Confusion, Delusions and Illusions

By: The Burning Platform


Two recent surveys, along with numerous other studies and data, reveal most American households to be living on the brink of catastrophe, but continuing to act in a reckless and delusionary manner.


There have certainly been economic factors beyond the control of average Americans that have resulted in real median household incomes remaining stagnant for the last 36 years. The unholy alliance of mega-corporations, Wall Street and bought off corrupt politicians have gutted the nation of millions of good paying jobs under the guise of globalization, while utilizing debt, derivatives and financial schemes to enrich themselves. The malfeasance of the sociopathic privileged class does not discharge the personal responsibility of citizens for living within their means. A lack of discipline, inability to delay gratification, failure to understand basic mathematical concepts, materialistic envy, absence of critical thinking skills, and a delusionary view of the world have left the majority of Americans broke and in debt.

The data that captured my attention was how little the average American household has in savings. Roughly 62% of Americans have less than $1,000 in savings and 21% don't even have a savings account, according to a new survey of more than 5,000 adults conducted this month by Google Consumer Survey for personal finance website GOBankingRates.com. This dreadful data is reinforced by a similar survey of 1,000 adults carried out earlier this year by personal finance site Bankrate.com, which also found that 62% of Americans have no emergency savings for a medical crisis, car repair, or unanticipated household expenditure.

Age insights: how muhc money is in your savings account

The fact is these are not highly unlikely scenarios. They happen every day as part of our routine existence. Everyone gets sick. Every car eventually needs new tires or an engine repair.

Every home will need a new hot water heater or roof at some point. It is foolish and short sighted to not expect "unexpected" expenditures. Living in the moment and fulfilling your immediate desires may feel good today, but leaves you susceptible to disaster tomorrow.

Gradually building a rainy day fund over time is what adults should do. Only immature children operate with no safety net. Everyone has an excuse for why they end up living on the edge, but the data exposes us to be an infantile nation of spendthrifts incapable of distinguishing between wants and needs. It might be understandable for young adults who are burdened by student loan debt and entry level jobs to have little or no savings, but the data for older Americans is most disturbing.

It seems 51% of all Generation X adults between the ages of 35 to 54, in the prime earning years of their lives, have ZERO savings, the highest among all age cohorts, with over 20% of them not even having a savings account. This is incomprehensible and reveals an almost juvenile approach to life. Approximately 70% of all 35 to 54 year old households have $1,000 or less in savings. These are people who should have been working for the last 10 to 30 years. To not have put aside more than $1,000 is beyond irresponsible, and the justification of earning no interest on savings is disingenuous as they could have earned 5% up until 2008. This shocking state of affairs can't only be laid at the feet of the evil bankers and rich corporate titans.

Every person has to accept personal responsibility for their own life. There is one sure fire way to accumulate savings and that is to spend less than you earn. It sounds simple, but the vast majority of Americans have chosen to live beyond their means by allowing themselves to be lured into debt by the Wall Street debt peddlers and their Madison Avenue media maggots selling dreams to willfully ignorant delusional consumers. Consumer dependent corporations hawking autos, electronics, glittery baubles, fashionable attire, toxic processed sludge disguised as food, and other slave produced Chinese crap, require a vast unlimited supply of easy money debt to keep profits rolling in. And the Federal Reserve has been willing and able to accommodate them.

Those who control the levers of this perverted economic system utilize Fed easy money, propaganda advertising messages, and the susceptibility of an oblivious populace, suffering from delusions of grandeur, to create generations of debt enslaved hamsters running on the wheel of life. But, we were not forced into this enslavement. Millions have chosen to live lives of quiet desperation in order to keep up with the Joneses. They would rather portray themselves as successful and wealthy, rather than make the necessary sacrifices required to achieve success and wealth. Everyone has the ability to live beneath their means. Millions have made the choice to do so. The chart above shows 10% to 20% of people do have $10,000 or more in savings, including young people. Many are average middle class Americans, not the despised 1%.

Treadmill wheel

It is certainly not easy to accumulate savings in an economy stacked against the working middle class, but it is possible. It requires self-discipline, deferring gratification, patience, budgetary skills, staying employed, and not coveting your neighbors' possessions. The lack of short-term savings is not an isolated data point. It is representative of a nation of narcissistic live for today ne'er-do-wells who rarely concern themselves with the future or the consequences of their actions. They haven't been putting all their spare cash into their retirement plans either. When you realize the typical household between the ages of 35 to 54 has less than $10,000 saved for their retirement, the mass delusion becomes clear. How could Boomers, who have worked for 30 to 40 years, and experienced the greatest bull market in history (1981 - 2001) have only $12,000 of retirement savings as they approach retirement?

Typical Working-Age Household - retirement account assets

These are median figures, so half the households have even less retirement savings. It requires decades of living above your means to accumulate such little in savings. The apologists for the non-saving masses often argue Americans were utilizing their homes as a store of wealth to be used in retirement. This is just another false storyline, as the savings poor public used their homes like an ATM machine from 2001 through 2008, extracting hundreds of billions to spend on granite countertops, exotic Caribbean vacations, home theaters, BMWs, Olympic sized pools, bling, and new boobs for mommy. Equity in homes plunged from 60% to below 40% in the space of a few years and has only recovered to 55% after the Fed induced faux housing recovery. There are still millions of homeowners underwater, with the next leg down guaranteed to add millions more.

Household real estate percent equity
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The millions of American households living on the edge and headed for a poverty stricken old age have a million excuses for why they never saved a dime. These are the same people who will demand the government save them from their own foolishness and irrational life choices. They will demand the rich (anyone who worked hard, saved, and planned for their future) be taxed more, so they don't have to live with the consequences of their reckless disregard for common sense and self-discipline. These people should have read some Shakespeare in high school, and maybe they wouldn't be in this predicament.

"The fault, dear Brutus, is not in our stars, but in ourselves." - William Shakespeare, Julius Caesar

We are all responsible for our own lives and our own decisions. It isn't complicated regarding how to save money. But it is hard. It requires simple math skills like addition, subtraction, multiplication and division - concepts not thought too important in our government controlled educational system. It requires self-control, acting like an adult, and distinguishing between what you want versus what you need. It's OK to splurge once in a while, but since around 1980, multiple generations have been binge spending in an orgy of debt debauchery unmatched in human history. Since 1980 the U.S. population has gone up by a factor of 1.42, GDP has expanded by a factor of 6.3, and consumer debt has exploded by a factor of 10. The amount of consumer debt per person in 1980 was $9,300. Today, the total is an astounding $65,200 per person, a 700% increase in 35 years. We owe $21 trillion of mortgage, credit card, student loan and other debt to the felonious Wall Street bankers. This nation has gone insane.

Non-Housing Debt Balance
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"In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule." - Friedrich Nietzsche

With a median household income of about $56,000 and median net wages per worker of $29,000 it is fairly easy to grasp the monthly inflow of a middle income household. In Median World, taxes will take about a 16% chunk out of those figures, so the median household ends up with about $4,000 of take home pay per month. If they own a median priced home of $189,000, their monthly mortgage payment would likely be about $850. Add another $200 to $300 per month for property taxes and you are on the hook for $1,100 per month. A median rent figure would be in the same ballpark, unless you live in SF, NYC or a few other overpriced markets. This is where many people go off course, allowing themselves to be lured into more house than they can really afford with low down payments guaranteed by the government, driving the monthly housing burden north of $1,500. McMansion envy has destroyed more lives in the last ten years than any other delusion.

Food, clothing, utilities, and home upkeep expenses could total $1,500 per month for a family with kids. If one or both parents are stuck with student loan debt, a monthly payment of $200 to $400 would be normal. There isn't much spare change left to fund their remaining needs, wants and desires.

But their neighbors and coworkers are all driving new cars. They can't be seen driving a used 10 year old clunker. People will think they're poor. Shallow appearances are all that matter to a vast swath of America. According to Edmunds.com, the average monthly payment on a new vehicle is $479. We can't have one spouse driving a new car, while the other slums it on public transportation, so two newer cars will add another $900 or so of expenses to the monthly budget.

Wall Street and the automakers are only too glad to offer those with good credit a 7 year 0% loan, guaranteeing a permanent status of being underwater on your loan until you must have that new model after four years, rolling the underwater loan into the next purchase. The permanent leasers convince themselves they are making a good deal as they sign their lives away every three years without understanding the financial implications of the leases. And then there are the 20% subprime auto buyers who pretend to pay until the repo man shows up in the middle of the night. This delusion of debt is how annual auto sales have soared from 10 million in 2009 to almost 18 million today.

US Light Vehicle Sales
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I'm on the road every day and it is mind boggling to see the number of newer $30,000 to $50,000 vehicles cruising the highways and byways of America. Even in the poverty stricken neighborhoods of West Philly, brand new BMWs, Cadillacs, and other $25,000 or more vehicles are parked in front of dilapidated hovels and low income housing complexes. Virtually none of these vehicles are owned outright. Americans are essentially renting their luxury wheels so they can appear successful. The way to become financially successful on a modest income is to buy used cars and drive them for ten or more years. The years of no car payment can be directed into savings. Very few people chose this path. That is why auto loan debt has now exceeded $1 trillion, up 40% since 2010. Wall Street wants you in perpetual debt and millions have bought it hook line and sinker. But at least they appear prosperous to their neighbors, while they're really in debt up to their eyeballs.

Consumer Credit: Car Loans
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The choice to indulge in driving over-priced ornamental transportation basically leaves the average household with little or no discretionary income at the end of the month. But that doesn't stop spendthrift nation from becoming addicted to their mobile phones and binge watching reality TV.

The average American, who had never heard of a mobile phone in 1990, now can't go 20 seconds without checking their phone. And they are paying through the nose for the privilege of staying terminally connected. We have smart phones for dumb people. Even welfare recipients without jobs, living in low income housing and dependent on food stamps, somehow find the funds to have a smartphone in their hand 24/7. Maybe directing those funds towards books might give them a better chance of exiting poverty.

In one survey, 46% of Americans with mobile phones said their monthly bill was $100 or more and 13% said their monthly bill topped $200 per month. The average individual's cell phone bill was $73 per month last year, a 33% increase since 2009, according to J.D. Power & Associates. When they aren't texting, tweeting, or facebooking on their iGadgets, they are watching basic cable boob TV at average price of $100 per month, up 39% since 2010. But our connoisseurs of crapola need the NFL Package, HBO, Showtime, Netflix, and on demand porno. Tricked out smart phones and cable packages are not necessities. They are wants. 

Wasting $200 to $300 per month on narcissistic compulsions is a choice.

Possibly the largest squandering of resources occurs on a daily basis, as Americans spend money they don't have on $5 lattes, toxic fast foodstuff, craft beers, and whatever else strikes their fancy.

According to the most recent Bureau of Labor Statistics consumer expenditure surveys, the typical household spends $2,625 each year, or around $219 per month, on food away from home. Those in higher income brackets spend the most on restaurants at around $370 per month. Millennials, with the least amount of discretionary funds, view dining out as a social event, and choose fun and frivolity over finances. The concept of brown bagging your lunch for $1 rather than spending $10 at Paneras, or brewing a pot of coffee for 25 cents rather than paying $5 at Starbucks is inconceivable to the live for today credit card cowboys and cowgirls.

Disproportionate Spending
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Dining out is the ultimate personal choice and a huge factor in the non-existent savings of American households. Over the last two decades Americans have abandoned the frugality of buying food at the grocery store on sale, using coupons in favor of eating out at a hefty premium on a daily basis. The result has been a $10 billion gap in spending between groceries and dining out being obliterated by an army of live for today for tomorrow we can make the minimum payment on our credit card juveniles.

Not only has this penchant for satiating their hunger contributed greatly to their lack of savings, but has been financed on their credit cards. That $25 Applebees dinner, financed at 18% interest over the next ten years ends up costing $54. Multiply this foolishness hundreds of times per year over decades and you understand why Boomers have less than $1,000 in savings accounts and $12,000 or less in retirement savings. It's just math.

Dining Out Spending overtakes Grocery store purchases
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The expenditures detailed above don't include healthcare, entertainment, vacations, government extractions (tolls, fees, fines, taxes) and assorted other miscellaneous wastes of money. It is pretty clear the monthly outflow exceeds the monthly inflow for the majority of Americans. That is why the average household has credit card debt of $7,500 and those carrying a balance pay an average interest rate of 14% on their $16,000 ball and chain. This is on top of an average mortgage obligation of $155,000 and average student loan commitment of $32,000. The Wall Street hucksters are only too happy to help you finance a lifestyle well above your true means. They borrow from the Fed at .25% and charge you 10% to 20% for the use of credit created out of thin air. They always win. The willfully ignorant are thrilled they can now pay their IRS bill, property taxes, utilities, and just about every daily expense with a credit card. They fail to acknowledge the insanity of their chosen lifestyle path.

I still remember something my sophomore English teacher Mr. McGrath taught the class, based upon the writings of Aristotle. Human beings are rational, sentient, living, corporeal substances. What separates us from animals is our ability to think and act in a rational manner, rather than just on instincts and urges. Based on what has occurred in this country over the last 35 years, I'm starting to question the rational part. It's almost as if a mental illness has befallen a majority of Americans. The Deep State and their minions on Wall Street and the corporate media certainly attempt to mold and manipulate the minds of the masses, but at the end of the day people are free to disregard those messages and live meaningful lives on their own terms.

Even though living above your means has become "normal", it is only normal in relation to our profoundly abnormal society. Telling people the truth today is meaningless, as they don't want their illusions destroyed. But destroyed they will be, when this teetering edifice of debt comes crashing down on their heads.

"The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does." They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted." - Aldous Huxley - Brave New World Revisited

Cartoon: People don't want to hear the truth


"Sometimes people don't want to hear the truth because they don't want their illusions destroyed." - Friedrich Nietzsche


Hobson's Choice

Doug Nolan

More than two months have passed since the August “flash crash.” Fragilities illuminated during that bout of market turmoil still reverberate. Sure, global markets have rallied back strongly. Bullish news, analysis and sentiment have followed suit, as they do. The poor bears have again been bullied into submission, as the punchy bulls have somehow become further emboldened. The optimists are even more deeply convinced of U.S., Chinese and global resilience (the 2008 crisis “100-year flood” thesis). Fears of China, EM and global tumult were way overblown, they now contend. As anticipated, global officials remain in full control. All is rosy again, except for the fact that global central bankers behave as if they’re utterly terrified of something.

The way I see it, underlying system fragility has become so acute that central bankers are convinced that they must now forcefully (“shock and awe,” “beat expectations,” etc.) react to any fledgling market “risk off” dynamic. Risk aversion and de-leveraging must not gather momentum. If fragilities are not thwarted early, they could easily unfold into something difficult to control. Such an outcome would risk a break in market confidence that central banks have everything well under control – faith that is now fully embedded in the pricing and structure for tens of Trillions of securities and hundreds of Trillions of associated derivatives – everywhere. With options at this point limited, the so-called “risk management” approach dictates that central banks err on the side of using their limited armaments forcibly and preemptively.

With today’s extraordinary global backdrop in mind, I’m this week noting a few definitions of “Hobson’s Choice”:

“An apparently free choice that actually offers no alternative.” (The American Heritage Dictionary of Idioms)

“A situation in which it seems that you can choose between different things or actions, but there is really only one thing that you can take or do.” (Cambridge Idioms Dictionary)

“No choice at all, take it or leave it.” (Endangered Phrases by Steven D. Price)

There are subtleties in these definitions, just as there are subtleties in financial Bubbles.
 
Importantly, over time Bubbles embody a degree of risk where they stealthily begin to dictate ongoing monetary accommodation. These days, global market Bubbles have reached the point where their message to global central bankers is direct and unmistakable: “No choice at all, take it or leave it.” “Keep expanding monetary stimulus or it all comes crashing down – and that’s you Yellen, Draghi, Kuroda, PBOC – all of you…”

As Ben Bernanke’s book tour lingers on, there are comments to add to the debate. From an interview with the Financial Times’ Martin Wolf:
Wolf: “… We have to recognise that neither he nor the Fed expected the meltdown. Does the blame for these mistakes lie in pre-crisis monetary policy, particularly the targeting of inflation, with which he is closely associated? Had interest rates not been kept too low for too long in the early 2000s?”

Bernanke: “The first part of a response is to ask whether monetary policy was, in fact, a major contributor to the housing bubble and all that happened. Serious studies that look at it don’t find that to be the case. People such as Bob Shiller [a Nobel laureate currently serving as a Sterling professor of economics at Yale University], who has a lot of credibility on this topic, says that: it wasn’t monetary policy at all; it came from a mania, a psychological phenomenon, that took off from the tech boom and moved into housing.”


Mortgage Credit almost doubled in six years. Home prices inflated dramatically throughout much of the country, with prices about doubling in key markets (i.e. California). Egregious lending excess was conspicuous. Speculative excess throughout ABS, MBS, GSE debt securities and mortgage-related derivates (i.e. CDOs) were only slightly less conspicuous.

Why did the Fed fail to impose some monetary restraint (recall that Fed funds remained below 2% for several years of double-digit annual mortgage Credit growth)? Because they had (once again) badly missed their timing. A Bernanke-inspired policy course was determined to see reflationary measures gain robust momentum. The Fed believed the benefits of prolonging aggressive accommodation greatly outweighed minimal risks (CPI and inflation expectations were contained!). Meanwhile, mortgage finance Bubble excess reached a scale where the Fed would not risk the un-reflationary consequences of piercing the Bubble. Financial and economic vulnerability were too acute for our central bank to take such institutional risk.

Then, one might ask, why exactly had the Fed been so unwilling earlier in the cycle to restrain obviously overheating mortgage and housing marketplaces? This is a critical yet somehow completely neglected issue. Well, it’s because the Federal Reserve had specifically targeted mortgage Credit growth and housing inflation as the reflationary drivers for the post-technology Bubble recovery. Though apparently lost in history, manipulating mortgage Credit and housing markets were the primary (Bernanke’s “helicopter money”) mechanism for the Fed’s war against deflation risk.

The Bubble was of the Fed’s making, and our central bank lost control. It became a Hobson’s Choice issue in the eyes of the Fed, and they fully accommodated the Bubble. Historical revisionism seeks to portray Bernanke as the hero that saved the world.

These days, the Fed and global central bankers face a similar but much more precarious Bubble Dynamic: The Fed specifically targeted higher securities market prices as its prevailing post-mortgage finance Bubble (“helicopter money”) reflationary mechanism. This ensured that the Fed would again be unwilling to impose any monetary restraint before it would then become too risky to remove accommodation (Einstein’s definition of insanity?). In concert, global central bankers now aggressively accommodate financial Bubbles.

Global markets have the Yellen Fed petrified of even a little 25 bps baby-step nudge up from zero rates. Despite booming bond market Bubbles, a huge rise in stock prices, generally loose financial conditions and expanding economic recovery, the Draghi ECB Thursday signaled additional monetary stimulus was forthcoming (above the current $60bn monthly QE and near-zero rates). Global markets were overjoyed. In the face of much trumpeted financial and economic stabilization, booming corporate debt markets and significant ongoing Credit growth, Chinese officials moved Friday to again cut lending rates and reserve ratios. Markets were more overjoyed.

The halcyon days have returned. Powered by strong earnings from heavyweights Amazon, Microsoft and Google, the Nasdaq 100 (NDX) surged 4.2% this week. The NDX has now rallied 22% off August lows to within about a percent of all-time highs. The S&P500 gained 2.1% this week, closing just a couple percent below record highs. Bloomberg headline: “Junk Bond ETFs Break Monthly Flow Record With a Week to Spare.” And to be clear, that’s an inflow record.

Friday morning from Bloomberg: “$100 Billion Rally Coming in Google, Microsoft, Amazon Shares.” Tech Bubble 2.0 is raging, fueled by the loosest financial conditions imaginable – spurred along by speculative market dynamics and a global industry arms race arguably on a much grander scale than that of the late-nineties. Friday evening from the New York Times: “America’s Heartland Feels a Chill From Collapsing Commodity Prices.” The impact from the faltering global Bubble is spreading. Fed Bubble accommodation ensured incredible wealth has been freely lavished upon Silicon Valley, exacerbating the issue of “the haves and have nots” locally, regionally, nationally and internationally.

It’s certainly worth noting that market strength continues to narrow. The broader market this week badly lagged tech – especially big tech. In a financial management world desperate for relative performance, Fed-induced market rallies compel market participants to jump aboard the big outperformers. It’s exciting – dangerous late-cycle financial market dynamics.

There is as well a powerful real economy dynamic at work. For the most part, the bull vs. bear argument has the economy either rather robust or on the cusp of recession. Most importantly, the U.S. economy is badly imbalanced. Segments and sectors are absolutely booming. Monetary policy is recklessly loose, with cheap liquidity apparently to fuel excess until Bubbles have finally run their course. Meanwhile, vast swaths of the economy suffer from structural stagnation, the aftermath of previous boom/bust dynamics. Here monetary accommodation has little impact. And this stagnation plays a major role in seemingly benign aggregate consumer inflation and economic output data.

Yet when it comes monetary stimulus fueling Bubbles and exacerbating structural imbalances, the U.S. is overshadowed by China. Spurred by a surge in state-directed bank lending, total Credit (“total social financing”) jumped back over $200bn in September. There are also indications that post-stock market Bubble reflationary measures have pushed China’s corporate debt Bubble to only more precarious excess. While many contend that the Chinese economy, markets and currency have stabilized, I see it much more in terms of ongoing unsustainable Credit excess.

Chinese officials missed their timing for reining in Bubble excess by years. It’s now a Hobson’s Choice of throwing everything at the faltering boom. Brief thoughts: The Chinese will need a couple Trillion (in U.S. dollars) of new Credit over the next year, then the year after and so on. Throwing enormous amounts of new Credit at a terribly maladjusted system will ensure epic maladjustment and a Credit Time Bomb. Normally, such dynamics ensure significant currency debasement. I would think in terms of a Credit and Currency Peg Time Bomb.

October 18 – Financial Times (Gabriel Wildau): “It seems a long time ago that China was piling up foreign exchange reserves at a record pace as economists fretted about global imbalances from Beijing gobbling up US Treasury bonds. Now investors are wondering how long China’s dwindling forex reserves — down to $3.5tn from a peak of $4tn in June 2014 — can hold out. Capital is flowing out of China at a record pace and the central bank is drawing down reserves to support the renminbi after its recent dramatic fall. A lack of clarity over how China calculates its reserves and how much is readily available to deploy at short notice has intensified these concerns. As growth slows and bad debt rises, investors have viewed China’s massive forex pile… as the ultimate guarantor of financial stability. The prospect that reserves could be quickly exhausted raises doubts about the government’s ability to ward off crisis. It also limits the central bank’s ability to continue foreign exchange intervention, which may have cost as much as $200bn in August alone.”
Thus far, the markets have been incredibly tolerant of erratic Chinese policymaking. “We don’t care how you do it, just stabilize your markets and economy.” But at the end of the day, I see a lack of trust weighing on the Chinese currency. China’s Hobson’s Choice: aggressively inflate Credit or not. And this will put the currency at risk – the currency peg at risk. Currency controls, state-directed currency manipulation and derivatives to mask “capital” flight only increase the risk of financial accidents. Commodities and developed sovereign debt markets seem to confirm that China is not out of the woods.

FT’s Wolf: “I ask him whether he is confident that the improvement in the resilience of the banks is adequate. ‘It’s a fool’s game to predict that everything is going to be fine, because either it is fine, in which case nobody remembers your prediction, or something happens, and then …’ They remember your prediction, I interject. Bernanke continues: ‘My mentor, Dale Jorgenson [of Harvard], used to say — and Larry Summers used to say this, too — that, ‘If you never miss a plane, you’re spending too much time in airports.’ If you absolutely rule out any possibility of any kind of financial crisis, then probably you’re reducing risk too much, in terms of the growth and innovation in the economy.’”

Miss your plane and you reschedule a later flight. And the issue is certainly not ruling out “any possibility of any kind of financial crisis.” By now we should recognize that failed experimental monetary management was the leading culprit in the so-called “worst financial crisis since the Great Depression.” So what’s at risk today from much more egregious monetary experimentation? With runaway Bubbles at risk or faltering around the globe, central bankers are left with a choice of pushing ever forward with monetary inflation and market manipulation – or coming clean. Clearly they believe they have no choice at all.

Central Banks Take Charge Of The Tape
 
10-23-2015 6-17-15 PM

The ECB is rumored, due to little bond supply to buy stocks with their QE program. Doing so would copy Japan’s BOJ who make no secret of buying stocks to support markets. Now China’s PBOC and acknowledging a weak economy, cut interest rates. And, after outlawing shorting, and even conventional selling, now markets are no legitimate two-way trading affair.    

It doesn’t matter that an overwhelming majority of pundits claim the U.S. central bank dare not raise interest rates. They’ve been saying they will do so, and do so this year. Isn’t their credibility is at stake?

Bottom line, central banks are in charge and want markets higher period.

This week many market sectors have heeded central bank’s not so subtle mandates leading to almost panic buying for stocks. Many sectors have moved into green for the year.

It’s been quite a spectacle as overall earnings and ongoing economic data have been weak and are cast aside.

As I and many others have asserted, the stock market is not the economy and this has never been truer than now.

Market sectors moving higher included: Mostly everything.

Market sectors moving lower included: Commodities (DBC), Crude Oil (USO), Base Metals (DBB), Gold (GLD), Treasury Bonds (TLT), Euro (FXE), Yen (FXY), REITs (IYR), Utilities (XLU), Retail (XRT), Energy Stocks (XLE) and so forth.

The top ETF daily market movers by percentage change in volume whether rising or falling is available daily.
Volume was higher and breadth per the WSJ was positive.

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 10-23-2015 6-55-49 PM Diary
Most market sectors weren’t trending the same on Monday. Weaker markets are so due to perceived weak economic demand from China despite some reports being better than expected.
More earnings data on the way throughout the week which should be telling since most reports have been marked much lower. How much these are beaten remains the issue for bulls.
It seems a little early to wait on the Fed already. Nevertheless that’s what it seems like.
Let’s see what happens. 
 
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Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001. He is listed as one of 22 experts you need to follow on Twitter. ETF Digest was named one of the most informative ETF websites in the 10th Annual Global ETF Awards.


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    EWG WEEKLY

  • EWJ WEEKLY

    EWJ WEEKLY

  • EWY WEEKLY

    EWY WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • RSX WEEKLY

    RSX WEEKLY

  • EPI WEEKLY

    EPI WEEKLY

  • FXI WEEKLY

    FXI WEEKLY

  • NYMO DAILY

    NYMO DAILY
    The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.



  • NYSI DAILY

    NYSI DAILY
    The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.



  • VIX WEEKLY

    VIX WEEKLY
    The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.


 
I’ve not much to add as the tape is doing all the talking and should be respected despite any negative opinions anyone, including me, might have.
 
Let’s see what happens