Markets Seen and Unseen


“…it was the age of wisdom, it was the age of foolishness…”

~ C. Dickens, 1859.

Reporting from Buenos Aires, Argentina…

When we hear people talk about the “tale of two economies,” we expect to find them referring to the Wall Street vs. Main Street match up. An important one, to be sure. Or maybe they’re comparing the economies of two different countries or regions; one healthy, the other moribund. The “developed vs. developing” comparison, for example, is a common one. Or maybe it’s private vs. public, that raging debate between the forces of capitalistic enterprise and socialistic control. The main problem with the latter being, as history has shown, that you eventually run out of the former.

All of these are, in their own context, worthy topics for discussion. We’ve visited them many times before in these very pages, and will likely do so again.

But what about the economy nobody talks about? That giant, $10 trillion economy currently employing half of all the workers in the world? It’s unregulated, unlicensed, untaxed and, largely, unnoticed by the mainstream press. We touched on System D earlier this week and will do so again today…but first, the markets…

Investors would have done well to go fishing yesterday. The markets were flat as a mill pond, ending the session more or less where they began. The major indexes in the U.S. are sitting pretty around a 5-month high. As Fellow Reckoners know, the world has been saved by central bankers, politicians and Ivy League geniuses. In the frightful days of 2008, we were told the global economy was teetering on the “edge of the abyss.” If we didn’t let these brave men and women do “whatever is necessary,” we…gulp… “might not have an economy in the morning.” Luckily, the aforementioned heroes and heroines filled in that abyss with trillions of dollars worth of paper money. So we’re all good. Nothing to worry about there. Hmm…

Alrighty then, moving on…

Gold, like stocks, barely budged yesterday. Last we looked, an ounce traded for roughly 1,640 government-issued, $1 I.O.U.s. As usual, we favour trading the government’s liability notes for the Midas metal, which, contrarily, represents the liability of no man (or thieving, politicking collection thereof).

Crude oil, meanwhile, lost about a buck a barrel. Nothing major in the news between Iran and the U.S. crossed our desk, not that we were looking very closely. No, the war drums were apparently between beats yesterday. If the whole spat fizzles out tomorrow (doubtful), we expect prices to continue tracing a long, steady path higher in accordance with unfolding supply/demand dynamics. But if the Strait of Hormuz gets choked off by a sudden burst of chest-thumping misadventurism (from either side), we won’t be expecting a miraculous, military-issued Heimlich Maneuver to restore vital supply lines overnight. Prices will likely skyrocket.

So that’s what’s up with the “seen” market. Now back to the “unseen” market with more on System D.

Publisher’s Note: Joel Bowman is the Managing Editor for The Daily Reckoning USA (

This article originally appeared in The Daily Reckoning USA.

Joel Bowman
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.

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