In beginning my recalibration / recalculation effort this weekend... also landed on a Rickards piece... I find reasons to have a few issues with his efforts, on occasion, but those concerns are conditioned more by his focus in self interest and elements in personality and style than they are by any failures in analytic ability. So, within an awareness of the limits... Rickard's provides a solid and useful enough sounding board... from which one might seek our resonances more in tune with ones own focus in self interest and elements in personality and style. One of his weaknesses, IMO, is in an ego that feeds itself in self promotion enabled by an excess in name dropping... but, it is also true that Rickard's analytic ability does provide him with some "inside" access that few share... with a particular crowd... and, that leaves one to judge the meaning when... as here... a casual comment is delivered while names are not dropped.
Also, perhaps leaving an issue in action taken in anticipation even more than expectation in "a shoe being dropped"... which then failed to drop...
My consideration of his has identified three core issues I must attack this weekend... which effort has already led me wandering off into a few related and additional offshoots... All of which I was just preparing to begin posting about in a series over on Aristocrats... but will pen the core here, as conversation, and re-post there...
First...
I noted in posting earlier this week... that Putin announced "counter-sanctions"... which were to be revealed in two days... which would have been Wednesday... but leaving us still hanging, waiting... I even suggested we were right to be concerned the news flow was "not working". But, now it appears more likely that Putin's creation of error in "expectations" was probably purposeful... although the "punt" Rickards' notes is just as likely to be misdirection as is the "two days"...
With Rickards as source... that "punt" at least appears confirmed, today... the only corroborating evidence I have of that being in the telling enough price performance of SBSW... first... which clearly responded to some bit of news I didn't get... on Tuesday. It's a reminder that the market reacts to news... whether you have it or not... and that your seeing the market react... can be considered as the same thing. Not the first time recently I've seen "a shift in the trade" as the first indication of news... so, if you want to be early in trading the Fed's next statement... or the announcement of OPEC's next move... don't watch it... just watch the market, and trade it ? The price is always the price... and the rest in "right or wrong" is beside the point... until the question is "valuation" over longer periods of perception... vs "trading" right now...
So, before proceeding to an analysis in alternatives and obvious errors I see in the resulting calculus in others re-calibration efforts... it seems important to first answer that question on "sources" that I missed that appear available to Rickards... and, clearly, to many others... as the same "Crazy Ivan" apparent in SBSW is obviously not different than that expressed in other "highly correlated" commodity spaces... so, oil, most obviously... it also being Tuesday that "the spike" to $126 occurred... and then failed. So, all of that now appears clearly related to the Putin "two days" comment... and the subsequent shift from "an announcement of action in two days". Putin's words... moving markets more than Biden's... perhaps worth noting.
But, I haven't answered the question re "sources" ?
Second...
After issues in sourcing of news... awareness in the elements of "strategery" perhaps included in Tuesday's now obvious Lucy/Charlie Brown/Football ploy...
There is a clear excess in the inherent bias in the market that has it slavishly focused on expectations being created, driven and condensed into timely and actionable bites... by directed action. The market has become ("managed" and thus) inured of being told what to expect... and what to do... and when. And that is... "control"... in which some get the word before... others only after... which I've commented on here often enough ? I often shake my head at the cupidity of markets responding to virtue signaling and other pointless posturing... as the play the team has called... as in Biden's SPR releases, which the market far too gladly pretends will matter in altering supply and demand... and balances in prices. But that, as example only...
That tendency... includes fostering a difficulty in result of enabling the excessively linear thinking... where direction and awareness of the play call... substitutes for analytic ability... which "cheat" leaves some unable to parse valuation under (purposeful) uncertainty, or in relation to risk vs time, based only on ones own ability: "short term focus" on a trade (you know about ahead of time)... induces error (or inability) in real analysis of value... which results in imposing counter-trending disconnects as (misdirection in) "expectations" which leads lemmings in lemming like fashion... into lemming like results...
In real market terms... it is "noise"... with only short term impacts, even if "loud" in the short term, still unlikely to have meaningful impact on trend direction... or "the average" in performance over time... (ie, BTFD)
I noted the same in addressing why a sudden spike to $126... would alter my view of an ongoing uptrend in oil prices that had it rising steadily higher... in a fashion far more familiar to those who understand OPEC's concern with "price stability"... without there being any obvious "real" event explaining the change ? In oil... I have also noted that the OPEC pricing and interest in sustaining market stability... does not prevent "financialization" efforts taking control of the market to direct pricing higher... in effect, often (as now) using oil prices as a financial weapon in lieu of making changes in interest rates... that are far more attributable. Oil is often made the tail on that policy dog... requiring you not leave a full wine glass on the coffee table...
What we see on Tuesday... SBSW and Oil... is a convergence of those issues in context of a financial war... where it appears perhaps puppeteer Putin skillfully played marionette Wall Street and directed the dance... before going full Lucy and demurring in enabling the kick...
The rest... appears it leaves the slavish followers in the leaderless crowd... at SBSW clearly... uncertain what to do about having been played... or what to make of the event otherwise... as what you see in the trade now is uncertainty tied to having a need for independent thought on "context" and "value".... vs trading a hot stock tip ? The oil market is less subject to such dithering... as the only commodity that is not left leaderless.
First in the tank... ?
But, what to make of "not nickel... yet" ? Or, Winning... versus "winning" ? A soccer team that wins the championship, outright... versus a soccer team that shows up armed and kills all the other teams, the officials, and takes out FIFA (to resounding cheers) along with all the broadcasters... ending the function of the market for soccer ? What are the near term impacts on bottom lines at nickel producers... vs the hypothetical in soccer... now that there isn't a functioning market ?
Or, the dollar ? if the dollar fails... all fiat fails... not "leaving an opening for a replacement"... but taking the game down with it... leaving nothing to "take over". Those unhappy with "control" by the dollar system... aren't looking for a more rigorous control imposed by dictatorial China... without any ability to opt out ? Pipedreams re legacy empires... not a foundation for withstanding the flow of tides, or ideas...
The Raul video yesterday... poses him as "one of the lost"... unable to parse the risks or chart a viable path in a contested geopolitical environment... where markets are breaking ? Rickards doesn't even seem surprised ?
Third...
The core error... an understanding required in consequence of all that above... is in ever believing (in hot stock tips or) "leaders" actually having much of that control being assumed...
Back in 2020... "the parts" were set adrift... as the intrinsic fragility of centrally controlled mercantilist globalist structures was exposed... as it exploded. The drift not being contained or controlled... [most, then and now, still not recognizing the reality of it]... has only made further disruption inevitable. As the vase hits the floor, our viewing it in slow motion... we've already seen the base hit first and shatter... And now, the remaining larger pieces sustain their own trajectory toward an series of independent impacts... even while sustaining " more of the same" in the ridiculous, the old way... as feudalism seeks to make a comeback. Why is there surprise when the next fragment impacts... as Russia/Ukraine... and we see the same result, only more... just like the prior result... always making more pieces... each also still heading for its own impact ? All the king's horses and all the king's men... pointlessly re-commit themselves to restoration. Much energy being spent in arguing over which piece may survive impact intact and then rule the rest, next, as a restored centrally controlled mercantilist globalist empire under new management... which is pure folly, if not high comedy... offering "more of the same only more so" of what we see causing the failure... as the solution to the failure... the failure of which is to be cured... only by preventing you talking about the failure...
A tacit recognition of which.... doesn't prevent the emergence of new jokes... that turn out to be re-writes of old ones... as the world never lacks for people seeking to direct you in "how things ought to be, neigh, must be"... on their plan... "or else"... that being the one thing in the world in which we will always have a "cost free" surplus... that only remains cost free if we refuse to buy it..
Back to point...
Reduced to the core issue... what happens next in pricing of palladium... is really not up to Vladimir Putin...
Putin has no more control over events, or any ability to direct or redirect them... than any other has now. Reactionary lashing out... doesn't make ships dock in foreign ports... or make them not do so more than they already are... not ? Which... they are... still ? So, shoes suspended, may yet drop... or not...
Reality is... world "leaders"... more, being incompetent... are along for the ride, here... all trying their best to maintain the pretense of being in control... or otherwise pointing the finger of blame at others... hoping to not be seen, too obviously, as being responsible for "breaking it worse, faster"... versus enabling failures for which some other is blamed... as the costs are realized.
The costs will be realized... but are not... yet... only as "too soon" to be transmitted through the market ?
"This is what failure looks like"... is correct... and leaves plenty of room for and ability in sharing blame ?
Again... there are none i see in "leadership" today... who belong there... a useless lot to the last man... in result, there is no leadership occurring... only entropy, ignorance, and ego driving events, now...
Putin might still announce a purposeful withholding of production, of one thing or another... as Rickards suggests... "before the end of the year"... or sooner... and... who cares... ? A pause and "catching of breathe" this week... does not determine events next week. Putin may not survive to year end... and, a lot more is going to change before then in any case... which has to be our focus now... no matter what Putin wants, thinks, or says about it... now or in future.
What is the future... if not waiting for the nickel to drop ? [ Inflation now making dimes unobtainium.]
But, in that drift to "before the end of the year"... the "supply chain" issues will not resolve themselves, to enable it to matter... as we see the accelerations occurring now in this, with the next round of impacts in queue... as each of the newly liberated "parts" are themselves shattering with new impacts... Which is which... and when... still unknowns ?
Almost no one i see... is addressing that underlying "trend"... Much less are they considering it as more than "shit happens"... rather than as "a failed idea" being implemented ... the failure being realized now precisely in consequence of the error made in implementing it. [Hearing echoes of: "you can ignore reality, but you can't ignore the consequences of ignoring reality... ?] Nor do I see any addressing sustainment, continuation, and rapid acceleration of the resulting failure(s)... as a growing issue ? "It's not our fault" seems the one thing in which there is still a global consensus extent among leaders... with that provably wrong. Most are still in denial about it... even retroactive to 2020 ? "It will fix itself" or "transitory" are still considered reasonable, rational, and viable views ? What was about "disruptions" in "chips to carmakers"... is now about a new and more fundamental set of things... being added to the trend in destruction... it being too soon now for "what we're going to do about it" to have even been considered, yet ? What I expect to see... is something very like what we see in oil... banning Russia, banning drilling, banning pipelines... labeling it all as overtly evil... and then blaming others for the impact in high prices... while demanding more production and "windfall profits taxes"...
But, now... given all the additional distractions... no one's even talking about inflation... so that's good !!! /s
All which seems to equate to... two sets of pirates... one set captures and controls trade, before breaking it... when another set arrives, disrupting trade... stealing cargoes... reselling them at higher prices... blaming others for the disruption... while wanting us to thank them for providing the service... by re-electing them...
What happens... in the near term reality of the palladium supply... was never going to depend on an announcement of some intent made last week... ? That event... had it occurred... would have been a "tacit admission" simplifying the effort in understanding... for those who need to be told by others what they are seeing and thus need to expect, next. But, the lack of the event, only in the telling... does nothing to alter the trajectory in the market reality... other than in altering the pace at which some gulls gain a recognition of the events... not as they are occurring, but only after. Those among the crowd who need to be told before seeing utility in acting... will only see what's happening now "after the fact" ? As the announcement of their "fact" just got taken away... it leaves them to grapple with uncertainty... which they don't have the skills to manage ?
The key takeaways emerging this week...
This conflict is likely not going to be resolved quickly... and if it is... that will make things far worse...
There is not going to be any "reassembly" of "the parts" set adrift in 2020... Humpty Dumpty is screwed... as all the king's horse and all the kings men are now trampling the bits of egg shell in the attempt made at a restoration... as the king's men aren't selected for their efficiency or accomplishment in the restorative arts...
There will continue to be "accelerations" in the pace of dissolution... as independent impacts of "parts" proliferate...
The "supply chain" will not be fixed... as it is not in control of itself any more than are other things now...
The markets apparent inability to anticipate and predict real events... imposes "more of the same" as we observed in the failure of the MOPE of inflation... as an inevitability... and on an accelerating timeline...
Recent events... don't alter any of the already bad prior trends... only add to and amplify them... ?
"Shock" in traumatic events... imposes "time dilation" effects... and, as the initial shock wears off... the perception that events are occurring in slow motion... wears off... often resulting in a "whoa... what just happened" first... and then a period of re-analysis... leading to decision making. The logging in memory at high rate... enabling that review. But, meanwhile... reality speeds up again... in 5, 4, 3, 2, 1....
And, thus... as opposition grows to the mandated misdirection enabled under cover of the prior shock being imposed... a new shock and distraction has to be delivered... restoring the imbalance... but, the time dilation effect won't be as much a factor again... as the "shock" is normalized... many already anticipating it. So, accelerating the pace from here... as "things fall apart"... faster... and with more certainty... less shock... vs. growing demands... even before things get far worse...
Stocks lower.... commodities higher... no escape... as physical reality, not market manipulation, dictates supply limits.
Palladium... perhaps dodged a bullet in the short term... giving a brief BTFD opportunity...
Not different than silver, gold, oil...
Fiat failing... faster... only while sustaining existing inequality... as no better offers exist...
Clocks ticking... louder...
Two weeks... |
