Tuesday, November 26, 2013

The Signs Of A Dying Monetary And Financial System As Asset Prices Are Cracking “Up”

I want to put a little reminder in here.  For quite some years I have written that we could wake up some morning and see the Dow down thousands of points.  I’m sure most people believe that statement is ludicrous.   Well, but then we actually saw the flash crash.  That added some validity to what I had been saying.  Or, at least it should have.  The market literally disappeared.  There were no bids. 

This financial system is so wildly corrupt, driven by outright stealing and looting and unnecessarily complicated that no one person really has a complete perspective on why financial markets react the way they do.  If you think Jamie Dimon or Lloyd Blankfein could explain what their companies are doing and how it is affecting markets, you would be sadly mistaken.   They are probably two of the most ignorant and incompetent participants in this system.   They have simply “captured” the technical architects of this Frankenstein for benefit of covet means.  That is, to loot and to ameliorate their pathology. 

The pricing action of global equity markets, and that of all markets being manipulated by our pathological masters, may actually be driven by computers chasing other computers.  Prices may be moving higher not because of free Federal Reserve money alone but also because of the unintended consequences of all of these algorithms.  In other words, who said that markets needed to crash downward?  What we could be witnessing is the markets crashing upward as I type this.  Driven by the unpredictable consequences of unlimited money at zero percent interest coupled with financial algorithms attempting to steal money from other algorithms, pensions, long term investors, etc.   What happens if someone pulls the proverbial plug?  Janet Yellen is inheriting one hell of a mess.  One she supported in creating and most certainly has absolutely no idea how to resolve.  A frightening absurdity of a dystopian reality created by centralized bureaucratic hierarchy and its attempts to control the lives of billions of people.   Billions because the Fed is responsible for the world’s reserve currency.  Sounds like the Soviet Union and communist China to me.  By the way, the Chinese communists just announced “reforms” that  give corporations greater control over their citizens.  The yoke of greater tyranny dead ahead.  The force of the state joining with the force of corporate capitalism resulting in greater and greater violence against humanity.

Regardless, as I have noted on here ad nauseam, the level of markets don’t reflect any type of reality.  They are simply a reflection of the massive wall of money, derivatives leverage and lunacy of a private, undemocratic banking and private, undemocratic monetary cabal of pathological predators and criminals. 

Remember, central banks around the world are all purchasing assets for the first time in history.  All of them.  Many of them are buying equities.  Many are buying U.S. equities.  Who bails out corporate capitalism and its Wall Street enablers when central banks need a bailout?  This is going to end very, very badly.  And it is no one but the capitalist aristocracy that is holding the bag. 

In the next post I’ll share a simple solution that subverts this lunacy while creating merit-based democratic capital markets rather than markets dominated by capitalist oligarchs, the aristocracy, politicians, the investor class of looters and other class-based predators. 


Cracker Barrel stock is cracking “up”.   A frightening chart for an unspectacular chain of restaurants that serves a corporate interpretation of home-style food.


Amazon stock is cracking “up”.  Another frightening chart that makes the 2008 stock market bubble look like a picnic.  It uses receivables float to generate working capital.  The U.S. uses a similar manipulation scheme to keep neoliberalism going. 


Biogen stock is cracking “up”.  The renter capitalist predators that are the investor class are betting Obama and the fascist state will deliver astronomical profits created by drugging Amerika into a stupor on behalf of the sick care complex.


The S&P 500 health care sector is cracking “up”.   Sick care stocks are priced to astronomical levels.  If Obamacare fails, and there are so many terminal problems that Dummycrats who voted for it didn’t and still don’t understand……  Because they didn’t read what they passed due to massive corruption.  And, even if they did read it, they could not comprehend a bill so corrupted, massive and convoluted.  In a recent poll nearly 9 in 10 Democrats want the bill changed or repealed.   When I was a kid doctor’s visits were out of pocket.   While I support a national self-insurance plan, ie a nonprofit plan, were I to guess, it would be that we are headed towards an out of pocket end-state.  ie A personal self-insurance environment.  Were that to happen, costs for medical services are going to collapse.


Netflix is crackup “up”.  Netflix may provide a decent service but its valuations make 1929 and the 2000 internet bubble look preposterous.


The Russell 2000 is cracking “up”.  The valuation of the 2,000 stocks comprising this index are far higher than anything ever seen in this nation.   Far, far more overvalued than anything in 1929.


The Dow Transports is cracking “up”.  Global capitalism’s overconsumption and overproduction has benefits all aspects of the transportation industry.  There is ample evidence that more pollution is created shipping materials and goods around the world than all of the world’s automobiles combined. 


Another of my favorite big turds in the pool, LinkedIn.  A for-profit social media company that makes money by selling personal information about its participants to corporations.  Or, frankly, anyone who wants to belly up to the bar and pay for personal information.  Social media and corporate profit are not natural bedfellows.  But, it serves the god of profit so the capitalists love LinkedIn.  It is sporting a price to earnings ratio of 1,000 but even more frightening, an enterprise value to free cash flow valuation of something just short of this stock is guaranteed to fall 99% or worse when the corporate earnings bubble collapses.   

It’s not just equities that are cracking up but art, collectibles, bonds, high end real estate, farm prices, etc. 

Charts courtesy of BarChart.com

posted by TimingLogic at 10:11 AM