satisfaction of others.  He won’t have the skills to bring in new business or grow the bottom line.

A Walk on the Wild Side

“Never play cards with a man called Doc.  Never eat at a place called Mom’s.  Never sleep with a woman whose troubles are worse than your own.”
– Nelson Algren, A Walk on the Wild Side

Fresh Fruit or Rotting Vegetables?
A subtle gas seems to always be vented into the atmosphere at the sunset of an extended bull market.  As the light fades, an odor that’s indiscernible from that of fresh fruit or rotting vegetables wafts down Wall Street.  You can almost smell it.  But what it is you smell is too faint to accurately characterize.

DJIA, daily; quo vadis Industrial Average, and what’s that odd smell? At the peak in late January the  weekly chart of the average sported an RSI of 92 – an all-time record “overbought”

Futility with Purpose
Plebeians generally ignore the tact of their economic central planners.  They care more that their meatloaf is hot and their suds are cold, than about any plans being hatched in the capital city.  Nonetheless, the central planners know an angry mob, with torches and pitchforks, are only a few empty bellies away.  Hence, they must always stay on point.

Watch for those pitchfork bearers – they can get real nasty and then heads often roll quite literally. [PT]

One of the central aims of central planners is to achieve effective public exhortation.  While they pursue futility, in practice.  They must do so with focus and purpose.
For example, economic reports with impressive tables and charts, including pie graphs, are

Credit has a wicked way
of magnifying a person’s defects.  Even the most cautious man, with unlimited credit, can make mistakes that in retrospect seem absurd.  But an average man, with unlimited credit, is preeminently disposed to going full imbecile.

Let us not forget about this important skill…  [PT]

Several weeks ago we came across a woeful tale of Mike Meru.  Somehow, this special fellow, while of apparent sound mine and worthy intent, racked up over $1 million dollars in student loan debt – all to become an orthodontist.
Surely, with several good text books, and a disciplined self-study program, Meru could have learned everything there was to possibly know about adjusting malpositioned teeth for roughly $200 bucks.  Instead, with

Friends and Enemies
Do citizens of the United States trust their government will do what’s right?  It depends who you ask. By and large, the esteem the American populace holds its government in is likely a small fraction of what it was roughly 65 years ago.  That was when Lieutenant General William Kelly Harrison Jr. signed the Korean Armistice Agreement.  Certainly, in days gone by representatives of other nations held the U.S. government in higher regard.

The most austere signing ceremony ever: Lieut. Gen. William K. Harrison, Jr. (seated left), and Korean People’s Army and Chinese People’s Volunteers delegate Gen. Nam Il (seated right) sign the Korean War armistice agreement at P’anmunjŏm, Korea, July 27, 1953. No-one seems really

Rare Commodity
Modern economists are prone to shouting fire in a crowded theater.  The world is full of seeming incongruences. Economists puzzle over things like population growth and arable acres of farmland. They project out a linear scenario of increasing divergence, and see a catastrophe in the making.

Professional scaremonger Thomas Robert Malthus, one in a long line of scarcity prophets who failed to recognize the capacity of human ingenuity and free markets to solve the perceived problem of “finite resources”. The effects of demographics are the exact opposite of what the scarcity scaremongers claim: there is no overpopulation problem based on the allegedly “limited carrying capacity” of the planet (as an aside, note that most of

Tightening Credit Markets
Daylight extends a little further into the evening with each passing day.  Moods ease.  Contentment rises.  These are some of the many delights the northern hemisphere has to offer this time of year. As summer approaches, and dispositions loosen, something less amiable is happening.  Credit markets are tightening.  The yield on the 10-Year Treasury note has exceeded 3.12 percent.

A change in pace: yields are actually going somewhere. There is a fly in the ointment for treasury bears though: the net speculative short position in futures across the yield curve is seemingly establishing new record highs every week. While this is not bullish for treasuries per se, it definitely makes yields vulnerable to a sharp

“Literally On Fire”
This week brought forward more evidence that we are living in a fabricated world. The popular story-line presents a world of pure awesomeness. The common experience, however,  falls grossly short.

There are many degrees of awesomeness, up to total awesomeness – which is where we are these days, in the age of total awesomeness, just a short skip away from the Nirvana era. What is Nirvana, you may wonder? We only know for sure that Nirvana is what the stock market has priced in – other than that, we will have to wait and see. [PT]

On Tuesday, for example, the Labor Department reported there were a record 6.6 million job openings in March.  Based on the Labor Department’s data, there were enough jobs available –

A Useful Public Service
There are nooks and corners in every city where talk is cheap and scandal is honorable.  The Alley, in Downtown Los Angeles, is a magical place where shrewd entrepreneurs, shameless salesmen, and downright hucksters coexist in symbiotic disharmony.  Fakes, fugazis, and knock-offs galore, pack the roll-up storefronts with sparkle and shimmer.

The Alley in LA – in places such as this, consumers are as a rule well served by applying a little bit of common sense when pondering purchases. In fact, common sense is a multi-purpose weapon that reportedly comes in handy in many situations and is widely considered a valuable addition to one’s personal armory.  [PT]
Photo credit: Navymailman

Several weeks ago, the LAPD

Meandering Prices
Prices rise and prices fall.  So, too, they fall and rise.  This is how the supply and demand sweet spot is continually discovered – and rediscovered. When supply exceeds demand for a good or service, prices fall. Conversely, when demand exceeds supply, prices rise.

Supply and demand (the curves usually shown in such charts are unrealistic, as bids and offers in the market are arranged in discrete steps). [PT]

Producers use the information communicated by changing prices to make business decisions.  High demand and rising prices inform them to increase output.  Excess supply and falling prices inform them to taper back production.
This, in basic terms, is how markets work to efficiently bring products and services to

Paradise in LA LA Land
More is revealed with each passing day.  You can count on it.  But what exactly the ‘more is of’ requires careful discrimination.  Is the ‘more’ merely more noise?  Or is it something of actual substance?  Today we endeavor to pass judgment, on your behalf.

Normally, judgment would be passed on a Thursday, but we are making an exception. [PT]

For example, here in the land of fruits and nuts, things are whacky, things are zany. Last month, State Senator, Dick Pan, introduced Senate Bill (SB) 1424, which would require California based websites to utilize fact checkers to verify news stories prior to publishing them.
Who exactly these fact checkers would be – the moral servants that would save the world from the ills

Good Intentions
One of the unspoken delights in life is the rich satisfaction that comes with bearing witness to the spectacular failure of an offensive and unjust system. This week served up a lavish plate of delicious appetizers with both a style and refinement that’s ordinarily reserved for a competitive speed eating contest. What a remarkable time to be alive.

It seemed a good idea at first… [PT]

Many thrilling stories of doom and gloom were published across the tops of the finest digital news sites.  The main object of our satisfaction, however, was buried further down the pages, well below the latest Trump tweets and relentless reports on the global war buildup.  Nonetheless, our focus is not without merit.
Today’s foil is played

Interesting Times Arrive
“Things sure are getting exciting again, ain’t they?”  The remark was made by a colleague on Tuesday morning, as we stepped off the elevator to grab a cup of coffee.

Ancient Chinese curse alert… [PT]

“One moment markets are gorging on financial slop like fat pigs in mud.  The next they’re collectively vomiting on themselves. I’ll tell you one thing.  President Trump’s trade war with China won’t end well.  I mean, come on.  China’s outplayed the U.S. at this game for over a quarter century.  They have the upper hand.
“Besides, what’s the point?  If we no longer buy stuff from China, then how will China buy Uncle Sam’s debt?  And the timing for all this couldn’t be worse.  Deficits are spiraling out of control.

Son of the Imperial City
What are the chances of Federal Reserve Chairman Jerome Powell being wrong?  The chances he’ll be wrong on the economy’s growth prospects, the direction of the federal funds rate, and inflation itself?  Our guess is his chances of being wrong are quite high.

The new central planner-in-chief. Central banks are facing a special case of the socialist calculation problem pertaining to the financial system. Like the comrades in the former Eastern Bloc, who tried to adjust their plans based on prices they were able to observe in the capitalist West, their best bet is to simply follow market rates. Unfortunately market rates – especially at the short end of the yield curve – are subject to an observer-participant