I want to start this post off with a quote from John Sherman that fits well with Jamie Dimon’s reply of the JP Morgan press problems “Tempest In a Teapot” . It’s something John Sherman wrote in a letter in 1863 when he was in support of the National Banking Act, oh, did I mention he was a protege of the Rothschild banking family?
“The few who understand the system, will either be so interested in
its profits, or so dependent on its favours that there will be no
opposition from that class, while on the other hand, the great body
of the people mentally incapable of comprehending the tremendous
advantage that capital derives from the system, will bear its burdens
without complaint, and perhaps without even suspecting that the system
is inimical to their interests.” … John Sherman
So what does that quote really mean, well…it means that the bankers back in the old days knew a little about how mass psychology worked. When your feed the masses enough easy money generation after generation it becomes a way of life. In the end you hold influence over the masses and then enslave them without the masses even knowing it. Sound familiar today?
The masses in the western world are held hostage to the central banks of the world, we owe them money. Sure our standard of living is high, it’s higher than it ever was in history, but there is also a price to be paid for this. You work harder to buy more things to stay ahead of the Jones’s, the Jones’s worker harder to stay ahead of you, you borrow money to stay ahead of the Jones’s and then the Jones’s borrow more money to stay ahead of you. The system feeds on itself until you have over production in conjunction with too much debt, that is the point when our monetary system has to rebalance through deflation so that it can reset itself, or, have a great big war (funded by the bankers) so that leaders of the nations can blow things up, get funded by the bankers and make lots of money in the mean time. What a system.
In Jamie Dimon’s case, U.S. criminal legislation, pretty much does not very often hold individuals criminally to blame for failure to supervise. You will need to indicate not just outright awareness but in addition turning a blind eye to possessing a strong suspicion that there is an individual doing incompetant activity in the firm or carrying out some thing unlawful or displaying negligence, and then, using ways to sweep the dirty deed under the carpet.
JP Morgan Chase & Co., the largest U.S. bank with a market cap of close to $140,000,000,000, reported a $4.4 billion trading loss in its Chief Investment Office is really not a huge issue unless they start losing that much money every quarter even though the loss was bigger than analysts estimated, that helped drive second-quarter profit down 9 percent. The “London Whale” trades are giving the bank a $5.8 billion hit year to date. So where do the losses end, the $5.8 billion loss is nearly three times the amount the firm had originally thought it was initially. The London Whale transactions were massive bets on U.S. corporate bonds that went upside down on them, so if JP Morgan is taking a hit in these trades how many other institutions are out there with trades that are going backwards on them in a complex derivative market . The trades were supposed to be a hedge against risk, but their size and nature have raised the suspicion that the traders involved were betting to make big profits. Aparently, traders did not report their positions honestly at the end of the trading day. Jamie Dimon says that the uproar of the London Whale bets are a “Tempest in a Teapot” (meaning a small event that has been exaggerated out of proportion).
Your probably asking yourself, what does Jamie Dimon have to do with a quote in a letter from 1863 from a man named John Sherman.
Well, things are no different now as compared to 1863 or before that in history . The top 2% with influence make the decisions for everyone else and profit from it at the same time through propaganda, it’s always been that way, it’s kinda like a law of nature. Jamie Dimon’s reply to his recent challenges “Tempest in a Teapot” is true in regards to the fact that if derivatives losses where JP Morgan s problems it would be ok, but it’s not, it’s everybody’s problem. In 2008 everybody had to anti up to the loss’s of institutions taking extreme risk and these institutions take on extreme risk knowing that the tax payer is going to bail them out via the central banks of the world. Every now and then I debate with friends who say that there is more legislation needed to counter these risky bets, we don’t need legislation we need accountability in place for institutions that take risk. Capitalism is about making money through risk but taking your losses if your idea fails, called bankruptcy. You let the bad assets fail and give those assets to someone at a discount who can manage the assets properly. Things haven’t changed today versus 2008 and 2009, the beast that was invented to protect an institution from default is still living and worse than ever. The Credit Default Swap.
The financial market top in October 2007 was marked by over production in real estate and over consumption world wide, funded by easy money and risky derivatives that still haven’t gone away but have actually gotten worse. If Jamie Dimon’s JP Morgan & Chase is having problems with marking to market the daily tally of their trades how many other institutions have skeletons in their closet, that’s the question we should be asking ourselves.
There is only one way to tell, in my opinion, if things are getting bad in the financial markets and that’s with the charts. The charts tell the whole story of what the smart money is doing and where investors both large and small are putting there money where their mouth is.
It’s not the end of the month but I like to look at the long term charts to get a different perspective of what’s going on rather than just looking at the short term.
JP Morgan & Chase 12 year consolidation inside a descending triangle. The Descending Triangle is easily seen since it has a horizontal lower boundary (demand line) and a down sloping upper boundary (supply line). Triangles are considered continuation patterns, however, in JP Morgan’s case I’am considering this a reversal pattern. The development of a descending triangle takes it’s cue from a campaign by a group or syndicate. There are large blocks of shares bought, usually at a predetermined price and usually below the market. The orders are taken and allowed to sit until the orders are executed at that level. Here’s the kicker, and this is important, when the rallies from the purchasing of the shares are ended from the supply of new stock for sale at lower and lower levels. This is where you get the Descending line on the chart above. So…eventually all the orders are filled and then the price action breaks the horizontal line downward, technically and fundamentally, investors get shaken from their position when what they say as support now becomes resistance. Then…the investors who previously were not thinking of selling previously now lose confidence. These investors now sell accelerating the decline…
Notice the Weekly Gold Chart above has a descending triangle as well. Although shorter in duration than JP Morgan & Chase.
In the months past I wrote about the declining volume and the rising price, it’s a divergence that’s worth noting. The divergence in the momentum indicator and the price action is also worth noting.
The S&P 500 is also up at some resistance. We could go higher on the short term, but why take the chance.
The Wilshire 5000 is an index that encompasses all the stocks. The momentum indicator had a crossover not too long ago, why take the chance.
The Russell 2000 is showing a crossover on the stochastics for the monthly chart. All though there is a cross over we could still go higher in the short term.
The TZA daily chart shows there is a possibility of going lower.
TNA shows a crossover on the hourly chart possibly making a short term high.
The Gold Bugs chart is showing an oversold situation on the monthly chart. You never we could go lower, then again the median line on the chart has shown descent support so far. I myself still have my small position in juniors from May.
The Next trend change is still due July 17th – 18th. Are the financial markets going to break out or break down? At this point it’s tough to say all I know is that there should be something to kick the prices one way or the other next week. Keep an eye on the short term patterns that emerge on the 17th and 18th and make your trade accordingly. According to my model the market might still climb the wall of worry till the week of December 4th, 2012. That’s the week a major pivot point is due.
Well I’ve written enough for a weeks worth of Swing Trading and letting you know my personal opinion and theory of Jamie Dimon’s predicament “Tempest In A Teapot” as well as the quote from John Sherman…all of which is interlinked.