British Sterling Gets Pounded!

Notice the MACD on US equities, yesterday, moving close to record highs, again. The short value moved above the long value to indicate momentum of a bullish trend against “slow capital investment.”

Corporate profits have been declining for five straight quarters (naturally) since “most new income is going to the top 1%.” Yet, equity value is rising, and yesterday it was mostly because (so the story goes) markets were “pricing-in NO BREXIT”–which was wrong, thus reversing the trend because the momentum is actually due to the mal-distribution of income (commanding market mechanics–or rigging the market) and not because you and I used our dollar votes to know it before it happened.

Like Adam Smith essentially said, consolidation of dollar votes results in stupid money!

Now, understand. Political-economic events like the BREXIT determine the value of futures and options contracts that derive from, for example, reverse interest rate swaps (“swaptions”) that very few people understand but are used to manage large pension funds backed by municipal, bonded debt. (The pensions can then be rendered bankrupt and reorganized for pennies on the dollar, due to “unforeseen triggers”–called at the margin–which is standard language limiting the liability in any margin, or derivative, contract.)

Even though the MACD oscillator does not indicate whether something is overvalued (to be discovered in the futures) it does indicate the strength of knowing the futures now–TO WHAT we can attribute the value and avoid the moral hazard described as “the fully assumed risk.”


About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
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