Modest follow through from Friday afternoon's bounce.
Bloomberg gets the latest accidental subtext award.
Accidental subtext is unintended communication that is at odds with the writer's intent. That said, perhaps the
Yet even with value hunting hitting the art market, there still seems to be a need for a higher high in the financial markets at some point to complete the mood swing from February's low, but that might not preclude lower prices first.*
Here in Puerto Rico the mood swing is all about the local government's efforts to paint its debt problems as a humanitarian crisis. Meanwhile the malls are flooded with people, getting a parking space there is a challenge, restaurants are brimming with people and getting a table is often a challenge, streets and highways all over the island are clogged with expensive cars and SUVs, and avoiding traffic is becoming more and more of a challenge.
The Constitution of the Commonwealth of Puerto Rico explicitly states, twice, that:
1) "interest on the public debt and amortization thereof shall first be paid" and,
2) "The Secretary of the Treasury may be required to apply the available revenues including surplus to the payment of interest on the public debt and the amortization thereof in any case provided for by Section 8 of this Article VI at the suit of any holder of bonds or notes issued in evidence thereof. (emphasis added)
Contrast this with Governor Padilla's remarks on television last night as his administration was defaulting on a $270 million payment: "In light of Congress’s inaction, we were forced to enact Act 21 to protect the education, health and public safety and other essential services of our citizens from creditors,” the governor said.
To "protect the citizens" from the very same creditors that he and his predecessors actively courted. Congress didn't force anyone to borrow.
The real humanitarian crisis will occur when Puerto Rico's underfunded pensions come due in a few short years, estimated by some sources to be underfunded as much as $80 billion. That will be a crisis. A self-inflicted one that PR's politicians can't blame on creditors.
Puerto Rico's embrace of socialism (while enjoying the largesse of the municipal bond market and billions in annual US aid) might soon cause it to resemble Venezuela.
Meanwhile, both Puerto Rico's water and electrical monopolies are bankrupt after years of hiring well-paid middle managers rather than invest in infrastructure. As a native businessman told me, "who the hell can screw up a monopoly, let alone two of them?"
Needless to say there are periodic water and electrical shortages on the island.
Former UK Prime Minister Margaret Thatcher said it best: "The trouble with socialism is you eventually run out of other people's money."
I love Puerto Rico. I'm sure I'd love the people of Venezuela. But they're being played as pawns by their own leaders.
JPY coming off fresh highs. USD looks weak and threatens its 92.62 swing point.
Little net progress higher in prices.
WTI crude digesting Friday's high. NG settling too.
Gold broke out and volume did appear. 1300 was exceeded. Volume does still appear to be waning in silver, platinum, palladium, and copper, yet each followed gold.
*Regardless of whether the market corrects back to 1750 in a more complex pattern, there is one simple indicator that suggest new highs will come at some point.
Markets don't usually end with a strong breakout of leadership. So what is needed is probably some more backing and filling and then a slow, labored grind higher that allows for divergence.
As far as the backing and filling goes, it's hard to tell if it's run its course. But I must admit I like the idea of the market having thawed out just in time for another freeze.