Monthly Archives: October 2017

Sept 7 Below

The Fall, with debt supply and widespread material rebuilding, should provide plenty of opportunities to once again short the obligations of the government, a favorite non-grape based pastime. 

Sept 8 10 yr future - 12728

Oct 25 10 yr future - 124.06

and you're welcome. But remember, the fed buying less and less of said debt and rolling down its BS is not a negative...I heard everyone on TV tell me so !

Todd

Sons of 1984
Open your eyes and see
The world I couldn't change for you
Reach out your hand and take
The world that will belong to you
We were on our way to a better day
And the spirit was in us all
But as time went by we fell by the wayside
Maybe you'll be the last to fall
You are the only ones
There is nobody left but you
You are the chosen ones
There is nobody else to choose
Back when I was young, my hope was strong
But the time blew it all to hell
If I thought I knew what was good for you
I would have gone and done it for myself
Worlds of tomorrow
Life without sorrow
Take it because it's yours
Sons of 1984
I can still see the great panorama of hate
Being cleansed by our loving hands
But the brothers broke stride, the sisters cried
Now you have to start all over again
Songwriters: Todd Rundgren
Sons of 1984 lyrics © Warner/Chappell Music, Inc

The Wildfire of the Humanity

With due respect to Tom Wolfe.

I phased myself out of day trading and micro-bracket analysis several years ago. It was a long a gradual process - there is no methadone for generational animals like me, only isolation and rehab. Now and then, I feel drawn back into the muck to weigh in on the "sitch" .

The current social fragmentation was forecast years ago by numerous commentators. I recall being on CNBC with none other than Mr. Art Cashin when the growing wealth gap was discussed in terms of "ripping at the fabric of society." The shocking aspect is the fragmentation - now called tribalism - is occurring in the long upswing of economic activity and employment. If you hearken back to the financial crisis, many pedestrian thinkers voiced optimism that the financial destruction was occurring with LOW unemployment rates. In actuality, this proved to be no buffer as the socio-economic costs would be heaped on the already fractured financial system. (As opposed to a normal cycle in reverse order.)

Today, as everyday, the level of "the market" is pointed to in a variety of "sounds good" analysis indicating - simultaneously - the strength and impending implosion of said market, economy...world. The 30th anniversary of "The Crash of 87" (once called just The Crash, but now merely a top 5-er) is a good time for perspective: What did "the market" tell us about the world when it strted to ripple that August? Nothing. What about Continental Illinois 3 YEARS EARLIER ?!![ Actually #GIK..it was the largest bank failure in US history, and my first FTQ.] A surprise? Nope, my Economics professor, Dr. Frank Navratil, had laid out exactly how it would occur almost 2 years prior.  NADA. Worshipers from a host of ideological and graphic religions will sermonize their Nostradomic  warnings of the events. It changes nothing. The gyrations of the mid-80s are significant only because they ushered in the era of activist central banking - often derogatorily, sometimes factually called "bailouts" - that dominates policy today.

The latest risk to that 30 year evolution is the potential nomination of John Taylor to the Fed Chair. The greatest asset in the modern CB tool box has been flexibility. The Greenspan/Bernanke Feds should not - and I believe will not - be judged on the actuality of their policies but on their willingness (mistakenly by AG and presciently by BB imo) to explore the social boundaries of the institution. Taylor would attempt to revert the CB to a rudder steerer, most dangerously navigating by a seriously flawed compass, The Taylor Rule.

My worthless opinion from here among the vines is the potential for screwing it up at the Fed has risen significantly. I have long argued there is no hybrid ground between a rates regime and a quantitative regime that many subscribe to now. Mr Market will judge Taylor to be the rates line in the sand. The curve is as flat as its been in a decade already. My advice would be to concentrate on the BS and let the curve run wild, free and steep. An economic downturn, even a marginal one, with the country this frayed could morph into  social collapse.