Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
We have noted repeatedly that Operation Twist served to benefit
strategic areas (like housing) with its purchases of long dated Treasury
bonds, which kept rates down on the long end. We have also noted that
Twist sought to sanitize these asset purchases by selling short-term
Treasury bonds to keep the yield curve tame and snuff out any inflation
signals that would come from a rising money supply. Enter Goldilocks.
It’s all lies. It is a painting rendered by a most brilliant of Fed
chiefs playing tricks with the nation’s bloated debt load. People are
buying the stock market now and they (and their investment fund
managers) probably don’t give a damn about what created the rally. It’s
Goldilocks and that’s all they are concerned with.
I distinctly remember watching the first yellow highlighted bullish
pattern form. Here, don’t believe me? I am a perma bear? Here’s the
post from back then (7.3.12):
I did not buy it because I find it difficult to buy things that I
either don’t believe in or are entirely dependent upon overly powerful
people doing things that should be illegal in order to manage markets to
But the chart was the chart and it was bullish. HGX has since gone
on to much higher levels than I had anticipated as it carries along the
absolute dumbest, most greedy money on the planet in tow. These people
were hiding in foxholes last summer.
Just remember that if you want to go chasing this market. These people are your co-sponsors.
Risk vs. reward on the broad US stock market stinks. I was not
afraid to call it bullish last summer and I am not afraid to call it
what it is now.
One of the big standouts in today's rally is, of course, International Business Machines. I noticed something remarkable about it, however. From October 16 of last year, there was a gap at 208.56 to be filled. Even though that was more than three months ago, IBM surged today to a high of 208.58 and then retreated. Pretty interesting, yes?
I would quietly point out that Apple's modest strength of late is pushing it right up against its own gap. Apple is a depressed stock, of course, having fallen some 200 points, but I will not drop dead of shock if you see if trading deeply lower after earnings are announced this evening. Unlike certain analysts that really could use a good haircut, I never called for a $1,000/share price target, but instead have stuck to a target of about $440 before it stabilizes.
The Decline of the "Blue Social Model"
Blogger and Bard College professor Walter Russell Meade has written for years about the decline of what he calls the Blue Social Model, the post-World War II economic structure built on unionized middle class jobs with generous wages in government at at oligopolistic private sector firms such as the old AT&T. Of course, those sorts of private sector middle class jobs have been disappearing for decades, so what Meade has focused on is the unsustainability of unionized public sector jobs, with the increasingly parlous finances of state and local governments. Professor Meade noted in a post last week that the New York Times now acknowledges the fragility of this model.
In that post, Meade quotes Thomas Edsall of the New York times:
Dozens of city and state public employee pension plans are on the verge of bankruptcy—or are actually bankrupt—from Rhode Island to California; in 2010, a survey of 126 state and local plans showed assets of $2.7 trillion and liabilities of $3.5 trillion, an $800 billion shortfall.
Meade concludes: "The reality of blue model decline is so obvious that nobody can ignore it any longer."
Waiting for the retracement within the rising channel on SPX has been a bore. The strong resistance trendline has been holding well and it seemed just a matter of time until we saw at least some retracement. However SPX broke above rising channel resistance yesterday and while it may fall back inside today, that opens up potentially considerably more upside before a retracement: