After options expiration tomorrow, we may see something of a pullback in the markets (like next week) because we will have completed a technical count under Elliott wave theory and markets have earned a little rest. But as we’ve been pointing out to Peoplenomics.com subscribers, our long-term indicator has been correctly bullish since last December with only a one-week fake-out along the way.
A number of things account for this: One of which is obviously the “easy money” Fed, some of which is bound to flip over into equity buying pressure.
But another, less commonly understood dynamic is that as lower interest rates come to the bottoming-out period, the higher stocks can move because they really compete with bonds.
When the bonds were paying 5%, the yield on holding stocks had to be competitive (somewhere over 5% generally). So a $100 stock would have to pay $5-bucks.
As yields have come down, though, and now around 1 1/2 percent, that same $5-bucks worth of earnings and dividends baked in the stock price would support a stock price of $333.
And that, in ever-so-simplified terms, is why markets tend to go parabolic in ending long wave economic declines.
What also happens is that when yields begin to rise, stock prices not only collapse (according to whatever the new rising interest rates dictate, but they over-compensate because the worrywarts come out of the closet to lead the Hand Wringers Choir about the lack of consumer purchasing power (look at health insurance impacts, residual debt loads and such) and it usually gets coupled with companies generally under-spend on research and development.
The really, really good times, from an investor standpoint turns into really, really bad times, and the Great Wheel turns, kind of thing.
CEO styles will be changing, too, which is one of the reasons Ford’s CEO, Alan Mulally, might be a good choice to run Microsoft – an idea which is already getting some play over here.
The reasonable way to look over the current news-scape is with a cool eye and a longer-term view… Meanwhile, what I refer to as the “dust bunny crowd” is sucking down the “disaster porn” like there’s no tomorrow.
I got news for ‘em: There will be a tomorrow.
Today, the GridEx II power grid test will wrap up, and pardon me, but haven’t the lights stayed on meeting our expectation-setting? Are the exchanges likely to open in a few minutes? Yes, most assuredly.
Not that things can’t go wrong in a heartbeat in today’s world. But a few Chinese troops working on joint disast5er-relief training in Hawaii is not an invasion. Nor, so far, does GridEx look like “social engineering and martial law.’
To be sure, there is the possibility that sunspot AR1890 could pop with an X-class flare, but that doesn’t end life on earth. Nor would an M-class flare off AR1897. More likely than a massive power outage would be a large earthquake in the 7+ range, because we’re “due” any time based on an uncritical eye at the charts.
And this morning’s view from the real science types at the Solar Influences Data Center?
COMMENT: The strongest flare observed during last 24 hours was a confined M1.4 flare (peaked at 15:20 UT, on November 13), originating from the NOAA AR 1897. We expect C-class and possibly M-class flares, while X-class flares are possible but not very probable. Catania sunspot group 35 (NOAA AR 1890) is at the moment close to the west solar limb, therefore, we maintain the warning condition for a proton event during the following hours. The Earth is still inside a slow solar wind flow with the speed of about 370 km/s.
Consequently “solar activity at record levels” is a fear to take with several Tums since the sunspot number is 128 reported this morning is the “Boulder number” which is about 25% higher than the ISES number, so even with the spot-a-lurking, the way the data seems likely to come out in a couple of weeks, it might look something like this dummied-up view:
Not exactly the end of the world.
In fact, the weakest in 200 years, or so.
I’m afraid despite all the worries about sunspots, the biggest [rational] fear a thinking person can have is about economic meltdown when the paper money notion blows up. THAT’s something to really worry about…oh, and what to do with the dust bunnies under the bed where such thinking leads.
On the other hand, our resident war-gamer is still tracking the pending Middle East war:
Good Mornin’ George,
Relax the sanctions and Israel may feel compelled to take unilateral action against Iran. Keep the clamps down hard on Iran, and their economic desperation may just as well lead to war with the Islamic Republic’s anxious militarily striking out regionally in desperation, worst case against Israel.
Look for Russia and China to quickly, deftly try to exploit every sign of weakness shown by the U.S. and Europe.
If you’re really looking for something to worry about, although it’s not here yet, this is a dandy choice because you can just imagine the radiation to be released when the centrifuges in Iran are bombed while in operation.
Believe it, or not, that’s one of the reasons I’m building a new room on my house: A closed cell foam sealed, positive (pressurized and well-filtered) air area. It may seem like the modern analog to a 1950’s-style bomb shelter, but give it time. I tend to be way early on things, but seldom wrong in the longer term. It should work well for the whole range of NBC concerns – and you did notice the metal roof, right?
Prepping Notes: New Food Line
What’s the point of prepping, if all you’re going to do be be hungry? I don’t know about you, but I have this 2,500 calorie habit called eating…
I received a nice note from Preparewise about a new line of long-term stored foods that’s now available. One of the reasons I like Legacy Essentials is they are high quality and certified GMO-free, plus they have gluten-free options.
If you have any special dietary needs, brands like Legacy are doing some very good things and they have the largest serving-size in the industry.
What’s out now includes milk, (white and chocolate) whole eggs, honey powder, blueberry pancakes, shredded potatoes, real cheese blend and chopped onions. Importantly, each is rated for a 25-year shelf life.
They were out of stock on the Legacy Essentials powered eggs, but that should be back in shortly. I suspect it’s because the eggs are especially good – word quickly gets around in the prepping community as good powdered eggs are hard to find… So whether you’re just getting started, or topping off, it’s a worthwhile produce to check out.
Even if you’re not a prepper, the blueberry pancake mix and powdered honey is a good combination to try as a dangle a toe in the waters of prepping move.
We appreciate your support of our advertisers who keep the lights on around here.
A related (odd note, but one that came up at breakfast Wednesday here at the ranch) is that something like 17-states now have road-kill laws which make it legal to pick up road kill and take it home.
Thanks, but when disaster hits, I’ll be the guy with the blueberry pancakes with honey and butter on ‘em.
Web Hosting Deal
As long as we’re spending money this morning… We continue to be quite satisfied with our cloud hosting from www.emwd.com and every year, Brian Carpenter, who runs the company, has a birthday sale with some pretty good discounts:
Basic hosting: $4.60/month for the life of the account.
Standard hosting: $4.60/month for the life of the account.
Cloud VPS servers: 10% off
This is our BEST deal to date! Please use the following coupons at sign up to take advantage of our Birthday sale prices. The codes will only be good on Nov 14th and 15th, 2013:
Shared Hosting: FIB7EMTC72
Cloud VPS Hosting: E8PJHWWAX0
If you’ve ever wanted to get a web site up, this is a nice (U.S. BASED) high-reliability outfit.
Health Insurance for Auto Accidents
This note from reader David is worth thinking about…
unfortunately, your “health” insurance, in most policies, does NOT pay for injuries sustained in a traffic accident. working in a medical clinic, I know, as patients are quite disturbed when they find out that they have to pay out of pocket because their insurance will not pay.
the medical rider on your auto insurance pays for your medical bills (and possibly the other parties, or, their auto policy medical policy pays yours) due to traffic accidents.
now, if obamacare has changed that, I don’t know. its 12,000 pages, who knows what it covers. I know that they cannot deny one for “preexisting illness”, so, how long before hospitals catch onto this scenario?
patient comes in having a heart attack, hospital entrance coordinator to patient, “you have health insurance?”, patient, “no”, hep “would you like to sign up for gold premium plan NOW to cover your bills?”, patient, “yes!”, hospital, “ok, we’ll sign you up RIGHT NOW AS OF THIS MOMENT.
what’s to prevent that? idk. shouldn’t take hospitals too long to figure it out. hospitals win, insurance companies win (they’re backed by obamacare right?), government wins (obamacare gets used), corporations all win (drug/big pharma, insurance, etc), taxpayer loses (who cares?)……
Well, my, ain’t this going to be fun – as all these new healthcare regs come out, there are bound to be some holes big enough to drive a Kenworth through by unscrupulous marketers.