I can think of maybe a dozen reasons to just say “screw it” and go back to bed this morning. With the price of gold beat down under $1,000 again – something I expected Friday, but this will do – the odds of a sustained press upward will likely have to wait a while. I mean sure, it would be nice and all, but there was just too much hype about gold last week. I bought tome grain options, figuring that there’s less price elasticity in people’s bellies than in their hankering for glitz or good dental work. Admittedly, that may be a bad call on my part, but we shall see.
The key economic feature of the week is triple witching. That’s when stocks, some commodities, and foreign exchange all get up and play musical chairs. One way of guessing immediate market directions is to look back to the last options expiration (Aug. 21) and see where the Dow was then: The index options (Thursday’s close) came off at 9,350.05 while the Friday session closed at 9,505.96.
Quite often, Mr. Market will take something like all the hype surrounding ‘green shoots’ and ‘rally’s here!” and turn it around on investors. Thought you’d make a fortune buying short term call options? Not bloody likely. Markets tend to have payouts that mime casinos (which are considerably more honest, since there’s no such thing as High Frequency Trading of roulette positions, and no flash-trading at the one armed bandits); all of ‘em pay out just enough to keep hope spinning eternal in the hearts of men (and women, too).
So if you are holding a pile of near-the-money call options – thinking your ship would come in this week, you should have skipped the waterfront and gone to the airport where Wall Street will be taking off with your retirement again.
For openers, the US and China are conflicted over tire imports and chicken exports. The Financial Times story here does a good job of summarizing it, if you overlook their curiously Brit way of spelling tires – tyres.
But it’s really only a smokescreen for what’s really going on. The real deal is that US-China trade has already been dashed up on the rocks of despair as I’ve been harping on the past several months with my West Coast Port container traffic reports – which you’ll be treated to again this week when the August stats come in.
As a refresher, the Port of Oakland’s July numbers last month were down 10.8% from year earlier numbers, but 2008 was already down more than 6% from 2007 figures. I expect their August report will show a continuing decline. The Port of Long Beach was down almost 17% in July inbound containers, so it will be no surprise when you pick up the online version of the UK Daily Mail and see the headline (and picture, too): “Revealed: The ghost fleet of the recession” staring at you.
It has been more than a year since the collapse of Lehman Brothers – and in all of this time, next to nothing has been done to really solve the world’s economic problems. “Why?” you’re wondering?
The fundamental problem is that for the world’s economy to really ‘recover’, someone has got to come up with a new ‘game’ to suck people into; ideally something where there’s the prospect of at least easy pickings if not an outright killing to be made. Problem is, there ain’t no such animal in sight. So consumer sit on wallets, velocity of money tanks, ships drop anchor, and politicians wring their hands being mostly mindless reactionary twits.
The Cash for Clunkers program was a one-time injection and dealers are back to hurting again. Sure, there are some tax bennies to be had if you buy a new car, but who’s got income that needs offsetting in this kind of climate?
With a global recession still digging in, the Oil Futures settle down on oversupply worries which makes sense if people aren’t driving as much, doesn’t it?
I told you last week, when it came out, that the ugly economic truth could be found in the Federal Reserve’s Consumer Debt (G.19) report. If total consumer debt is collapsing presently at a -10.4% annual rate, where is a consumer-driven economy going to come up with a break-even sales plan, let alone any progress toward the Corporate Holy Grail — Growth of Sales or earnings…just any old thing to hype down in Investor Relations?
What Al Gore & friends had been hyping as a ‘new growth’ area for the economy – Fighting Global Warming – has fallen apart because the sun has not obediently put on a major heating trend so we’re stuck with conflicting headlines. The Chicago Times is headlines a “Report on global warming predicts dire Illinois consequences” – although their story failed to mention the role of political blabber-mouthing which here lately is one of Chicago land’s growth industries and all that hot air has to go somewhere. Aspirin overdose notwithstanding.
An Examiner.com (Dallas) headline more reasonably notes that “Meteorologists continue top challenge global warming theory.“ The UK’s Independent figures it right: “Global warming cynicism rises in face of stronger evidence” – something I’ve noticed with fewer people writing to me wanting to tax cow and goat farts down here on the ranch.
My point is we can scratch that one as a new source of revenue & reform. Since Health Care Reform is contentious, and since the politically active Right has turned out “Somewhere between 2 million and 60,000 People“ for the Tea Party march this weekend in Washington, the Obama administration finds itself waking up to a Monday Morning Mess.
So how do the PowersThatBe respond to the lack of ‘fear factor’ to galvanize the public into mindless compliance with their wishes for a mindless consumer economy that’s politically pliable? Well, they trot out the some old headlines. This must be the umpteenth time I’ve read:
“New Bin Laden Tape” calls Obama powerless to stop Afghanistan War. Authenticity of the tape yada, yada, yada. When’s bin Laden going to get a Twitter account?
“Obama turns efforts to Financial Reform” like that’ll be successful. Sorry – that’s been obvious since before the Internet Bubble Collapse and what’s been done – I mean really? With all the hype about transparency, where’s the audit of the Fed? Where’s ‘sound money’? Get serious.
CNN-Money summed up Monday in a simple headline this morning: “Stocks set for grouchy start“. Them, and me, too.
Looking at all the headlines that aren’t getting traction, I look for the PowersThatBe to try and roll out….hmmm, what’s not been overworked already…? Say, how about a new flu scare-line?
Nope: With all the public backlash building up to the flu vaccine, I hope you noticed how HHS Secretary “Sebelius: “Encouraging News’ Regarding Swine Flu Vaccine” was making the rounds – suddenly the flu shots (plural) may become flu shot (singular). Unanswered is the question whether the political ‘leadership’ will be getting ‘special vaccine’ (without all the preservatives and additives of production vaccine). Or, aren’t we supposed to ask? ( I’ve got a 60-year allergy history and a doctor’s note. )
Like the market, I’m off to a grouchy start. I’m all set for a one year self-quarantine. You?
Call me when the Consumer is Saved, a 12 percent interest rate cap is slapped on the Banksters, jobs are being onshored, globalism is a swear word, and housing prices are going up. I won’t stay up waiting for the call, believe me.
Just go flip open the NY Post site this morning where Nobel winner Joseph Stiglitz says a year opn from Lehman “Things are worse.” yeah, like our 401(k) reports weren’t a hint…
Meantime, best I can figure it’s “Look Out Below!” If you didn’t pay attention to all our “Top’s probably in!” rants over the past couple of weeks, don’t come whining when the bottom falls out, because all you’re going to get from me is “Told you so’s.”
Not much more optimistic is this morning’s report from my friend Rick Ackerman up in Denver: His “Two possibilities Bulls have yet to discount” is definitely worth noting. You’ll see I’m not the only skeptic around, in case you need reminding.
“More than 40,000 Japanese aged 100 or over: Survey” caught my eye. I kinda feel that old this morning myself. The world’s oldest person died Friday in Los Angeles at 115. Old news.
Since most of the headlines so far this week have been pretty damn boring, maybe I could entertain you with some clever prose about the importance of the Producer Price Index numbers tomorrow or the Consumer Price Fantasy due out Wednesday? Or, would that be straining our relationship?
I see where Iran has agreed to last ditch nuclear talks about October 1st. Gee, let me guess: running the clock?
I expect that now that a “Huge natural gas reserve discovered in Venezuela” that US attacks on Hugo Chavez will be increasing. Why between the energy resources of Venezuela and the lithium deposits in Bolivia (along with their natural gas fields) there’s a whole region of people coming into focus who we just really oughta be itching to ‘liberate’. A nice way of saying “Bend some more over for the bankers. Get them in hock at 33% and up rates like the rest of us.”
Chavez is just one lucky SOB – wonder if he buys scratch tickets, too?
Chavez’ strategy is clear: Russian Nuke Plants seem to come with a ‘bomb and overthrow’ protection insurance plan and Chavez was smart enough to buy one just like the clerics over in Tehranium. The name will make sense by Thanksgiving.