WASHINGTON, Nov. 13, 2015 – Wall Street started out Friday trading action by plunging right back into the crapper where we left it Thursday afternoon of this sickening week for bulls.
October’s apparently early-arriving Santa Claus rally is starting to remind us of our header image above from YourDailyDish, showing then-and-now photos of one of history’s most famous cinematic Bond Babes, golden girl Shirley Eaton from (appropriately) that Fort Knox-based spy thriller “Goldfinger.”
Sadly, everything in life, including stock market rallies, tends to age and fade, just like Ms. Eaton. And Friday, November the 13th (cue ominous background music) is proving no exception.
The reasons for traders’ now palpable fear are clear: Oil seems ready to test its previous bottom in the upper $30 range per barrel of West Texas Intermediate (WTI). The Chinese statist capitalists continue to lose ground to a system they never quite understood as they continue to arrest people who trade contrary to government demands. And the Obama administration, nearing its last year of destructive power, continues to destroy America’s greatness one vicious regulation and executive order at a time.
The results of all the hideous missteps by all the smartest oligarchs in the world are becoming plain for all to see. The military would describe the current global economic situations as terminally FUBAR.
That’s why we had to laugh when several sources reported this morning that Swiss financial conglomerate Credit Suisse is worried about the inflation risk in 2016. On what planet do these idiots live? At this moment, at least, the Credit Suisse analysts promoting the inflation bogeyman are either
A. The greatest, most misunderstood intuitive geniuses in the history of civilization; or
B. So terminally deluded they should be institutionalized.
We choose menu item B.
If you’ve even casually glanced at worldwide commodity prices a few times during 2015, you can easily see that commodity prices have been trapped in a one-way trip to hell. Rapidly falling commodity prices indicate deflation. Listen up, Credit Suisse.
From the Saudis’ reckless drive to squash U.S. shale oil production, ruining both themselves and everyone else by pumping their onetime “peak oil” reserves as if there were no tomorrow and leaving the world drowning in oil; the Chinese hoarding about 50 years of copper supplies and other building materials and commodities lest anyone else get them first; to the Obama administration collusion with their rich, Green Meanie crony capitalist faux environmentalists friends to destroy the value of coal; to international bankers’ collusion to keep gold prices in the cellar until they reallocate them to their satisfaction, the international oligarchy has utterly destroyed the value of most commodities worldwide.
All the above has led to windfall bargain prices for the consumers of these commodities and in general a commensurate price drop in the cost to consumers of finished goods in a variety of product areas from gasoline to plastics to chemicals and heaven knows what else.
When commodities continue to drop in price, that’s called “deflation,” something real economists fear even more than “inflation”—the steady and sometimes precipitous rise in wages and prices that central banks usually quash with higher interest rates in order to slow the pricing juggernaut.
Unfortunately, what we’re seeing today is a massive commodity-laden freight train barreling straight to the bottom. Which again really makes us wonder if central bankers like the Federal Reserve and the Gnomes of Zurich haven’t got their economic heads jammed into a place where the sun never shines.
It’s a dilemma, of course, but all this is absolutely killing what even about 10 days ago looked like an early-starting 2015 Santa Claus rally. It doesn’t take a genius to look around the country and see tapped out consumers trapped in a box of low wages and purchasing power that seems never likely to rise again.
Aside from the privileged enclaves on America’s East and West Coasts, we look at the lives of the average American workers and see that they’re trapped in a living existentialist world as in Sartre’s “No Exit.” It’s made worse in many ways by the deflation in commodities.
If the price of raw materials is continuing to decline, where are the commensurate bargains in the market place? And even if price cuts really did emerge en masse, who any longer has the money to buy that many products aside from America’s coastal oligarchs and their detestable, clueless, tree-hugging spawn?
At any rate, all of this, no matter how much the so-called media likes to ignore it, is what’s driving markets down as the utter despair of middle America is finally hitting America’s smug elitists where it hurts—in the bottom line. And down we go.
At this point, we’re probably reaching or passing an extreme oversold condition in all markets, which inevitably will lead to at least an exciting dead cat bounce. The bounce could even get more substantial as we enter what many traders regard as a period of “favorable seasonality” in markets that tends to get underway around Thanksgiving.
But until we see the needs of workers and consumers seriously addressed, as opposed to the lifestyles of the rich and famous, we are likely trapped in a wicked trading range, which can be absolutely devastating to investors who only wish for a bit more cash and yield to protect their increasingly uncertain futures.
We’ve pared down our portfolios, actually copping a few profits on the way down, but profits that are less impressive than if we’d sold these investments early last week. We continue to stick with fairly short-term preferred stocks, a couple of good but battered utilities, one speculative bank, and what’s left of the bargain bonds we bought in the March panic of 2009.
Otherwise, it’s hard to get turned on about anything else in the marketplace right now until governments and central banks stop having cocktail parties with their rich and famous friends and take a look out the window. Let’s stay put until Monday.