In spite of various market predictors putting up charts espousing a replay of 1929 is imminent, a more measured view of long wave economics argues that we won’t have an economic collapse/crash until April 17, or thereabouts. We’ll get into the “blood and guts” of why this weekend for subscribers.
But the main thing to be aware of this morning is that on our Peoplenomics side of things, I developed a trading model. And for a number of weeks it has been saying “new highs ahead in the short term.” Advice I promptly discounted thinking the methodology that I’d put into the model was somehow flawed, has been amazingly right.
Even if the present rally in global markets peters out right here, the earliest likely market crash window would not come until around April 17th.
This timing suggests a lot of things…and one biggy is that we should see an agreement among the EU/US/Russia to begin talks on the future of Ukraine. That would likely be struck in the next week or two.
And if that gooses the markets to new (nominal, but not purchasing power parity) highs, then the crash window could be delayed into May.
And here we are, on option expiration day for the month, and the Consumer Price Index hasn’t gone roaring to the moon. And The Conference’ Board’s Leading Economic Indicators is just about as rosy as could be:
The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.3 percent in January to 99.5 (2004 = 100), following no change in December, and a 0.9 percent increase in November.
“The U.S. Leading Economic Index continues to fluctuate on a monthly basis, but the six-month average growth rate has been relatively stable in recent months, which suggests that the economy will remain resilient in the first half of 2014 and underlying economic conditions should continue to improve,” said Ataman Ozyildirim, Economist at The Conference Board. “Correspondingly, the U.S. Coincident Economic Index, which measures current conditions, has continued rising steadily.”
Markets, globally, seem to agree.
Overnight, the Japanese market “went helium” rising nearly 2.9% and the Chinese chipped in for better than a 3/4 of one percent boost.
And, it’s carrying over into Europe, as well. In the early going there, small gains were being reported in all three major exchanges – England, France, and Germany.
Despite this, our proprietary Global Aggregate Index was holding in the vicinity of 29,116. In order for us to get comfortable with getting seriously long, the Aggregate Index would need to beat the recent high 29,234.27 that was set the week ending January 24th.
Otherwise, there’s a fair-to-middling chance that the markets are doing a classic double-top formation and from that, a major decline would be possible.
Most of that is likely to be determined not in today’s options settlement, but in how market participants reposition and hedge their bets next week and beyond. And that, in turn, should hinge on developments in Ukraine.
With the Sochi Games wrapping up Sunday, we’ll be keeping a very close eye on how Russia plays events as the window for headline-grabbing (and western-inspired?) “terrorism at the Olympics” comes to a close. that “judging” story in Sochi is down in the noise floor around here. BS and distractions to all but the ardent true believers in sports.
Next week should be key and by our chart work around here, this one is too close to call. Sometimes news will drive markets and – not surprisingly – this is one of those times.
Longwave economics views this period as one during which we should be falling into a major Depression. But even as late as the market high (back on September 3, 1929) there was little sign of trouble. And it would be a dandy rhyme on history for there to be a “breakthrough agreement for Ukraine talks” to orchestrate a market rally to new highs in coming weeks.
It’s later in the year you’ll want to bite your nails over. Or, March 6-12 if new highs fail next week or the week following.
That’s when we’d hit 55-days off the market peak (by the S&P) for the week ending January 10th. But the slope of decline doesn’t feel right and our trading model continues bullish going into today’s session. It goes much better than my gut and I’m honest enough to admit it.
Waiting for Ukraine Peace Talks
After more violence in Ukraine, we are now moving into the political arena as there is increasing talk about peace talks to put the situation to rest.
The talks to be watching for are two-fold. One set of talks has been going on in Ukraine where up to 100 (maybe more) have been killed so far. The diplomatic talks, that lasted overnight there are a wild card. They may – or may not – bear fruit.
The second level of talks, likely if there’s no progress toward settlement, might be in some forum like the United Nations. It’s these where the real players in Ukraine, the EU, the US, and the Russians might be able to talk out their differences.
In terms of the long wave economic cycle, this is too early to blow up into a major war. The Western economy shouldn’t, in one line of thinking, really need a major war until things in the US have turned really ugly and until we have a major drought, soaring unemployment, and all the rest of it.
In addition, and indicator of a major war to come would be an increase in defense spending, something that characterized the years leading into World War I or World War II. While its true that the emergence of the home security state might b e considered a partial militarization, the odds still favor a continuing economic decline for several years and the arrival of the global war in the 2018 (or later) timeframe.
If I were placing wagers here, one logical branch that would make sense would be an uneasy set of peace talks now…a “settlement” being forced on Russia, but that would give them time in the coming weak economic period to revive Russian nationalism and get on with building up their defense industry.
The Chinese, seeing everything playing out, and being in a position to be somewhat on the sidelines would also continue building, and somewhere in the process, the US would awaken to the fact that a lot of domestic manufacturing has been gutted and we could use the time to build up our domestic production.
Whether these macro moved of the “hidden hand” of economics show up in coming weeks will be interesting to follow. When the market eventually collapses, as all markets do on their own because of dynamical forces (ask the bitcoiners about this) there will be a ready-made flashpoint between the US/West and Russia which can be played like a violin in coming years. Not unlike the German’s nationalism movement played off the WW I reparations issue.
There….dead people, talks, more talks likely, let’s build a flashpoint for later, and get on with running the markets up to a collapse point, shall we?
Quick, hand me another cynical pill…too early for the war wave to break./
Police State Notes: FCC into Newsrooms
An op-ed piece in the Wall Street Journal by the FCC’s Ajit Pai is definitely worth a read. The reason – if you know how to read these things – is that the FCC is looking again at a common issue around here, the matter of “infotainment” versus “news you can use.”
Some background might be useful, because Pai didn’t get into it. Here’s what’s going on in a nutshell…
The FCC used to have a process called “Community Ascertainment” and the idea was that local broadcasters should be required to go out into their communities periodically and find out what the leaders of the community thought the major problems were.
The idea held that FCC licensees should address the community needs, concerns, and interests in both news and public affairs programming as a condition of retaining their licenses, which are a de facto license to print money.
HOWEVER, having been a news exec and having developed responsive programming by the boatload, I can tell you the public generally doesn’t want to be thoughtful, introspective, or proactive. Particularly on a rock & roll radio station where the manta is “the hits just keep on coming…”
The reason that programmers fight tooth and nail with news directors (which I was) is that they look at the two items that station management holds them accountable for: Ratings and secondarily money – and anything that becomes a “tune-out” is bad for business and, in career terms, bad for them.
The problem the FCC is (quite foolishly) wading into is really the larger social problem of somewhat intelligent audiences who realize that all the programming dealing with issues doesn’t really result in change in their communities because ultimately, those decisions about where society goes are decided on their economic merit.
Take Detroit, as an example, please. Would locally produced programming have changed the outcome in the auto industry one iota? Not no, but hell no. And that’s where the FCC has its head up it’s regulatory processes.
The born-again idealists in the Obama administration (and Mr. Pai) fail to understand that democracy is a kind of “mob rule” and shoving public affairs down people’s throats won’t change the facts that bankers and politicians call the shots. Who are they trying to kid?
So here we go again…like healthcare….into another battle where the idealists have some valid points to put on the board, but like everything else, the devil is in the details and the rollouts.
All of my smart friends read the Wall St. Journal and listen to NPR. And when they punch up rock and roll, they don’t want public affairs…they want to rock out and cope.
Oh, and when the Commission figures out that the rest of the general public is getting the “news they can use” from YouTube, Instructables, and here at UrbanSurvival, look for an evolution of FCC thinking to “go extensible” and begin working up content licensure schemes for the internet in order to seize “thought control” and “building community consensus” claiming i8t’ll be good for us or some other nanny-state bullshit.
And despite “free internet from space” being touted, remember it uses radio waves, so the spectrum police who work for the FCC can and will claim powers. Express an opposing view, or question the paradigm, and by God you’re a terrorist, aren’t you? Dispensing unapproved views? Can’t have that…
If you look closely – as I predicted in my book Broken Web, this will begin a slow-motion roll to start with television and then move outward to the Internet and extensibly to news analysis and commentary site (like this one) that offer you an alternative view of reality.
Which is fine, and it’s what the nanny state does, except that just like television, the power is still held by bankers, politicians and self-righteous leaders of community groups who are only interested in their interest group’s outcome… Did I mention public affairs programming didn’t do dick for Detroit?
My, ain’t this fun? Another nanny-state hold up to clamp down more federal control of radio, television, and internet communications.
Which, at least here in Texas and I’m sure elsewhere were never powers officially ceded to the federal government and therefore should be powers reserved to the states, and local stations. But there I go again, trashing another power power grab. I should apologize, but you know what? Ha!
China is warning president Obama not to meet with the Dali Lama. Or what? They won’t hold on to our job jacked employment and we might onshore instead?
“Auuuumm manu padme bite me…Aum mmm…”
Silence is Golden?
Hmmm…he hasn’t been talking as much. message in there, you think?
Remember that public service idea of mine outlined on my www.v-1-1.org website?
Someone’s got the idea besides me now… Reader Kimberly in Michigan tells us:
A guy here in MI has created an app called ActiveShelter it allows law enforcement and school staff to instantly notify teachers of a emergency lockddown with the push of a button it allows teachers to communicate directly with police
someone was listening to George ;)
Not many though…but maybe you can change that. Tell your friends… V-1-1 or4 some variants will come whether you like it or not. It’s just too damn good a concept…