Posts Tagged ‘Hayek’

Which Way Wednesday – Japan’s GDP Plunges 6.8%

MORE FREE MONEY!!!  

That's all this chart says to traders this morning, who are taking the European Markets up over half a point this morning and are goosing our Futures by half a point as well as bad news is good news and TERRIBLE news is even better in this Central Bank-sponsored market.

Private Consumption in Japan fell 5% in April, May and June and wages dropped 1.8% while sales taxes rose 3% and – PRESTO – there's your 5% decline in Private Consumption.  

Obviously, giving the workers more money is out of the question in a Conservative Capitalist Economy like Japan and we're certainly not going to tax Corporations when we can raise sales taxes that disproportionately target the poor instead so the only solution is:  MORE FREE MONEY!!!

Japan has increased their monetary base by 50% since last year and this year they are on track to add another 25% to pump it up to 270,000,000,000,000 Yen.  In March of 2000, there were just 50Tn Yen in circulation so a 5x increase in the money supply and NONE of it ended up in the hands of the bottom 80% who, just like in America, saw their standard of living DECREASE over the past decade and a half.  

It's a great race to the bottom in annual GDP growth overall as essentially all of the economic gains in Japan and the US accrue to the top 10% (people and corporations) while the bottom 90% circle the drain on the "Road to Serfdom" that Hayek warned us about 70 years ago:

“It is one of the saddest spectacles of our time to see a great democratic movement support a policy which must lead to the destruction of democracy and which meanwhile can benefit only a minority of the masses who support it. Yet it is this support of the tendencies toward monopoly which make them so irresistible and the prospects of the future so dark.

"If we face a monopolist we are at his absolute mercy. And an authority directing the


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Weekend Reading – Reviewing the Reviews

 I am still trying to get more bullish

I was thinking about writing something cute like I resolve to get more bullish but that would be wrong.  I try, in my own humble way, to "get" the market right.  That means I am not bullish or bearish but Truthish (to further botch Stephen Colbert's use of the word) and, as Buddah says: "There are only two mistakes one can make along the road to truth; not going all the way, and not starting."  Confucious reminds us that there are three methods by which we may learn wisdom:  "First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest."

In that spirit, we will spend the day in reflection so that we are better able to start on that long road to the truth so that we will be better able to imitate the things that will work in the year to come while trying to avoid making mistakes that will give us bitter experiences.  

This post is not about me – We had a fantastic year and I've already given some outlook for 2011 back on the 19th in that weekend's "It's Never too Early to Predict the Future" and our current position is short-term bearish in the Jan-April time-frame, looking for a pullback to at least 1,200 on the S&P and possibly back to 1,150.  

After that, we are expecting a return to steady gains but without the irrational exuberance we're currently experiencing.  So no, I am not bearish – I simply think we've gotten ahead of ourselves.  Since we don't know where the rally train will stop, we have our "Breakout Defense – 5,000% in 5 Trades or Less" from Dec 11th, which were a set of very bullish, highly levered plays where a little bet can pay off a lot if we simply hold our long-established breakout levels.   

How much is "a lot"?  Well my GE trade idea, for example, was to sell the 2013 $12.50 puts for $1.10 (net $1.15 in ordinary margin according to TOS) and to use that money to buy the 2012 $17.50/20 bull call spread for .95, which was a net .15 credit on a $2.50 spread
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Thrilling Thursday – Can We Be Saved?

Let’s review first, how we got into this mess

Not only is a bust cycle the inevitable result of a Capitalistic boom but the way we keep shoveling crises under the rug (to avoid pain and the ensuing political fallout) only exacerbates the problem once the rug becomes too small to mask the problem.  Then things begin unraveling at the fringes and then – horror of horrors – someone actually lifts up the rug and says: "OH MY GOD – IT’S TERRIBLE!"   Well DUH!  Of course it’s terrible.  Hayek (Freidrich, not Selma) told us this would happen 60 years ago and it’s happened dozens of times already and it will happen dozens of times again because it’s the nature of a system where there can be winners and losers – sometimes you win and sometimes you lose

It is no surprise then, that the Europeans are choosing to follow Hayek’s path to austerity, while the Americans cling to the Keynesian delusion that we, if we just buy a bigger rug, we can fit a lot more problems under it and maybe no one will notice until we move out.  David Leonhardt has a great article in The Times presenting the Keynsian side of the eqation.  Paul Krugman points out that the "bond vigilantes" are behind this massive attack on the markets as they work very hard to drive current rates down and keep them there BECAUSE THAT INCREASES THE VALUE OF THE BONDS THEY OWN. 

Come on people, grow up!  First Pimpco and company drove rates sky high telling you the World was going to default and there was a "ring of fire" in Europe and that sent swap rates and note rates flying so these evill jackasses were able to buy tens of Billions in sovereign debt at sky-high interest rates.  Now those same crooks push for a bailout, using other people’s money to insure their high-yield bonds and then they begin a PR campaign to crack the whip on austerity to make sure that making the bondholders whole is every country’s top priority, no matter what the cost to the population. 

How much is at stake here?  Pimpco alone has over $1Tn in bonds that get much, much more valuable if they can engineer a low-rate Japan-style deflationary environment.  I pointed out that this was happening on June 15th, when Mohamed El-Erian teamed up with
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Testy Tuesday – Gentle Ben vs. Reality

Behold the power of prayer! 

We had a wild ride in the futures in the last 16 hours as they were up 1% and now are barely holding flat at 7:30.  Our catalyst was Dr. Ben Bernanke who, as we expected, attempted to boost the markets in a scheduled speech where the Fed chairman said he is hopeful the economy will gain traction and not fall back into a "double dip" recession.  "My best guess is we will have a continued recovery, but it won't feel terrific," Bernanke said.

Bernanke didn't offer new clues about when the Fed would reverse course and start to tighten credit. However, he did say the Fed won't be able to wait until the jobs market is fully healed before it pushed rates up.  Observing the economy, Bernanke said the news so far is "pretty good." Both consumers and companies are spending sufficiently to keep the recovery moving forward. The private sector, he said, is "picking up the baton" as government stimulus, which mainly powered the recovery in its earliest stage, starts to fade.  n relations between the United States and China, Bernanke said there is a real desire between the two superpowers to work together to ease trade and economic tensions. Both countries sort of understand there is a "co-dependency relationship," Bernanke said. The United States snaps up Chinese goods and the Chinese is a major buyer of the U.S. government's debt.

Wow, really Ben?  I guess that's some "good" kind of codependency and not the actual definition of codependency, which is: "A tendency to behave in overly passive or excessively caretaking ways that negatively impact one's relationships and quality of life…  Codependency may also be characterized by denial, low self-esteem, excessive compliance, and/or control patterns."  According to Mental Health America: "Codependency is an emotional and behavioral condition that affects an individual’s ability to have a healthy, mutually satisfying relationship. It is also known as “relationship addiction” because people with codependency often form or maintain relationships that are one-sided, emotionally destructive and/or abusive."  Gee, he's right – we DO have a codependent relationship with China! 

Even more interesting is the way the MHA links codependency to Dysfunctional Family Structures, saying

A dysfunctional family is one in which members suffer from fear, anger, pain, or shame that


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Creator of “Fear the Boom and Bust” at the ASC

Creator of “Fear the Boom and Bust” at the ASC

By Mises.org

H/tip to Tom Burger ("It is entertaining and I can even understand the lyrics. A fascinating and rare example of economic theory meeting up with pop culture. Well … okay … it’s probably the ONLY example…")

The Mises Institute is pleased to welcome John Papola to the Austrian Scholars Conference, March 11-13, 2010, Auburn, Alabama. John is the co-producer along with Russell Roberts of “Fear the Boom and Bust,” the youtube smash hit that pits Hayek against Keynes in a rap song about the business cycle.

The video (now with 785,000 views) has brought more attention to the Austrian theory of the business cycle, and with surprising theoretical accuracy, than any medium in history, and driven sales of Hayek’s book on the business cycle…

Read more here.>>

There is also "The Making of … " here.


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Zero Hedge

UK To Close All Travel Corridors To Curb New COVID Variants

Courtesy of ZeroHedge View original post here.

Authored by Alexander Zhang via The Epoch Times,

Britain will further tighten entry restrictions by closing all its “travel corridors” with other countries in order to stem the spread of new CCP virus variants, Prime Minister Boris Johnson said on Friday.

...



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Phil's Favorites

Pursuing Tesla's electric cars won't rev up VW's share price

 

Pursuing Tesla's electric cars won't rev up VW's share price

The 2015 diesel scandal resulted in a 40% drop in the company’s share price at the time. A. Aleksandravicius/Shutterstock

Courtesy of Hamza Mudassir, Cambridge Judge Business School

Volkswagen’s chairman, Herbert Deiss, has been struggling to bring the company’s stock price back to its previous heights since he took over the reins of the German car maker six years ago. The business has been emb...



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Biotech/COVID-19

What you need to know about the new COVID-19 variants

 

What you need to know about the new COVID-19 variants

B117, the SARS CoV-2 variant that was first detected in the U.K., has been found to be 30%-80% more transmissible. Juan Gaertner/Science Photo Library via Getty Images

Courtesy of David Kennedy, Penn State

Editor’s note: Two new strains of the coronavirus that causes COVID-19 called B.1.1.7 and B.1.351 have been found in the U.K. and South Africa and are thought to be more transmissible. In ...



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ValueWalk

US Consumer Confidence Increases At Start Of 2021

By Refinitiv. Originally published at ValueWalk.

WASHINGTON, DC ‐ According to the Refinitiv/Ipsos Primary Consumer Sentiment Index, American consumer confidence for January 2021 is at 50.9, up 2.8 points from last month. The index fielded from December 25, 2020, to January 8, 2021.

Q3 2020 hedge fund letters, conferences and more

American Consumer Confidence Is Back Up In 2021

After a sharp 4‐point decline in December, American consumer confidence has returned to levels seen in September 2020 (50.6). The Current, Expectations, Investment, and Jobs sub‐indices all experienced ...



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Kimble Charting Solutions

Treasury Bond Yields At Make-Or-Break Decision Point Says Joe Friday

Courtesy of Chris Kimble

Treasury bond yields (and interest rates) have been falling for so long now that investors have taken it for granted.

But bond yields have been rising for the past several months and perhaps investors should pay attention, especially as we grapple with questions about inflation and the broader economy (and prospects for recovery).

Today we ask Joe Friday to deliver us the facts! Below is a long-term “monthly” chart of the 30 Year US Treasury Bond Yield.

Counter-Trend Rally In Yields Facing Strong Resistance!

As you can see, treasury bond yields have spent much of the past 25 years trading in a falling channel… but the coronavirus crash sent yields...



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Mapping The Market

The Countries With The Most COVID-19 Cases

 

The Countries With The Most COVID-19 Cases

By Martin Armstrong, Statista, Jan 12, 2021

This regularly updated infographic keeps track of the countries with the most confirmed Covid-19 cases. The United States is still at the top of the list, with a total now exceeding the 22 million mark, according to Johns Hopkins University figures. The total global figure is now over 85 million, while there have been more than 1.9 million deaths.

You will find more infographics at ...



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Politics

The Confederate battle flag, which rioters flew inside the US Capitol, has long been a symbol of white insurrection

 

The Confederate battle flag, which rioters flew inside the US Capitol, has long been a symbol of white insurrection

A historic first: the Confederate battle flag inside the U.S. Capitol. Saul Loeb/AFP via Getty Images

Courtesy of Jordan Brasher, Columbus State University

Confederate soldiers never reached the Capitol during the Civil War. But the Confederate battle flag was flown by rioters in the U.S. Capitol building for the first time ever on Jan. 6.

The flag’s prominence in the Capitol riot comes a...



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Chart School

Best Wyckoff Accumulation for 2020

Courtesy of Read the Ticker

Yes folks there has to be a winner. Price and volume in the right place. Very nice eye candy!


Introduction ...

Ethereum was posted on RTT Wyckoff Campaign blog for monitory and trade entry. To watch the RTT Wyckoff Campaign blog is part of the RTT Plus service. After all you only need one to two great accumulations in a year and returns will be fantastic.






Charts in the video ...


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PnF ...

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Digital Currencies

Bitcoin: why the price has exploded - and where it goes from here

 

Bitcoin: why the price has exploded – and where it goes from here

B is for blast-off (but also bubble). 3DJustincase

Courtesy of Andrew Urquhart, University of Reading

Bitcoin achieved a remarkable rise in 2020 in spite of many things that would normally make investors wary, including US-China tensions, Brexit and, of course, an international pandemic. From a year-low on the daily charts of US$4,748 (£3,490) in the middle of March as pandemic fears took hold, bitcoin rose to ju...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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