There are periods where one can recall certain periods in market history and understand why events overwhelmed the economic group think. This past Thursday one of those events was remembered by some of us as America celebrated the 53rd anniversary of what Paul Volcker declared one his greatest achievements.
The bugaboo was true. pic.twitter.com/7PhjeskV1Z
— Jameson Lopp (@lopp) August 15, 2024
There are lessons from that era that nobody appears serious about remembering and the consequences of trying to force capitalists into becoming socialists at the behest of the government.
Yet here we are again, entering into a week of great geopolitical, economic, and domestic instability where the appointed Democrat candidate for President just declared open support for price controls sounding remarkably like the Republican in the video above.
Economic Insanity is on the Agenda
The impetus for last week’s dead cat bounce “rally” was the often criticized yet never improved Consumer Price Index reading of inflation this past Wednesday. The S&P 500 basically created an age old oddity in the technical analysis world that I call the “no bueno formation” which looks like this on a chart:
The math is simple, the pattern obvious, but the bulls, as usual ignore the warnings to sucker the public (aka, retail bagholders) back into the market so they have buyers for their book and they can bailout before the really big crash. The warnings are everywhere as Leon Cooperman said on CNBC during an interview last week:
The reality is that inflation is not under control and these pages favorite measurement for this measurement of price stability comes from the Atlanta Fed itself:
The problem for the markets this week is that there is very little economic data to influence a “narrative” for direction until Friday during the Jackson Hole symposium when Federal Reserve Chair Jay Powell is due to speak.
Unfortunately for Mr. Powell, the words he uttered in 2022 now are at great risk of coming back to bite him:
The Federal Open Market Committee’s (FOMC) overarching focus right now is to bring inflation back down to our 2 percent goal. Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. The burdens of high inflation fall heaviest on those who are least able to bear them.
Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.
The emphasis is mine because the survey data of the American people, not bureaucrats going shopping (CPI) says the following, from CNET’s survey story on June 12, 2024 in this example:
Worried About Inflation? 93% of Americans Are, Too, CNET Survey Finds
This one excerpt from the story linked above should cause Powell to remain hawkish on inflation in his statements on Friday:
A recent CNET survey found that US adults are cutting back on nonessential spending (53%) and leaning on credit (16%), such as credit cards and buy now, pay later plans to cover essentials.
The graph from the survey is just as disturbing, needless to say, and should keep the Fed Governors in a hawkish stance until real inflation, aka, Atlanta Fed Sticky CPI is below 2.5%.
Obviously what is said on Friday will open up the markets to some violent moves, as they have in the past.
1968 Chicago or Worse?
In 1968, the Democrat National Convention was held in Chicago, IL during the peak protest period of the Vietnam War and marked the decline and fall of the 1960’s dominance in national politics for a party that was slowly shifting further left. This past week, the pro-Palestinian protestors engaged in a practice run for what could be coming to Chicago per the story below from News Nation.
Pro-Palestinian protesters disrupt Harris campaign after-party
If they were successful in a city like New York City, what in the world can the nation expect in crime-ridden, heavily DEI woke tolerant Chicago?
The warnings are out in public view, and it is not going to be pretty if all of the Communist and other leftist groups join in as they usually do as this story below from the New York Post indicates.
Roughly 100K anti-Israel protesters expected to descend on Chicago to steal spotlight from DNC, Harris-Walz ticket
If there is any illusion that these individuals are going to sing Kumbaya and march with candles peacefully, the section below on geopolitical instability will shoot that theory to hell.
What most people who do not travel outside of their suburban back yard paradises do not understand is that most inner cities, especially in the major US cities around the nation, look like Oakland to some degree and domestic discontent is bubbling to the surface, this time right before the Presidential election.
No, this is not the slums of Cape Town SA. This is Oakland. Located in the wealthiest state in the wealthiest country on earth. This is a policy choice. @CAgovernor pic.twitter.com/x5QLrt8mU1
— T Wolf 🌁 (@Twolfrecovery) August 16, 2024
Elsewhere, a major terrorist attack happened at a major US Air Force base yesterday and the national media managed to suppress the story below. This appears to be an ongoing theme to erase stories about attacks and incursions against US military facilities inside of the United States during the past several years to provide the illusion of domestic security and stability.
🚨🇺🇸Breaking active shooters at the JBSA joint base San Antonio multiple shooters tried to enter the base servicemen return fire more to come🇺🇸⚠️ pic.twitter.com/Ha8CYvhUWH
— Todd Paron🇺🇸🇬🇷🎧👽 (@tparon) August 17, 2024
The Geopolitical March Towards Global Conflict
The ongoing conflict between Russia and Ukraine aside, as it is always at risk of expanding, the remainder of the world is on fire right now. The biggest risk is what is happening in the Middle East with the Israeli invasion of Gaza and daily exchange of rocket and artillery fire between Hezbollah and associated groups with the IDF.
The ceasefire discussions appear to have broken down as of this Sunday evening publication, per this story from Al-Arabiya:
US Gaza ceasefire plan rebuffed by Hamas as Netanyahu rejects permanent truce
Needless to say, the Israeli government has been preparing for this moment by receiving massive airlift and ocean cargo re-supply from the US government in addition to preparations for a major attack on Iran should a retaliatory attack occur.
As a Threat towards the Islamic Republic of Iran, the Israeli Air Force conducted an Aerial-Refueling Exercise on Thursday to Simulate a Long-Range Strike into Enemy Territory similar to the Strike recently against the Houthi-Controlled Port of Hodeidah in Western Yemen. Involved… pic.twitter.com/qdylsjqgiD
— OSINTdefender (@sentdefender) August 16, 2024
The United States has moved fully 1/3rd of all active US Naval assets into the region also:
With Taiwan still a flashpoint, the negotiations for a ceasefire in Sudan failing, Libyan oil production facing another shutdown as that situation heats up again, and the Houthis apparently re-armed for more attacks on global shipping and naval fleets, this week could become a firestorm on a global scale with little warning.
Or the minor clashes might be a prelude to next week, which starts on August 26th and the explanation about that warning shall be published in these pages tomorrow night.
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