“And on the pedestal these words appear:
‘My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away .”
(last part
of Ozymandias, excerpted…by Percy
Bysshe Shelley)
The central banks of the
world are the Ozymandias of today. What they say, do, whisper, insinuate, etc.,
those are the crumbs that
many observers watch, turn over, interpret, and base investment analysis upon.
It’s the central banks that
have, with regularity, created the so‐called boom‐bust
cycles of several genera ons. Oh sure, those cycles conveniently and falsely
are attributed to voluntary market forces, but are retraceable to central bank
policies. It’s been a recurring pedal to the floor monetary policy for decades,
then interrupted by “oops we went too far,” then some enghtening policies that
have clearly marked the edges of market cycles. Then back to pedal to the floor
to fix the prior busted bubble.
Well, over the past nine years the pedal has been to the floor,
and only lately has any marginal lining of that monetary ease been evident, and
that being so trivial that it can be parsed in quarter percentage points and
only by the Fed. Not the BOJ or ECB.
MSA argues that this process has buckled and bubbled now to the
point of a final termination. The game now has government debt (we especially
watch U.S. T‐Bonds) in a situation of long‐term
technical breakdown. Europe and Japan are a hair’s breath behind this full
breakdown. And this breakdown comes from levels of government debt (Western
world especially) that is parabolically off‐the‐page
versus a decade or two or three or four ago. Their game, their sense of
control, as well as Wall Street’s sense of the CB control, is a pa ern that is
highly unlikely to replay again. That’s MSA’s long‐term
momentum assessment of government debt, hence our view of the inability of Fed,
ECB and BOJ to play the game forever. What Draghi has to say in Jackson Hole
next week, for example, will be the strands of a dying policy. The money game
(monetary manipula on) is ending. It can loop up and down only so many mes, and
then finally come untethered. MSA thinks that the past eight or nine years has
been the last hurrah. Untethering comes next. That’s why we are watching the
long‐term momentum trend behavior of T‐Bonds/Bunds/JGBs,
as well as the emergent upturn in commodi es, an on‐the‐edge
downturn in developed market equi es, and most important, the forex trend shi s
that MSA expected and which are picking up steam. These will all fit together
in an unraveling of non‐market trends that have been forced into reality by central
banks in a coordinated fashion. The Ozymandian dream will end with the next
burst bubble. A calmer market‐based reality will emerge on the
other side. MSA sees it’s task as ming these macro‐trend
events.
J. Michael
Oliver [send
him mail] operates Momentum Structural Analysis, a proprietary
technical analysis firm that has provided its market timing research solely to
asset management institutions since 1992. He is also the author of The New Libertarianism: Anarcho-Capitalism (2013).
Copyright © 2017 J. Michael Oliver
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