Financial topics

[aedens]

The Catholic and the Communist are alike in assuming that an opponent cannot be both honest and intelligent.
George Orwell
http://2045.com/ideology/

[world]

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[aedens]

Why we took delivery.

There's a term for this manipulative tactic in the trading world. It's called "Beat the Beehive." You smash the nest and then watch the total confusion feed on itself. By the next day all the bees are gone and all that's left is a smashed up beehive. There has been a lot of speculation on the markets and manipulation that is going on. What I’ve offered in this report using the fact that gold crashed on Friday is a scenario on how it could have been orchestrated.

[aedens]

Part of the acceleration in activity reflected farmers' filling up silos after a drought last summer decimated crop output.
Removing inventories, the growth rate was a tepid 1.5 percent. Just as we noted H

While consumer spending increased solidly, it came at the expense of saving, which does not bode well for future growth.
http://seekingalpha.com/article/1378691 ... urce=yahoo

[aedens]

The Calvary is not coming to save you. They have other plans and if you missed that essential point you have aready been abandoned.
The Battlefield Is The United States Of America" I heard that before around 1996, funny how time flies. Earlier I remembered this. I alluded to it before as we are percieved as a death cult to the unborn. Toward the end of an extended visit to America in 1976, an obscure Polish archbishop from Krakow by the name of Karol Wojtyla stood before an audience in New York City and made one of the most prophetic speeches ever given. "We are now standing in the face of the greatest historical confrontation humanity has gone through," he said, "...a test of two thousand years of culture and Christian civilization, with all of its consequences for human dignity, individual rights and the rights of nation." But he chided his listeners on that September day, "..wide circles of American society and wide circles of Christian community do not realize this fully..."

[Higgenbotham]

Note the big move in the ratio which began at the end of July 2008 several weeks before the financial crisis and collapse of Lehman Brothers. The chart also shows the S&P500 continued to rally before turning down at the end of August.

Cross market indicators are often unstable, rarely unambiguous, and must be interpreted within in a larger context.

http://macromon.wordpress.com/2011/05/2 ... -risk-off/
http://macromon.files.wordpress.com/201 ... -ratio.jpg

The above was posted May 23, 2011 and I feel is applicable today. The link is to his original chart, which is very nicely done and the best I can find; it depicts the ratio and its relation to the behavior of the markets pre-Lehman. I've modified his chart below to show where the ratio is today. The chart below that shows the ratio over the past 5 years.

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[Higgenbotham]

BONDS.gif (101.95 KiB) Viewed 3442 times

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[Higgenbotham]

This chart is updated through the end of March. Spot copper closed at 3.18 yesterday.

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Spot oil closed at 92.90 yesterday. The recent oil price movement is more difficult to analyze. I'll post below what I think might be going on.

OIL.gif (17.13 KiB) Viewed 3434 times

[Higgenbotham]

I'll start with what we know as a fact. Over the past 9 weeks, gasoline prices have been falling faster and more steadily than oil prices.

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Before finishing this post, I hunted around for an analysis that may have already covered this topic. This one is fairly close. The article is pretty comprehensive.

The Nature of the Financial Predicament We Are Reaching

At the beginning of this post, I mentioned that rising investment costs lead to what I call an investment sinkhole problem, as we extract fuels and ores that require increasingly expensive inputs near the bottom of Figure 1. An examples might be tight oil, that is extracted using “fracking”. While we hear much about the hoped-for higher supply, we don’t hear that the newer types of oil are available only because oil prices are high. They can’t be expected to bring oil prices down. An investment sinkhole means that our dollar of investment doesn’t go as far; it is precisely the opposite of increased productivity.

When we were still far from reaching resource limits, efficiency improvements could more than make up for the loss of efficiency that comes from the Investment Sinkhole effect. But as we get closer to limits, the situation is reversed. Efficiency improvements are outweighed by the ratcheting up of extraction costs, because of the Investment Sinkhole effect. This means that instead of increased wealth being added to the system by efficiency improvements over time, we find the Sinkhole effect predominates. The common worker needs to spend an increasing proportion of his paycheck on necessities, leaving less for discretionary items. The result is recession, or very slow economic growth.

When the Investment Sinkhole problem starts to predominate, financial models suddenly don’t work very. Central banks react by cutting interest rates, in an attempt to stimulate economic growth. They also try to stimulate the economy by Quantitative Easing. This adds more money to the economy, and attempts to reduce longer-term interest rates. Of course, if the problem is really structural, there is no bounce-back to economic growth. The temporary fix becomes a bridge to nowhere.

http://ourfiniteworld.com/2013/03/29/ho ... -collapse/

This is all well done and accurate in my opinion. The only thing I would add is that as the extraction costs increase and the common worker's relative wages decrease as she describes, the common worker's ability to pay for gasoline also decreases, which should lower the cost of gasoline relative to oil. It's too early to say if this is the process that's driving the recent price discrepancy but this theory fits with the rest of the charts.

That may be covered in some of her more recent posts. I'm just finding those now.

http://ourfiniteworld.com/2013/04/21/lo ... -peak-oil/
http://ourfiniteworld.com/2013/04/11/pe ... e-problem/

The real problem arises when oil price falls back from a price level it has held, as it has done recently, and as it did back in July 2008.

Yes, precisely. That quote is from the April 21 article.

[vincecate]

This recent up surge in the market may be due to the Reinhart and Rogoff paper on the problems with high government debt getting a bad name in the press due to an error. As Krugman and others marginalize this paper it clears the way for more money printing. The stock market likes money printing.

http://www.cnbc.com/id/100674381