You fools. The Dow closed down 250 and you’re celebrating in the streets, naked, as if you won the lottery.
There were signs of hope, however. Inside of Exodus, my bubble basket closed up 2.6%.
All that is great, especially when the lows of today’s session, down 565, looked pretty darn ominous. But let’s review what lies ahead.
Janet Yellen has been saying, for over a year, the downward price of oil was “transitory”– and that once it stabilized– inflation would rear its disgusting head.
WRONG.
This woman could not be more wrong about the economy, the tape, if she tried. They aren’t going to reverse their stance on rates. They’re ideologues, purposely ignoring markets because they believe in their mission.
Aside from the Fed, we have an out of control downward spiraling Chinese economy, being led by amateurs. And, to boot, there are jihadists in Saudi Arabia, hell bent on destroying America and its latest ally, Iran, working towards bringing oil to single digits by the end of the month, seemingly. The result of lower crude is disaster for US producers. Bankruptcy and large bank write downs await.
In short, let’s get a few percent to the upside before celebrating over the bones of our enemies.
For now, dark days still are directly ahead.
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Here is the inflation that Yellen is concerned about.
https://www.washingtonpost.com/news/wonk/wp/2014/11/06/heres-the-latest-dumb-argument-from-a-billionaire-that-will-hurt-the-economy/
Bear euphoria = trading bottom
Gotta suck it up and buy these -500 swings, not with all cash, but something
Do not give into BEAR fear. Bears are like ISIS they want you to feel terror and hide.
Be smart in 2016 and be rewarded.
You have 0 until you get either a V or MAs
got a ways to go…
Lots of traders must have known well ahead of time that oil, and the stock market, would dive when the sanctions were lifted off of Iran this past weekend. So perhaps this is Sell the (bad) rumor, Buy the bad news time. But maybe not, if the Fed keeps being bull headed.
Veritas
Here is another explanation of why the Fed wants to keep raising rates– that since the U.S. Congress believes in a laissez-faire free market ideology, Congress believes that it is unacceptable for government to do anything else to get the economy out of a recession except to lower rates. E.g. they think they should never pass stimulus bills Apparently, this means they have to hike rates in a hurry before we ever get into a recession, in order that, once we’re in a recession, they have a high enough place from which to start lowering rates.
http://neweconomicperspectives.org/2016/01/sovereign-spending-market-economy.html#more-9896
Interesting piece…as long as we have mental midget politicians who can’t grasp that modern monetary theory isn’t just like balancing a household budget, we’re going to have boom/bust. Which means forever.
In a free market economy, interest rates would be determined by market forces. In a Keynesian economy, the government attempts to control interest rates. I would think that obvious. With possible exception of old Hong Kong, there hasn’t been a free market economy on this planet in over a 100 years.
Yes, those 2 pure types are the the 2 extremes in ideology. In the real world, what actually exists is something between the 2 extremes but perhaps closer to the free market idea extreme at the moment, with regard to the question of economic stimulus. (With regard to other questions, we are all over the map.) What we have are Congress members who say they believe in a free market economy, so they do not want any stimulus bills– or perhaps they just don’t want to let their rival party to pass any stimulus bills.
I guess one could say that the Fed is a little more Keynesian at the moment, because, if no other things are being done to stop a severe recession, the Fed wants to lower rates rather than no one doing nothing at all.
However, if a recession turns into a huge crisis like in 2008, Congress members panic & throw the free market ideology out of the window & start bailing out banks.
The real world is more complicated than what happens in theoretical free markets vs. theoretical Keynesian markets.
“rather than no one in government doing anything at all” I meant to type.
“Pure”? “Extremes”? No. The extremes would be Anarchy or Communism. As to government actions – what they “say” doesn’t matter in the slightest – only what they do. What they have done is increase leverage across the board. Debt is not capital. It does not matter if the taxpayer is bled dry for the next 20 years or if the investor class is destroyed by defaults. The end result will be the same: obliteration of unsustainable debt levels.
You are right, there are some further extremes on each end.
As Fly noted in a previous post today, the U.S. has the world’s reserve currency, by virtue of our being the world’s police force with the world’s strongest military. As long as this situation remains, government debt is not a problem. Private debt may is a different matter.
Because government debt is not an issue, at least for the time being, the modern monetary theorists at the web site I noted above
http://neweconomicperspectives.org
take the position that we do not even have to have taxes at all, much less bleed the taxpayer dry. That we could just put whatever we want on our credit card, just like we did with the Iraq War. It was not paid for with taxpayer money. We went into debt for it.
http://neweconomicperspectives.org
Although the GOP talks the talk of not wanting government debt, they just borrow and spend, rather than taxing and spending. There is no political party that acts as if they have any concern whatsoever about government debt.
MMT is re-labeled chartalism (interesting how that word is so close to charlatanism). It never worked for long in the past and this time is not different.
If debt must be paid back, then ALL the recent wars were financed with taxpayer money. To be collected in the future.
One thing is certain: the only difference between the major parties is what they want to spend on.
IF debt must be paid back. When you have the world’s reserve currency, it doesn’t have to be paid back. As it well should not, because really, being the world’s police force is taking on a boatload of problems. I can’t see any reason at all why any other nation would ever want to take that job away from the U.S. And if no one ever does, then we keep having the world’s reserve currency, and keep having to never pay back our debts.
I mean never having to pay back our debts.
Almost no one if fond of these never-ending wars, and I am not either. But we can’t stop having them, unless we can reduce our debt to a manageable size, so that we can eventually pay our debt off. Then we wouldn’t have to have the world’s reserve currency in order to be solvent. And so then we could let go of the associated job of policing the world, .
“I can’t see any reason at all why any other nation would ever want to take that job away from the U.S.”
Yeah, Russia, China, Germany, France, Great Britain, numerous middle east countries, even North Korea, no they wouldn’t want to take any power from us. No further comments.
You are quick to assume that you understand what I am saying, rather than asking questions if you do not know what I mean. A funny way of being that is extremely common on the Internet.
I was not implying that the job of world policeman was open to all countries who would like to apply.
This is a job that is given out by the multinational corporations of the world. Most of those countries would never be found acceptable by the multi-national corporations, to apply for the job. Maybe Germany and Great Britain might be acceptable. But they are probably saner than the U.S. and they would not want the job. It’s quite a burden to accept such a job.
The job is not worth the trouble, as the few countries who are eligible to apply can clearly see. The country with that job gets to have the world’s reserve currency. But they are required to get involved in numerous wars which are not in their nation’s best interests. And no country would be considered for the job unless they enforce international property rights, and have numerous other rigorous qualifications in areas of importance to multi-national corporations.
Frog hire an editor
or cut 1 sentence from EVERY post BEFORE you click
Start there
Snow storms are coming. 2 feet possible in the East Coast. This is the start of winter!
Long natty gas!
I like Phillip Glass….. I bet he doesn’t throw any rocks.
Like it or not, today’s action is indicative of at minimum a tradeable bottom….and potentially MOAR.