Idiocy Cubed

Over the years I’ve now become resolute in holding the conclusion: the so-called “smartest people in the room” when it comes to economics, monetary policy and more – are those that staunchly oppose venturing into said “room,” for fear the permeating idiocy wafting unimpeded would be more dangerous to their mental faculties than deliberately walking in front of a moving semi.

It is absolutely dreadful what is touted as “insightful.” The evermore frightening aspect to the above is much of this monetary, economic policy dogma is then inflicted on a populace with disastrous results, while they are unaffected. i.e., Their salaries, pensions and more remain intact, regardless.

What adds further insult to injury is their speaking fees and venues to blather more of this idiocy to a group of political sycophants with the power to enact also grows. Halloween may come once a year, but the horrors this group can inflict on a global scale makes thermonuclear war appear like child’s play.

Today, we are, once again, being bombarded with the idea that not only is MMT (modern monetary theory) the way to go, but also the perfect vessel to bring it to us. e.g., Stephanie Kelton.

Ms. Kelton in now considered among the intelligentsia set as a “rock star” when it comes to economics out of her frequent cable news appearances as one of Bernie Sanders top economic advisers. The issue is not with her affiliations or “rock star” status, my issue is with her theory, MMT – for it is nothing more than gobbledygook for enhanced mental masturbation to the intelligentsia class.

Let me make this one point, which is the most relevant to any and all economic theory, that lays waste to any and all comers like the Sword of Damocles: Once this theory meets the cold reality that a people, country, __________ (fill in the blank) deem it as a con and want some other form of payment than what this theory bases itself on – it falls apart in toto, rendering all it’s so called “hypothesis and theories” to the trash bin of history with immediacy. Period.

What everyone (especially this so-called “smart crowd”) seems to forget is the very simple fact that where we are currently in regards to currency, reserve status and more is based entirely on confidence. That’s it.

In this world currently known as “fiat dominance” all it takes in just one, repeat, one debt holder to no longer hold your form of payment as “acceptable” and the entire charade collapses in a manner that would make Charles Ponzi wince.

Think that’s hyperbole? Fair point, so lets use just one small example and see how it may work out in a real-world environment, shall we?

China demands all future trade to be settled in, oh, let’s use Euro’s, because the Renminbi (i.e.Yuan) is just too easy. Let’s also say to back up this “idea” that China begins selling U.S. Treasuries en masse and converting them into, oh I don’t know, let’s use some other new and improved version of lunacy say, 100 year Euro bonds, tit for tat. What does one contemplate will happen next?

Now I can hear some of you right through my screens yelling “They would never do it, besides, there aren’t enough to replace that magnitude so quickly!” Fair point, here’s the problem – all one has to do is openly get the ball rolling in earnest. i.e., just actually start. And – it’s all over.

The Federal Reserve could turn around and buy all the Treasuries, stocks, bonds, ________(fill in the blank) it wants. But it wouldn’t matter, because outside of the U.S. – they wouldn’t be worth dog crap. And the more they bought, the faster the progression from dog sh#t, to cat, to mice, to amoeba. Remember: If printing your currency to prosperity truly worked – Venezuelans would be eating caviar daily, rather than searching for their pets or escaped zoo animals for sustenance.

Oh yeah, lest we forget, it’s this same crowd that held up the policies of Venezuela as “proof” that their theories worked – until they morphed into what we see today. Now you’re more likely to find these clarion callers on the back of a milk carton rather than in public touting their prior slobber. Paging Mr. Stiglitz. Mr Stiglitz? Bueller?

Again, if you think any of the above is either harsh, or not criticism worthy? Let me expose to you what happened with another Nobel Laureate for economics, Paul Krugman.

In an interview at a NYT™ conference he made the following statements. Below are a few pull quotes from an article by Michael Hirsh at Foreign Policy™. To wit:

Paul Krugman has never suffered fools gladly. The Nobel Prize-winning economist rose to international fame—and a coveted space on the New York Times op-ed page—by lacerating his intellectual opponents in the most withering way. In a series of books and articles beginning in the 1990s, Krugman branded just about everybody who questioned the rapid pace of globalization a fool who didn’t understand economics very well. “Silly” was a word Krugman used a lot to describe pundits who raised fears of economic competition from other nations, especially China. Don’t worry about it, he said: Free trade will have only minor impact on your prosperity.

Now Krugman has come out and admitted, offhandedly, that his own understanding of economics has been seriously deficient as well. In a recent essay titled “What Economists (Including Me) Got Wrong About Globalization,” adapted from a forthcoming book on inequality, Krugman writes that he and other mainstream economists “missed a crucial part of the story” in failing to realize that globalization would lead to “hyperglobalization” and huge economic and social upheaval, particularly of the industrial middle class in America. And many of these working-class communities have been hit hard by Chinese competition, which economists made a “major mistake” in underestimating, Krugman says.

It was quite a “whoops” moment, considering all the ruined American communities and displaced millions of workers we’ve seen in the interim. And a newly humbled Krugman must consider an even more disturbing idea: Did he and other mainstream economists help put a protectionist populist, Donald Trump, in the White House with a lot of bad advice about free markets?

To be fair, Krugman has been forthright in recent years in second-guessing his earlier assertions about the effects of open trade. He has also become a leading and sometimes harsh critic of his own profession, especially in the aftermath of the financial crisis and Great Recession, when he declared that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” 

(Source)

I encourage you to read the entire article for yourself, while I also believe the above pretty much tells one all they need to know. i.e, Speculate just how wrong he is that he has had to come out and say it, rather than partaking to the requisite “milk carton” scenario.

This is not the first time I’ve made the above arguments. Back in April, 2016 I stated in the end the Federal Reserve would fall victim to its own perceived success when I wrote the article “Absurdity: When The Con Believes The Con” in regards to then former Chair of the Federal Reserve, Ben Bernanke, to the screams and howls of this same intelligentsia crowd.

And what has happened since? Let me ask it this way…

How is that decreasing of the balance sheet and interest rate normalization going along?

In a day and age where 2+2=4 math is being taught as racist. The only math that still holds up is when 1+1+1= idiocy cubed. Or said differently: when past, present and future economic, monetary theory meets the reality of the day, it is sheer lunacy – that it is this ilk – that still has standing to express it.

Someone, anyone: please take away their chalk or markers before more wealth and prosperity is laid to waste via their black and white boards.

© 2020 Mark St.Cyr

Here’s What I’m Watching Update

As I’ve been explaining over the past few days on the show, things can happen and happen quicker than most realize once the premise of “a deal on stimulus” is rendered moot before election day. Once Friday of last week past, as I warned, the “market” will now have to adjust, and adjust quickly – and here we are.

Precisely 13 days ago I posted the following chart, made my argument, and have let things play out. Below is that chart. To wit:

(Chart Source)

As of the close of the “markets” today here is the exact same chart only updated with a new notation. I’ll let you spot where it is. Again, to wit:

(Chart Source)

To some the above may appear inconsequential looking at the current move, but what one needs to fully comprehend is this very important point…

All of the gains, money, however one wants to categorize it, the result is the same: 90%, repeat, that’s ninety percent of all the gains supposedly “banked” by Wall Street has been wiped out.

To put it another way (which I did on the show today) If you are of the financial investor persuasion such as, you make your year based on your bonus calculated at the end of year. If you were banking (and presumably living and relying on) let’s say your $250,000 year end bonus for all the profits you had as recently as two weeks ago – that cool quarter of a “milly” is now worth about $25K. Last time I checked – that’s less than a yearly salary at minimum wages.

But not to worry I was told during these past weeks, because the buzzer banger on the TV told everyone just “Buy, Buy,Buy!” because: The Fed’s got their back.

So far the Fed and Treasury have spent a combined $9,000,000,000,000.00 (that’s 9 Trillion!) to push this “market” to those highs. And yet?

The way this thing is going it appears for all that “free money” that still might not be enough to afford a lousy T-shirt.

Will it continue, will we bounce to new highs, is it another BTFD moment of the year? No one knows, and we’ll just have to wait and see as it progresses. However, I will say this: The entirety of the mainstream business/financial media basically told their audience things like this were behind us.

And here we are, just as I warned.

But what do I know.

© 2020 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.

F.T.W.S.I.J.D.G.I.G.T.

(For Those Who Say I Just Don’t Get It… Get This)

When I first began opining commentary in regards to the capital markets, Federal Reserve, et. al. I was originally greeted with calls of “conspiracy theorist” and much, much worse. Over the years all that “conspiracy” theory has been proven out to be prescient facts.

Way back when the idea that there was a “secret hand” behind many of the dumbfounding market moves, where a sudden sell-off was immediately reversed out-of-the-blue with no arguable catalyst. All there was to explain it was some next in rotation fund manager mugging a camera to say “This shows that there is plenty of investors willing to buy this market!” hogwash. This back then and up until not too long ago was still the norm.

This phenom back then was usually referred to by people such as myself as “The PPT” (The Plunge Protection Team.) This was howled and laughed at by the entire mainstream business/financial media. Today, that same media now howls and toots their collective horns to call it “Prudent monetary policy” also known as QE (quantitative easing.) But back then this “tin-foil hat idea” and a few more like it such as “The Fed monetizing the debt” or, “The Fed buying stocks” was also seen as a conspiracy laden, tin-foil hat crowd affairs that needed to be segregated to its own isolation i.e., They refered to all of us as “The Doom Crew.”

And yet today, I submit to you the following. To wit:

(Source)

For those that may be lost on the irony of the above, or shrugging their shoulders thinking “And?” Believe it or not, you prove my point ever-the-more. Here’s why…

The lower comment from Mr. Gasparino’s feed is actually the first, which was the view that many had in response to the AG laying out a real anti-trust lawsuit today against Google®.

I mentioned this alert in real-time on the show today, because it was absolutely bazaar to those of us that understand the way things used to work which was – when a public company was even whispered to be under any eye of the authorities, the stock would immediately take a hit, which was easily explainable to the circumstances. i.e., law suits means expenses, sometimes “Bigly.” So it was an arguably easy assumption to have. But today?

Not only did it not go down in any major way, but it began to rally well over one to one and a half percent on the news. With a reaction like that, one should be sued every day, right? Right?

So, now if you read the top one where he implicitly states the reasons now becoming apparent i.e., “Fed plans to institute its emergence [sic] powers…” you now understand just how perverse, adulterated and perverted the once bastion of “free market enterprise and capital formation” has now become. To prove my point all one needs to understand is this…

The above is precisely what I said would take place years ago and was called a “tin-foil hat wearing no-nothing.” Now?

“It’s a “Buy! Buy!! Buy!!! Because the Fed’s got your back.” And today proves that to be so.

I would say “what a charade” but they don’t even bother to try and hide it any longer, for it’s now a telegraphed buy signal by the ultimate croupier.

But I will say this: What a complete farce all this has become.

At least I know that’s still applicable.

© 2020 Mark St.Cyr

Footnote: These “FTWSIJDGIGT” articles came into being when many of the topics I had opined on over the years were being openly criticized for “having no clue”. Yet, over the years, these insights came back around showing maybe I knew a little bit more than some were giving me credit for. It was my way of tongue-in-cheek as to not use the old “I told you so” analogy. I’m saying this purely for the benefit of those who may be new or reading here for the first time. I never wanted or want to seem like I’m doing the “Nah, nah, nah, nah, nah” type of response to my detractors. I’d rather let the chips fall – good or bad – and let readers decide the credibility of either side. Occasionally however, there are and have been times they do need to be pointed out, which is why these now have taken on a life of their own. (i.e., something of significance per se that may have a direct impact on one’s business etc., etc.) And readers, colleagues, and others have requested their continuance.

Here’s What I’m Watching

In regards to the current gyrations within the “markets” the following chart is about all there is left to speculate with, because from a technical perspective, it has pretty much nullified every, once useful, metric for calculation into the dust-heap of technical analysis history. But that’s what $90 Trillion dollars of globally synchronized central bank money printing will do. i.e., It enables the fantastical fantasy of “money for nothing” to be believed far longer than prudent perspectives can keep their sanity.

So with the above said, for those that want to know what I may still be watching, below is the same chart I’ve been using over these past weeks only with updated notations. To wit:

(Chart Source)

I’m still standing with my original call, for it is still plausible based on any remaining semblance of useful technical analysis judgements. But, as I’ve alluded to over the past week, it’s been all but nullified. So for those that want to know what I’m watching – It’s all about where I noted “Right now…”

If it stays above that line then “New, never before seen in human history highs!” headlines are more than plausible. Under it? The story can change faster than you can say “Wait, what?!”

And that’s about it.

As always, we shall see.

© 2020 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.

Don’t Just Watch But Interpret Differently

I received a call today from a college to discuss one of my assertions when it came to negotiation tactics at apex levels. What he was asking me to qualify further (actually, more like taking issue with) was when I said that the current stimulus negotiations had been turned on its ear and the president just moved the onus off his shoulders and put it squarely on Ms. Pelosi’s.

This simple negotiating tactic i.e., calling something off entirely, out-of-the-blue, then saying you may be open to further discussions, is something that happens at high level, high stakes negotiations everyday. It’s just that most people (especially politicians) never deal with such. But, in business, it’s more common than common, which is why I had stated and explained it on the show today.

However, I also said something else that I needed to remind him of, where I said “Don’t think for a second the other side is not aware of these tactics, it’s just who dares use them first, because Ms. Pelosi is far from any slouch when it comes to getting what she wants.” And then I said the following…

Do you think Ms. Pelosi is making the call for the 25th amendment action because she wants to apply this to Mr. Trump? Or, do you think the party elders want to make sure if Mr. Biden does get elected and then something happens where the V.P. needs to take over – that they are going to leave it to chance that Ms. Harris will do as Ms. Pelosi or the others want her to do?

Think about it..because when he regained his breath after I made the statement , that’s all he could.

© 2020 Mark St.Cyr

F.T.T.W.T.K. Addendum

(For Those That Want To Know) what I’m watching: Addendum

When you hear me say such things as “You have to think like a machine sometimes to interpret these ‘markets.”‘ The following two charts show precisely what that looks like in real time. For when you look at the first one, it is the same as the one I posted prior (i.e., early this afternoon.) What you’ll see is the path I interpreted as to be the most likely is exactly what followed, represented by the blue channel. (note: and was not moved from the prior only extended) To wit:

(Chart Source)

As far as what the machines are doing in the overnight session, here’s a chart of the S&P 500 (aka E-minis) as I type this at about 7:15pm ET Wednesday. Again, to wit:

(Chart Source)

Another way to look at the above is using the commercial tag-line that sums this all up better than most, and is from the clean up organization known as Servpro®.

“Like it never even happened.™”

Or, maybe it was said better by one of my favorite bands Pink Floyd…

“Welcome my son, welcome to the machine”

© 2020 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.

F.T.T.W.T.K.

(For Those That Want To Know) what I’m watching

As I type this (~1:00pm ET Wednesday) the “markets” are both exhibiting, as well as positioned precisely where we were yesterday when I was both observing and about to opine the following…

…following this melt-up via my technical eye when for all intents and purposes I mused looking at the unfolding price action and said “Well, there’s no denying that, that’s a textbook breakout which opens the door for a possible retest of not just the prior highs, but setting the table for the headline: New never before seen in human history highs!”

“Just When You Think…”

What happened next is yesterday’s news. However, today the exact same set up via a technical perspective is playing out with the same implications. To wit:

(Chart Source)

The above is the S&P 500™ represented via one minute candles/bars. Everything that was possible yesterday is still possible today, meaning: Get back under that red line (notice how important the market seems to view it?) and a continuation lower, and possibly much lower and faster is right back front and center. Stay above it? Just reread the above quote from yesterday, it’s that simple.

Oh, and speaking of simple, may I remind you of this one other simple piece of information…

It’s still all based on whether or not Ms. Pelosi wants a stimulus deal. i.e., Do you feel lucky that she will allow Mr. Trump a win (in any form regardless of size) going into the election in under 28 days?

It’s that simple and complicated all at the same time.

As always, we shall see.

© 2020 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.

Just When You Think…

At around 2:40pm ET today (Tuesday) I was following the current gyrations in the “markets” with what’s been no less than an incessant melt-up fueled by press releases of pure innuendo that a “deal” (i.e., stimulus) was still possible. Both sides of the political aisle have been adroit at getting in front of a camera or microphone to spout their version of “maybe.” And the “markets” have responded like Pavlov’s dogs salivating at just the idea rather than anything substantive.

As I iterated, I was following this melt-up via my technical eye when for all intents and purposes I mused looking at the unfolding price action and said “Well, there’s no denying that, that’s a textbook breakout which opens the door for a possible retest of not just the prior highs, but setting the table for the headline: New never before seen in human history highs!”

To be thoroughly honest I was a bit taken back, for it’s been getting harder and harder to take this insanity, where the once bastion of capital formation, that was the envy of the world, would once again prove itself out to be nothing more than an adulterated, perversion of what it once was.

I mean, let’s be honest here, even these levels currently with the backdrop still unfolding of a completely smashed economy is still, in itself, a gross representation of what it once was.

However, record highs, once again, in this environment is getting to be like salt in an open wound. The reason why, for me, is that it allows for this perversion to go on indefinitely while the gutting of small business with bankruptcies and more continue at an ever faster pace.

Or said differently: Until everyone realizes that this entire facade is nothing more than a Potemkin Village constructed with nothing more than stimulus (i.e., free money) for siding, and financial pundits spinning fairy-tales that would make Walt Disney blush as the glue holding the facade aloft – nothing meaningful to truly help small businesses and entrepreneurs and the millions of people they employ will get done. Nothing. Period. And it sickens me.

So for those that are in the “The stock market is fairly priced based on solid earnings and blah blah blah…” I offer the following.

Below are two charts. The first is precisely when I was watching and about to post, offering the position that, for what it’s worth – new highs were now very possible and how repugnant I felt about it. To wit:

(Chart Source)

Then, as I say in the notation, I literally went to get a cup of coffee before I was going to sit down and write it – then this happened. Again, to wit:

(Chart Source)

That move noted by “This happened!” is what I saw when I returned to my desk from getting my coffee. I almost dropped it, but that didn’t stop my jaw from dropping, for I really was quite taken aback.

I immediately perused the web looking for the news and found out that only minutes after I left my desk it was reported that the president called for the negotiations for a “deal” were to be halted.

You can now see just how dependent these “markets” are on “Good earnings and blah, blah, blah.” Hint: They aren’t.

Without stimulus or free money via the Fed – it all falls apart. Just as I’ve been warning. The above is the first indication of how correct to heed my warnings, as to be prepared for anything between now and the election, still are.

For those that may not have caught my insinuation in the above paragraph, yes “first indication” is correct, because now it’s all about the what follows. And from a technical perspective, if this current down move is not immediately reversed. (i.e., someone of prominence with control of some very large purse strings or printing press) Then everything I’ve been warning about moves not only back from being nearly nullified, but rather…

To the head of the table. i.e., The March lows can come much sooner, and with far more scarier resolve than an abandoned roller-coaster that suddenly begins rolling down the steepest vertical on Halloween.

As always, we shall see. But today shows just how frightening this can all become in less time than it takes to get a simple cup of coffee.

© 2020 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.

F.W.I.W.

(For What It’s Worth)

As I have been saying on the show repeatedly, “The possibility for something to come out of left field and startle this market needs to be on the watch for – more now – than ever.” That “now” may have just taken place.

As I’m typing this (approx. 9:00pm ET Thursday evening) the Democrat controlled House of Representatives just passed on a strict party line vote (i.e., not one Republican) a $2.2Trillion stimulus package. What this signals is that there will be no, repeat, no forthcoming “free money” of any type to anyone. This along with the forthcoming jobs number due before the U.S. markets open has the possibility to upend any current perceived sense of calm.

Remember: The “markets” have been ultra-sensitive to any stimulus talks over the last day or so, spiking up when it looked like a possibility and falling sharply when talks broke off. Those rises and falls have been sharp and sudden, but in relationship to the overall picture have been somewhat muted in severity. This now very unambiguous “There is no stimulus, and there won’t be any!” vote, I believe, will now be acted upon in earnest.

As always, we shall see. But if we do? I think it may be as soon as tomorrow.

We’ll discuss this and more on Friday’s show.

See you then.

© 2020 Mark St.Cyr

Y.J.C.M.T.S.U.

(You Just Can’t Make This Stuff Up)

It appears my latest missive (i.e., commenting on the current Joe Rogan situation) has caused quite a stir. What has been fascinating is many of the responses we’ve received. Some have been complimentary, others have been down right insulting, usually in response to my writing style, but that’s par for the course.

But what I’ve also rediscovered is the vitriol in regards to some political angle as if I’m taking one side or the other. It appears even the very mention of a candidate’s name, if only using it for reference, throws you into the political quagmire. Dare I say – I used three, one from each. So in response I have been targeted by each saying I’m a ________ (fill in the blank) supporter and an idiot. Well, let me declare right now I am not a ________(fill in the blank) supporter. However, when it comes to “idiot?” OK, enough said.

Another thing that seems to be proving out is what I addressed on the show last week, where a study was done indicating that nearly 90% of all articles posted online (both professional news and others) never get read but for the headline. This latest article of mine appears to prove that correct.

As all of you well know I don’t and won’t argue the “he said she said” of politics, don’t and won’t endorse any candidate, and stay as far away from politics as I can. And yet – I’m being accused of being a mouthpiece for ______________(fill in the blank.)

You just can’t make this stuff up.

© 2020 Mark St.Cyr