Friday, April 3, 2015

Which Inning Are We In?

Preseason baseball is on from Scottsdale, Az.

We watch the SF Giants in this household.

Stock and Bond markets closed today for Good Friday. (the celebration of the death of Jesus, WTF?)

But the govt. carries on. The monthly employment report out this morning. It seemed the market, to judge by the clowns on CNBC, expected some small slowing, the consensus on the pre-release show was in the neighborhood of 200,000 of new job creation. The actual number came in at 120,000. A dramatic weakness.

The markets are dependent on low interest rates and any suspicion that interest rates will be raised to accommodate a strong U.S. economy, or raised to at least gain some wiggle room for future interest rate manipulation, or at very least to gain a modicum of credibility for Chair Yellen seem to have been allayed this morning.

The Fed has moved from looking to get people back to work, to depending on some inflation to indicate the economy is chugging along, to thinking about the strength of the U.S. dollar and how that may be a headwind, and back to the employment rate again. Have we come full circle.

We may be a few innings earlier in this post crash ballgame than we thought. After all this is the world free market economy that is subject to blatant mercantilist manipulation by the central banks of the world to weaken their respective currencies and thereby drum up some export business in this world that is awash in excess labor.

We may be in a new world, economically speaking, as long as people are content to put up with the churn of living in a world that has no winners and only ephemeral losers.

What are the central banks of the world afraid of that a country can not put up with a long period of subpar "growth" and even declining prices. Is it fear of debt? It must be. That is all that really makes sense. But whose debt? Government debt would not be a problem with low interest rates and low inflation. Is it the demographic aging problem? Perhaps.

 But they sure seem afraid of something, or afraid of nothing. Perhaps there is no real problem with dreaded deflation. No one seems to have a problem with outright inflation. Not the western countries at least and China seems intent on further devaluation of the yuan, as well as lowering reserve requirements for their banks.

There has been a continuous string of devaluation plays over the last couple of years.
And the U.S. Dollar has been the strong currency on the prospect of a rise in interest rates here due to a strong economy.  Now, not so much?

Next week may be exciting. Stocks should go up, as the dollar goes down, as oil holds or goes up, probably on Middle East turmoil (there was no decline on the good Iran news). PM's may go up with the equities as new hopes/fears of inflation resurge. It WILL happen sometime.

control your risk,

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