SP 500 and NDX Futures Daily Charts - Calm Before the News

Stocks opened weakly on the slightly worse than expected home sales numbers this morning.

They tended to drift higher, back to nearly unchanged, on light volume.

The markets are waiting for the more significant economic news that starts rolling out on Wednesday.

Have a pleasant evening.

What Is the Effective Limitation on the Fed's Ability to 'Print Money?'

"There is felt today very widely the inconsistency in this condition of political democracy and industrial absolutism. The people are beginning to doubt whether in the long run democracy and absolutism can coexist in the same community; beginning to doubt whether there is a justification for the great inequalities in the distribution of wealth, for the rapid creation of fortunes, more mysterious than the deeds of Aladdin’s lamp."

Louis D. Brandeis, Speech to Harvard Ethical Society, May 4, 1905

In a purely fiat monetary system the effective limitation on the Fed is the acceptance of the dollar and the bond at value in objective, non-coercive market transactions.

Since the value of a currency can be viewed as 'relative' to other currencies, if one ignores the values of other goods, there is some thought that a group devaluation of money can be accomplished if all the issuing entities devalue at the same time, so that the average person will not notice it.  As if.

When such frauds fail, then there is the result to force.  There are numerous examples of non-objective market transactions being used by failing monetary regimes, where they are guided by a central bank or directly by politicians.

Most recently in the case of satellites of the former Soviet Union,  there was an increasing divergence between an 'official exchange rate' versus a 'black market' exchange rate, even in Russia itself as the old rouble failed.  The bad money crowded out the good,  the good which became the new benchmark of value. 

The notion that a sovereign government issuing their own currency and debt cannot fail flies in the face of history, if not common sense.   The ability of the government to enforce an increasingly arbitrary valuation ultimately comes down to a measure of the oppressive power and reach of the regime.   Therefore the failures tend to begin at the edges, where arbitrary force does not reach as effectively.

This is not to say that the US is at that point. But to say we are not yet at that point is like the drunk who says he has not crashed his car into a brick wall yet.  It is to say that the idea that money can be created endlessly without engaging powerful forces of political and financial hazard is nonsense. It requires increasing amounts of official fraud, fear, and force to maintain, until the system ultimately collapses. I have seen this first hand, and have listed numerous examples of it on this site in prior posts.

One of the reasons that this current scheme of the Fed seems to be succeeding is that instead of increasing the overall money supply by distributing it freely 'out of helicopters' and stimulating aggregate demand to the objective of stimulating a recovery,  they are printing loads of money and then carefully handing it to their cronies in the Banks and other private multinational corporations.

And since they are dealing with the world's reserve currency, the base of their Ponzi scheme is very broad in its number of potential contributors.

The notion is that they will be forced to do productive and constructive things with it, and prosperity will 'trickle down.'  Rather, they prefer to use that money to further enrich themselves, to acquire productive assets, rentals, establish new frauds and rig more markets, and buy other companies to establish monopolies, and to put themselves increasingly above the law.

The resulting distortion does not yet result in a general inflation, but certainly facilitates and promotes a bubble in certain financial paper, and a massive wealth transfer from the public to the privileged in a corrupt and systematized plunder.

This system will not cohere.  But it has become very profitable for the status quo, if one ignores the consequences.  It results in a society turned upside down, a bizarro world where nothing makes sense.

Wars have been fought to sustain such looting, and to distract the people from their misery.  It always ends badly, in social disruption and worse.

C. S. Lewis On Kindness and Civility at the Table (And Online)

"We hear a great deal about the rudeness of the rising generation. I am an oldster myself and might be expected to take the oldsters' side, but in fact I have been far more impressed by the bad manners of parents to children than by those of children to parents.

Who has not been the embarrassed guest at family meals where the father or mother treated their grown-up offspring with an incivility which, offered to any other young people, would simply have terminated the acquaintance? Dogmatic assertions on matters which the children understand and their elders don't, ruthless interruptions, flat contradictions, ridicule of things the young take seriously - sometimes of their religion - insulting references to their friends, all provide an easy answer to the question "Why are they always out? Why do they like every house better than their home?"

Who does not prefer civility to barbarism?

If you asked any of these insufferable people - they are not all parents of course - why they behaved that way at home, they would reply, "Oh, hang it all, one comes home to relax. A chap can't be always on his best behaviour. If a man can't be himself in his own house, where can he? Of course we don't want Company Manners at home. We're a happy family. We can say anything to one another here. No one minds. We all understand."

Once again it is so nearly true yet so fatally wrong.

Affection is an affair of old clothes, and ease, of the unguarded moment, of liberties which would be ill-bred if we took them with strangers. But old clothes are one thing; to wear the same shirt till it stank would be another. There are proper clothes for a garden party; but the clothes for home must be proper too, in their own different way. Similarly there is a distinction between public and domestic courtesy. The root principle of both is the same: "that no one give any kind of preference to himself."

C. S. Lewis, The Four Loves

I suspect Mr. Lewis would be inclined to make similar observations about online manners as compared to public manners, where electronic anonymity tempts the worst part of a person to be belittling, dismissive, condescending, and in short, a bully.

Sometimes people come to confuse rudeness with strength and position, and choose to exercise it when they feel that they have some power, even if it is just the power to say what you will with relative impunity given the distance of electronics. The culture of the internet is nascent; and intelligence without education and cultural broadening can quickly degenerate into barbarism, even amongst people, not only commenters but bloggers, who might be otherwise appalled by how they act online.

Understanding, compassion, and kindness are the signs of real power and strength. Rudeness, incivility, and bad manners are the signs of ill-breeding and ignorance, of the disordered mind of the narcissist, who proceeds through life unaware and uncaring of those around them.

I am certainly no stuffed shirt. Manners does not mean that famous English reserve which is mannerism. Rather, manners are no ritual. Ritual manners, like accents, are too often an artificial construct with the purpose of promoting a type of class system.

Civility is a certain ease of behavior, a tolerant awareness and acceptance of the commonalities of the human condition, supported by kindness.

Barbarism can become fashionable, almost contagious. One may even have learned such dismissive and condescending behaviour from a parent, who learned it from one of theirs, or in some deep disappointment in their lives.

Don't tell yourself that this is just the way it is. Rather, tell yourself that this is just wrong, and let such incivility stop with me.

Gold Daily and Silver Weekly Charts - Silver Price Rigging, Huge Week for News Coming

Gold and silver bounced back quite a bit from the bear raid earlier this week.

Things are so boring on the Comex I think they didn't bother to update the clearing reports or the warehouse data.

 

Deutsche Bank, Bank of Nova Scotia, and HSBC have been accused of manipulating the silver fix.    Whitewash and/or wristslaps to follow. There is little justice, and no real reform.  Like flies to wanton boys are we to the Banks.

Next week is going to be a huge week for news.

First off we have a Comex option expiration on Monday the 28th.

Next, we will be seeing a trifecta of metals sensitive news events including 2nd Quarter Advance GDP release on Wednesday morning.   I have heard that John Williams is looking for a disappointing number.  I am thinking we will see a decent number, that will deteriorate noticeably in later revisions when no one cares as much.  They are also tinkering with the benchmark numbers and history in this release, so who the heck knows what will get tossed up from the Capitol maw.

And on Wednesday afternoon we will hear the results of a two day FOMC meeting.  I expect it will be steady on the taper, and we'll do something if something big happens.

And last but not least, we will be getting the Non-Farm Payrolls Report for July on Friday August 1.  The jobs number will likely be in line with seasonal adjustments, but keep an eye on hours worked and wages.  Without wage growth the velocity of money will continue to languish, and the Fed will feel free to keep pursuing a top down monetary stimulus and feed the asset bubbles.

There will also be the Chicago PMI, Michigan Sentiment, and the ISM Index.

I have included a calendar of next week's news events and projections below.

And in background the Ukraine and Gaza continue to simmer.

So let's get ready for some action in Madame Tussaud's precious metals museum on the Comex.  Maybe.

Have a wonderful weekend.

SP 500 and NDX Futures Daily Charts - Ho Hum

Earnings and geopolitical events continued to drive the US markets this week.

As for geopolitical events, since nothing blew up within the last 24 hours, the markets pretty much forgot about them, including plague, wars, and rumours of war.

As for earnings, they are mediocre, and stocks gave back some of their gains today on that disappointment.

Next week ought to be action packed. I will discuss that further in tonight's metals commentary.

Have a great weekend.

Beloved CEO Fired By Board For Being Insufficiently Ruthless: Employees Leave Jobs In Protest

"Just remember this, Mr. Potter, that this rabble you're talking about,  they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?

Anyway, my father didn't think so. People were human beings to him. But to you, a warped, frustrated old man, they're cattle. Well in my book, my father died a much richer man than you'll ever be!"

George Bailey in It's a Wonderful Life

This is by far the most remarkable story I have seen in a while.  Ordinary employees lay their jobs on the line to support a wealthy CEO who was fired by the board.  Talk about a 'man bites dog' story.

In the latest development the CEO of a northeastern grocery store chain, Mr. Demoulas, has made an offer to buy back his company, Market Basket.

If only more of us would put people before power and greed.  If only more of us would insist that our leaders live up to their duties to the people first, and not wallow in money and privileges for themselves and their cronies. 

If only those spreading fear and hatred to keep the people compliant would not find so many willing and gullible fools to support them.

 

Then that really might be 'a wonderful life.' 

Meet America’s Most Beloved CEO—Too Bad He Just Got Fired

Brad Tuttle

July 23, 2014

After the wealthy CEO of a supermarket chain was fired, thousands of workers walked off the job in protest—some getting fired themselves. What's up with that?

Workers understandably tend to go on strike or protest for selfish reasons—more pay, better benefits, improved working conditions. Over the last week in New England, however, thousands of employees at Market Basket, a supermarket chain with 71 stores in New Hampshire and Massachusetts, have been sticking their necks out (and in some cases putting their jobs on the line) in support of Arthur T. Demoulas, who was the company CEO until he was fired in June.

Rallies pushing for “Arthur T.” to be given his job back were held at the Market Basket headquarters in Tewksbury, Mass., on Friday and Monday, drawing upwards of 5,000 protestors. Meanwhile, the shelves of many Market Basket locations have gone barren, as there are too few employees still on the job to stock them. At least eight employees were fired over the weekend related to the protests...

“He’s George Bailey,” Trainor explained to the Washington Post, comparing Arthur T. Demoulas to the beloved savings-and-loan manager played by Jimmy Stewart in It’s a Wonderful Life. “He cares more about people than he does about money...."

Read the entire story here.

Joy

If I have learned anything in the past few years, it is that work and money and the markets are only things.   Important things perhaps, but only as means to the ends.  The ends are where the real stores of value in our lives reside.

And so I will enjoy the rest of the day, and be back tomorrow.  And the markets will still be there, as I hope that you and I will also be, thanking God for His small but tender mercies.

Have a pleasant evening.