Dow to Drop Big-time: So What?

imageI began with, a nice dish of organic chicken stroganoff over (also organic) Yukon gold potatoes for breakfast.

Then, for dessert, it was a hot peppermint cocoa…

Hey!  Ure!  WTF with the culinary crap?  Where’s my insightful look at where the market is going today?”

Easy, there big fellah.  I’m making a point.  Pay attention….

The point is the market is in the process of making a January low that may have a 50-50 chance of being the low for the whole year.  With options expiration next week, who cares if we are down another 400 points on the Dow today?

imageIn my world, things look very far from grim – we’ll get to that in a sec.  But first, even if I pencil in a 44-point further loss in the S&P today, that still doesn’t get us out of my “target” green circled area for this week – and in fact, with even a small rally at the close tomorrow, we are likely to be right in the green, so to speak:

Sure, it would be more graceful if we could get down into the yellow circle, but that’s just wishing and hoping.  The deeper the pullback, the more upside money may be made…everything has a gold or silver lining to it.

How can I blithely not buy into the current doomporn outburst?   Let me count the ways…

1.  Man With Knife Shot Dead After Trying to Attack Paris Police Station – which means that we could be rounding a corner where force is met with force in Europe when people start misbehaving.

2. In the Middle East, Iraq is offering to mediate between Iran and Saudi Arabia.  Depending on how this goes, we could see a chill-down in regional tensions.

3.  The ADP Jobs Report yesterday was pretty good, really.  And this morning, we have the Challenger Job Cuts report just clearing:

A strong economy, coupled with what appears to be a growing reluctance to announce layoffs during the holidays, contributed to December experiencing the lowest number of monthly job cuts in more than 15 years, according to the report released today by global outplacement consultancy Challenger, Gray & Christmas, Inc.

U.S.-based employers announced planned workforce reductions totaling 23,622 in December. That was 24 percent lower than the 30,593 job cuts announced in November and 28 percent below last year’s 32,640 December job cuts.

December was not only the lowest job-cut month of 2015, it was the lowest job-cut month since June 2000, when employers announced 17,241 planned layoffs. Last month also represents the lowest December job-cut total on record, since Challenger began its monthly tracking in 1993.
The December decline was significant enough to prevent 2015 job cuts from reaching a six-year high. In all, employers announced 598,510 job cuts during the year, 24 percent more than the 483,171 planned layoffs in 2014.

While 2015 total still saw the heaviest downsizing activity since 2011 (606,082), the year definitely ended with job cuts on the decline. Employers announced 105,072 job cuts in the fourth quarter, down 49 percent from 205,759 in the previous quarter. The fourth quarter total was 12 percent lower than the 119,763 job cuts announced during the same quarter in 2014.

4.  Options expiration is next Thursday – I look for prices to recover from here because stock owners hate nothing more than handing option traders money on the monthly payday.  So a turn higher before next Wednesday seems likely.

5.  We’re not sure that North Korea really has a “mini-H-bomb.”  Our military affairs expert (warhammer) tells us…

George,

The AF Ass’n news (snippet below) details how the WC-130 Constant Phoenix aircraft is sniffing around to determine if North Korea indeed unleashed a Hydrogen bomb earlier this week:

“WC-135 to Sniff Out Truth of H-Bomb Claims

?The Air Force will deploy a WC-135 Constant Phoenix to test for radiation near North Korea in an effort to determine whether the communist country actually did detonate its first thermonuclear…weapon, reported the Washington Post, citing an anonymous defense official. “

Wikipedia has nice rundowns on the difference between an Atomic bomb and an H-bomb For anyone interested.
<https://en.m.wikipedia.org/wiki/Nuclear_weapon>
Cheers,

If the NK bomb was atomic as an igniter for fusion, or not, won’t change much of anything.  It would only matter greatly if an unholy triangle evolved (ISIS, North Korea, Iran) and they all worked together on a missile delivery system, would we be worried and that would take time to evolve.  Or, NK bombs SK…which is “dis-likely.”

6.  Whenever I see a story (like this CNBC piece on how George Soros is saying “It’s 2008 all over again…” I get really skeptical.  Mr. Doomporn Profits, Hisself.

Ask Ure-self this:   What asset class of regular folks is outsized?  Not housing, not stocks, not bonds, not gold….so WHAT is he talking about?

The Eurabia Immigration Bubble?  Hahaha…this guy slays me.  Stgomp yuour feet, Soros…stampede the chicken…we love to see ‘em scamper, too.

You see, folks like Soros make their money by (to use an old Rothschild expression) buying when the blood is running in the streets.  So when I read Soros promoting fear, I have to wonder if he’s being a tool who is just looking for even lower prices and a better long-side entry.  Yah-think?

In the real world?  Soros is a democrat and if this is a REALLY a replay of 2008, the political reality is that democrats are even more inept than the republicrats.

Why, this would a) destroy the Smart Obama Myth amongst liberals and b) Hillary whatzzit’s party would own the Greater Depression…and History says that won’t happen.

7.  imageSince the 10-year Note has essentially NOT MOVED since the Fed “rate increase” the fed would, in keeping with the previous Depression rhyme going on, raise rates at least one more time before the Big Finish in late 2016 or early 2017.

Fact:  Most of 2013 and 2014 the 10-year was at higher levels so the Fed has gobs of room to move again.  The odds are they WILL.

Lord O’ Goshen, am I the only guy who remembers there were three rate hikes leading into the last Depression?  See Fed Discount Rate data right:

8.  I have been telling you this stuff for weeks, but if you’re not hearing it yet, UBS has issued a forecast of a Peak yet-to-come and then a 30% collapse late this year and who knows after that.  But again, the key point is?  Seems too early to collapse just yet.

9.  China’s leadership is pragmatic.  They have announced a stimulus already, but Ure thinking is that they will opt for a further stimulus, as well.  Headlines like this one ask “China: Is stimulus the answer?

The correct headline is “If one isn’t big enough, how big will be next stimulus be?”  China is not down, out, or about to play dead.  They have 4,760 more years of public finance experience under their belt than the USA since our founding a mere 240 years back.

People tend to forget the depth of Chinese culture and experience.  Sadly, these are the same people who forget it’s illegal to pass out national secrets for favors or to put classified information on a private server.

But hey!  If there’s no indictment-to-come on the email scandal, Chinese government, Russia’s, and even most governments in the Middle East, begin to look like ethical high-grounders in comparison to U.S.

When that realization spreads, then we will have cause for real panic – it will mark the moral bankruptcy of our government.  In  the meantime?

Panic is a fine and savory thing.

But it can’t compare with chicken stroganoff, a hot cocoa, along with a cool, detached view of things.

Besides, if a thousand points off the Dow scares you, you’ll be reduced to a puddle of jelly by what 2017-2018 bring.  So cowboy the ‘ef up and get done what you need to do.

In a perfect world, the S&P will close Friday at 1,960.48.

Oh, one more:  a rare P.S. from warhammer just in:

George,

Some random observations . . .

Remember those reported DHS camps awhile back?  Perhaps they were not for John and Jane Q. Citizen, but instead were in preparation for a massive influx of illegal aliens? 

http://www.washingtonexaminer.com/obama-eyes-6-military-bases-to-house-surge-of-illegal-immigrants/article/2579730

Who’s fingers are holding the Middle East shit bag zipper today?  Iran appears to ardently preparing to let it hit the fan. 

http://www.bbc.com/news/world-middle-east-35251917

Lastly, on the more severe end of the Armageddon scale, marshmallow toasters of the world have scientific reason to be optimistic.

http://www.express.co.uk/news/science/632054/Yellowstone-about-to-blow-1-in-10-chance-super-volcano-will-kill-millions

Cheers,

Now, while you wait for spring, go read something useful…

Comments

Dow to Drop Big-time: So What? — 13 Comments

  1. In other words: SPY entry at 1900 +/- could be potentially good position during 2016?

  2. Who cares about what manipulated markets are doing in lala land? The 1% own them all anyways.

    I look around me in the real world and people are living paycheck to paycheck and that is if they have a job.

    If we actually had real markets i would pay attention.

  3. “””Ask Ure-self this: What asset class of regular folks is outsized? Not housing, not stocks, not bonds, not gold….so WHAT is he talking about?””””

    I am wondering.. could it be the destruction of the petro dollar..

    ( http://www.crisishq.com/why-prepare/world-war-3-preserving-petrodollar/ )

    Now I am just curious didn’t the IMF just come out with the statement that they were going to adopt a policy that only backed currencies will be used for global debt, and china just got their currency listed with the IMF …
    ( http://worldtruth.tv/peter-schiff-warns-americans-to-buy-gold-as-chinas-gold-backed-yuan-threatens-to-collapse-the-u-s-dollar/ )

    If that is true and the federal reserve can’t stop the leaking bucket by pumping more currency in it..In theory he could be right..

  4. George:

    I don’t really get your use of “doomporn” in reference to a complete economic collapse. I know you firmly believe that money makes the world go ’round, but you’re wrong. It’s PEOPLE that accomplish that miracle – money merely sets up a have/have not society which in turn creates those bumpy playing fields that everyone seems eager to level. I certainly don’t let my personal cashflow guide me by the nose through my daily life or allow the wealthy to exert influence on the kind of person I should be – that all comes from within myself and not my bank account. So: in short, a full global economic collapse would not signal the end the civilization; it would only reshuffle the cards until the next hand is dealt by whomever the designated dealer may turn out to be. And, as is always the case with human nature, one thing only will determine who will be calling the shots: a monumental ego laced reinforced by a healthy dose of avarice. Like a drunk who gains confidence with each swallow, bankers do likewise with each new acquisition as well as economists with each predictive statement that may come to -temporarily- pass. I’m far more impressed by humans who’ve learned to adjust to the vagaries of daily existence instead of pointlessly moving illusory assets from account to account. Once again, the animal kingdom has proven itself superior to the human races… as it always will.

    • Effective EMP weapons now can be placed on light planes or cruise missiles and activated by conventional explosives disrupting an existing electromagnetic field and causing a catastrophic collapse of said generating an EMP with equivalence of small nuke.
      Less problematic and less traceable.
      Any county detonating a nuke in US territory would be insane as you folks have shedloads and blow random countries up at short notice.
      Sorry guys but being an Aussie that’s how it appears to us down under. Being a virtual 51st client State of USA is probably why it hasn’t happened to us.

  5. The concern about the markets is not the amount they will go up or down, the concern is that there is so much turmoil that when you figure out that perfectly timed short or long, there is no one willing to take the other side because liquidity has gone out of the system. The second possibility is that all trading accounts get frozen for some reason like a massive fraud that has to be unwound in discovery. As Holter/Sinclair often say, you should never go to bed at night holding a position you would not want to hold for at least 3 months. In these days of casino markets, playing the delta is as risky as playing the slots.

    Those who say this could never happen are just like the young coworkers who, at the peak of the dot com bubble looked me in the eye and said, “the stock market will never go down!” The next day I went all in on gold, first round at at $256, then second round at $302 and then just kept stacking. As Jim Willie says, the Chinese keep postponing opening the Shanghai gold exchange where metal will be priced only by actual physical sale and delivery, because they can’t believe that the western banks will continue to sell gold at what to them is a heavily discounted price, most of which has been rehypothicated at least 3 or 4 times.

    • George is correct to degree, however, thins may have accelerated, but it is still up to the angel in the ‘garden’. If Angel chooses a different path for us, from my perspective it will create a 7 year extention of “good” times. Postponing the inevitable.

      Before isis became an “entity” you find the current world trajectory posted at the link.

      link: https://lunaticoutpost.com/thread-252442.html

      CXI translates into 111, the angel has until the 3 years from the date posted in the link to choose.

      You may ask where is rhe mention of China and Russia? Both omited because at the time it was posted, both China and Russia were doing naval drills around syria. Dont believe me? Ask warhammer, im sure he can verify that.

      Take care buddy.

  6. Your column today has prompted me to see an uplifting movie this morning,The Big Short.

    • Just don’t buy into the story line that the hedgies in the film were some kind of good guys. They were just as slimy as the banks, and did some things that were just as illegal and immoral. Check this blog post made the week the book came out.
      https://mindonmoney.wordpress.com/2010/04/07/muggers-arent-heroes/

      By the way, all three of the bond deals mentioned by name in the book had already paid more than 90 cents on the dollar the day the book was published. Seems Michael just swallowed what the hedge fund guys told him. 90 cents on the dollar. Hardly the disaster he described.