(This will be updated as data is released) We will have an unusually short and to the point column this morning because I have a) been coding for the past 5-hours down in the CSS levels of the new website that I mentioned in Peoplenomics Wednesday and b) I have all the parts to get the riding mower going again, so with grass getting long, priorities, priorities… And writing on the (*still free) UrbanSurvival site has to fall where it will…
So the first point of this morning.
Remember out discussions over past years about what will happen when Consumer-Super-Saturation shows up? The economy will go from bad to horrific over the couse of a year, or so…and we will be in the Greater Depression as my friend Jas Jain has been calling it for years. OK, since 1997 actually… since those of us engaged in the study of long wave economics c an see trains like this one coming from a long ways off…
Now in case you have forgotten the core question that leads to Consumer-Super-Saturation (CSS but not cascading style sheets, lol) it is simply this (language alert!) “How much shit do we need?”
I mean this very seriously.
While I am something of a hawk on border security, for example, the fact is that people sneaking in from Mexico (and points further south) have increased demand for a lot of items domestically. Not new stuff, so much, but people in the third world (which arguably Mexico is and we are heading toward) know how to fix (repair, recycle, repurpose, etc) things.
Ergo, when I saw the Federal Reserve’s latest numbers showing the rate of consumer debt growth was down to 2.5%, or so, in the latest reporting month, I began to get nervous about the coming Big Decline.
It was one of the items weighing on my mind when I got into that short position last week, which while I made a few cents on, holding through today (with the Dow futures looking like -100 or more between now and the weekend) shows again that ADHD and investing make difficult bedpersons (if that;’s a concept).
You saw the retail sales and the Fed hike on Wednesday, I assume?
Let me lay out what I think will happen between now and our projected All Time Market High on August 21 (or 24th, markets read my forecasts as well as race horses read The Daily Racing Form).
The first thing we should see will be some weakness in the two regional Fed reports out this morning.
NY Fed Empire State Manufacturing:
“Business activity rebounded strongly in New York State, according to firms responding to the June 2017 Empire State Manufacturing Survey. The headline general business conditions index shot up twenty-one points to 19.8, its highest level in more than two years. The new orders index posted a similar increase, rising twenty-three points to 18.1, and the shipments index advanced to 22.3.The inventories index climbed to 7.7, indicating a rise in inventory levels, and labor market indicators pointed to a modest increase in employment and hours worked. The pace of input price increases was unchanged, while selling price increases picked up somewhat. Looking ahead, firms remained optimistic about the six-month outlook. “
Philly Fed Report:
“The index for current manufacturing activity in the region decreased from a reading of 38.8 in May to 27.6 this month (see Chart 1). The index has been positive for 11 consecutive months. Forty-two percent of the firms indicated increases in activity in June, down from 51 percent last month. The shipments index decreased 11 points, while the new orders index was little changed. Both the delivery times and unfilled orders indexes were positive for the eighth consecutive month, suggesting longer delivery times and increases in unfilled orders.”
Then we saw some softening in import and export prices.
All Imports: Import prices decreased 0.3 percent in May, the largest monthly drop since the index fell 0.5
percent in February 2016. The decline was driven by falling fuel prices, unlike last month when higher
nonfuel prices more than offset decreasing fuel prices. The price index for U.S. imports rose 2.1 percent for
the 12 months ended in May. The last over-the-year decline in import prices was a 0.2-percent decrease in
Fuel Imports: Prices for fuel fell 3.7 percent in May following a 0.3-percent drop in April and a 3.1-percent
decrease in March. The last time fuel prices fell by more than 3.7 percent was a 6.8-percent decline in
February 2016. The May decrease was primarily led by a 3.9-percent drop in petroleum prices. Natural gas
prices also declined, falling 2.9 percent. Despite the recent decreases, import fuel prices increased 16.9
percent between May 2016 and May 2017. The import price index for petroleum advanced 16.2 percent for
the year ended in May and natural gas prices rose 44.1 percent.
The Fed’s industrial production and utilization figures out in the next hour, or so, will also likely not toss rainbows and lollypops at the assembled multitudes.
Quadruple witching tomorrow with a hot side of housing starts which should be fun…
Which leave us in what looks like the following chain of events.
The market will come down today (with possible follow-through selling tomorrow) and that will take us to the bottom of a trend channel Peoplenomics.com subscribers have in their charts from the Wednesday report.
About there, I will likely go long the market because we should have a screaming powerful run into August. This is summertime, and other than the fear-pandering stories about how Trump is under investigation for obstruction of just-us, we don’t see anything really big “rocking it” until August-ish.
Then Sucka-a-bunch Economics will arrive.
Between here and thar, we ought to see greedy bond mone6y come off the table and roll into stocks. That’s because as the yield on bonds goes UP the retail price of bonds goes DOWN.
Here’s a bond. I lent $100 to someone and it pays 10% interest. If the prevailing interest rate is zero, then that looks like an easy way to scalp a nice 10% return. But to illustrate the point, what if the prevailing rate goes to 8%?
Well, that does it: Suddenly your bond is going to make a lousy two percent. Sucks to hold bonds when rates are going up.
So (greedy and shifty-eye sleazoid that you are) you look for other ways to make some fast cash. Knowing that stock represent assets that are adjusted to market conditions (like rates and inflation), you jump in there. Because, when you study the market you notice that we have been on a steady roll since November.
So the market goes up like crazy. People like me track the price of at-the-money (or just under it) put options for the fall, and we all sit around fizzed on coffee and remark on how brilliant we all are.
And then comes August 21st (a Monday).
Here’s the kind of (language Alert 2!!!) shit sandwich we could see served in that window:
- Special prosecutor Bob Meuller could be closing in on Donald Trump because he’s been loading up with democrat lawyers who have given generously to people like Obama and Clinton.
- Somewhere in this vicinity, Kid Korea will light off a very public nuke test and Mad Dog Mattis et all will have to start using all that materiel they’re presently moving into the theater of conflict.
- Market experts will be scratching their heads and worrying loudly about how consumers aren’t spending as much. Also about here, I will be saying “Who told you a new cell phone or app won’t save the freakin’ economy?“
- The mislabeled liberal democrat controlled congress (they ran as republicans but less than half really are…as we have discussed they mostly fly ‘flags of convenience’ so they can claw their greedy way into power, money, hookers, book deals, fat retirements, etc. Did I mention foreign travel junkets? How many congressoids have played St. Andrews, huh?)
- Consumers will be tapped out because despite enough hot air to launch a fleet of hot air balloons there is no relief in sight for the little people.
Somewhere in here, people will begin to ask “How much more crap to we need?”
That, my friend is the most dangerous question that people suffering fro9m super-saturation can ask because when they do, they stop buying new things and make-do with the old.
I did mention that for $187 worth of parts and shipping from Jack’s Small Engines I am saving the price of a new 48″ riding mower which was $2,395 when I looked this week?
We like to be ahead of the curve.
So what happens to the Trump administration ought to then roughly parallel the decline of Herbert Hoover, who was stuck holding the bag for the Great Depression, but (like Trump) had been a success in the private sector.
That, buddy, is where we flip out of the very last remnants of “virtuous cycle” (quickly fading today) and we will roll into vicious cycle under which the worse it gets the more people pull in their horn and so the worse from even there it becomes.
By now you ought to be able to see the hand-writing (and hand-wringing) on the wall. And why it’s more important for me to fix my riding mower than it is to wax on eloquently about how much the vicious cycle is going to hurt.
Still, in case you have a news addition that can’t be satisfied without solid data points,. here’s a summary of stinky-stank to roll your day with:
But Don’t Be Deceived!
When you read how the Fed raises rates, unveils balance sheet cuts in sign of confidence, the real reason is they know they need to get ready for the next mess to come down the pike.
And Don’t Be Deluded
BITCs are down to $2,458. Who told you be on the lookout for a bubble high? Maybe one more run to go but if you want to invest to slow-to-clear easily lost money substitutes, have you considered, oh, AIR?
Trump-bash du Jour
Source: Investigators for special counsel will soon speak to senior intelligence officials.
Play in Lieu of Work Dept:
Congressional baseball game will go on today in a call for bipartisan unity. But speaking of which…
An Interesting Note from CNN
Story/op-ed here goes to the idea of the “return of leftist terrorism in America – since the shooter yesterday was 66 and hugely anti-Trump.
Is America Nearing Civil War?
A colleague (and famous writer) asked me the other day: “Do you thing the Soros-backed demonstrations and mini-uprisings (he was referring to Ferguson and Baltimore and..) that got out of hand were really a BETA TEST for what will happen when the Greater Depression shows up and the PTB want to steal everything, go all electronic and force a publicly funded bail-in?”
I hated to admit it, but the idea could not be dismissed out of hand.
And then comes analysis from Warhammer:
“War is more than bloodshed and destruction. War is economic, political, ideological or military in nature. All-out war involves all the aforementioned working in tandem.
It may be apparent to most of Ure readers that America is in the midst of a full-blown Ideological war. No big deal, you say? Well, actually, it probably is. War is essentially a conflict of ideas, ideas which evolved out of major social movements. Ideological wars thus often become physical ones – Oliver Cromwell’s English Civil War and France’s revolt against the crown are a few examples; the U.S. Civil War; the collective birth and spread of Fascism in Germany, Spain and Italy; Lenin’s war against the Czar and his satellite bourgeoisie, followed by Stalin ruthlessly crushing all internal and external opposition; and the Ayatollahs winning the hearts, minds and souls of the Iranian people, exiling their American backed Shah in the late 1970s; all stand as testimony to ideas turning violent.
America is currently entrenched in a classic ideological war, pitting the conservative right against the progressive left. The party presently in power, the conservative right, is under sociopolitical siege by the party voted out of power in the 2016 general election, the progressive left. The right is largely in favor of, among other things, anti-globalist American exceptionalism, pro-business, anti-illegal immigration and anti-radical Islam. The left is literally a coalition of the disaffected – LGBQT issues, Black Lives Matter, illegal immigrants, universal health care, environmentalism, aiding the habitually unemployed or low-income worker, and many, many more lesser constituents.
Opposition to conservatism is the primary cattle prod used to push together the coalition of the disaffected, a resistance that achieved unifying success through adhering to the dogma of Saul Alinsky. Alinsky was a ‘60s apolitical American community organizer who started off by working in slum communities and representing the social rejects and have-nots. A few of his more famous adherents include THE community organizer-in-chief, Barack Obama, former Secretary of State and FLOTUS Hillary Clinton and Weather Underground convicted bomber and long-time university professor Bill Ayers. More on the education angle of the Alinsky left in a bit.
Trumps quite literally is the cattle prod unifying the coalition of the disaffected. The ‘war against Trump’ is led by liberal progressives in government, prominent media members and, most significantly, the U.S. National Education Association. The education union represents the vast majority of U.S. educators at all grade levels and is disproportionately progressive at the leadership levels.
Annual dues to the NEA average in the neighborhood of $500. With over $3.2 million members, they pull in a ton of cash which is used to fund a number of social and political causes having little to do with the classroom. Over 93% of the NEAs political contributions go to the Democratic party. Over $80 million goes to leftist organizations. The ideological war is a war for minds. This war is being fought full force starting in our American classrooms and at the very earliest levels.
“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.” ~ Thomas Jefferson
Back to community organizer Alinsky. His famous Rules for Radicals expounds 13 tactics that have served as the rulebook for the coalition of the disaffected since the mid-1960s. The NEA became increasingly populated by fervent followers of Alinsky, eventually steering the American education system to instill a more liberal view of history, social affairs, politics and science (global warming, anti-creationism, etc.) in the classroom curricula. Prominent media members who grew up in the Alinsky/NEA indoctrinated education system, and many politicians and business leaders as well, are now in positions to dramatically affect policy and fine tune media content. Today we can clearly see the ripples of Alinsky’s tactics turning into socio-political tidal waves that roll across America.
Trump stole the election from the Alinsky left with the help of Russia (see the last Alinsky rule below). He stole it in the way he was able to bypass the dominant progressive communication network through the use of social media during his campaign. He got his word out, uncensored, via Twitter, much to the dismay of the word twisting, progressive leaning mainstream media. Trump’s Tweets also frustrated his more established GOP opposition, to the point where the media consistently covered only negative information about Trump, while Trump simply covered Trump directly to his growing number of Twitter followers. The battle lines were quickly drawn for this battle in the ideological war – Fake News vs. unfiltered Twitter Trump.
Embedded within this nasty ideological war, we can saw many of Alinsky’s tactics being deployed consistently via liberal congressional statements and mainstream media reports. In fact, many citizens are quite literally deadened to them only five months into Trump’s presidency, but the Alinsky drum continues to beat (and for good reason – it’s supposed to). Every day we can see these Alinsky tactics at work around us:
- Make the enemy live up to its own book of rules
- Ridicule is man’s most potent weapon
- Keep the pressure on
- The major premise for tactics is the development of operations that will maintain a constant pressure upon the opposition (note the military-like terminology in bold here)
- If you push a negative hard and deep enough, it will break through into its counter-side . . . every negative has a positive
- Pick the target, freeze it, personalize it, and polarize it
With the American education system, the media, progressive politicians and the coalition of the disaffected all so totally permeated by the Alinsky philosophy, the conservative right will find it increasingly difficult to make political headway, let alone hold their own against the rising tidal wave of negative reporting and orchestrated social protest against Trump. In a nutshell, the social and political terrain of America is shifting decidedly into territory the Founders hoped would never arrive.
“Real liberty is not found in the extremes of democracy, but in moderate governments. If we incline too much to democracy we shall soon shoot into a monarchy, or some other form of a dictatorship.” ~ Alexander Hamilton“
Mr. Hamilton might argue that the rise of Trump is simply a natural correction away from the progressive “extremes of democracy” and toward a more moderate government in terms of a fully function tri-cameral system of government composed of the Executive, Legislative and Judicial branches, each not exceeding their constitutional charters but ruling jointly by law ‘of, by and for the people.’
Following the shooting incident, warhammer added that the escalation is running much faster than he feared:
“It seems only a matter of time before the Red state Trump/GOP supporters start to respond in-kind.
Just my two cents, but the liberal MSM is complicit in this attack. The haters are gonna hate, but it needs to stop there. Some folks just can’t separate propaganda from reality.”
Ah, there’s the rub. If they could, we would be a group of United States again…and that, boys and girls, hasn’t been the agenda since Obama and Bush before him…
Crap the Masquerades as News
Did I say this would be a short report? So sorry, lol.
Off to the undersides of the lawnmower, then. This has been just way too much fun.
Now if I can only get done in time to buy a nice tradable low for the final run to insanity…