“Because in the real world their shuttin Detroit down
While the boss man takes his bonus pay and jets on out of town
DC’s bailing out them bankers as the farmers auction ground
While they’re living it up on Wall Street in that New York City town
Here in the real world their shuttin Detroit down”

Indeed, Mr. Rich, indeed. But it’s important to remember one of the primary reasons why the USA has exported its manufacturing base to foreign lands: agricultural exports.

American agribusiness wanted to break down the trade barriers to their products in places like Mexico and China. However, those countries knew that if they allowed big American companies to wipe out their small farmers, those farmers would move to the cities looking for jobs.

So, deals were struck. American agribusiness got to expand their exports, and nations like Mexico and China got to expand their manufacturing exports to the USA. Many of the small farmers who were displaced now work in factories that used to be located in the USA.

If the farm states weren’t over-represented in the US Senate (on a population basis), the USA’s trade policy would likely be quite a lot more rational.

I didn’t have time to make any charts today, so I wrote a joke instead:

What’s the difference between a Mexican and a Detroiter?

Mexicans make cars and Detroiters live in their cars.

Note: Thank you NAFTA!

Note: I would say that the joke is clever, but not really funny – especially to Detroiters.

Note: I googled the joke and didn’t find anything, so I’m claiming copyright. Interested comedians can PayPal $100 to the email address on the About page for non-exclusive usage rights.

Note: Yes, people from Detroit are indeed called Detroiters. Just look at the demonym on Wikipedia (in the population section). And no, people from Charlotte are not called charlatans.

Our drones don’t encrypt their video output? Who’s idea was that? If the enemy can simply receive your video, doesn’t that make it harder to sneak up on them? WSJ story here.

On November 17th, I posted this XLF triangle chart (click to enlarge):

How did it turn out? Here is what it looks like now:

The XLF didn’t hit either my upper, or lower target. It just sort of drifted out, but notice that the upper triangle line has become a downtrend line. The pattern is now starting to look like a bearish descending triangle.

Watching the triangle play out, I thought: “traders have just lost interest in the financials and are off playing gold or something.” And now, it looks like traders have lost interest in the entire market. Will the SPX follow the XLF pattern and fizzle out too?

Here is what the textbook has to say about prices drifting out the apex of a triangle (page 103):

“If prices continue to move “sideways” in narrower and narrower fluctuations from day to day after the three quarter mark is passed, they are quite apt to keep right on to the apex and beyond in a dull drift or ripple which leaves the chart analyst completely at sea. The best thing to do in such cases is go away and look for something more promising elsewhere in your chart book.”

The SPX is not in a triangle pattern, but the XLF has lead the rally since the March low and might be giving us a clue as to what the SPX might do.

IP Round-Table
Vice President Joe Biden held a big meeting on intellectual-property yesterday. CNBC reported that the Obama administration was trying to protect jobs in the movie and TV industries. Of course, if anything comes of this effort, many jobs would be lost in the technology industry. It’s companies like Cisco that make it possible to download movies in a few hours, and would Apple’s iPod have taken off so spectacularly if it didn’t play MP3 files? I doubt it. For men like John Chambers and Steve Jobs, copyright infringement is the killer app to end all killer apps.

It’s FOMC Day
The SPX was trying to recover from a weeks-long 70-point downtrend coming into to the last FOMC announcement on November 4th. After the big event, the SPX rallied up to 1061, but then flopped over and plunged into a 1046.50 close. It looked like a victory for the bears, but the market gapped-up the next morning and rallied for almost two weeks. That gap has yet to be filled.

I suppose that the dip-buyers were waiting for a scary event to buy into on November 4th. Are they looking for the same play this time? Film at 2:15pm.