The futures are showing the Trump rally has at least an other half day, or so, and it could go higher.
Periodically, I share the following long-term view of the economy, updated twice weekly for our Peoplenomics.com subscribers:
This brings me to the financial discussion points of the morning:
- · Gaps tend to be filled.
- · What goes up…
- · Trump is the 1920’s Hoover analog.
The details then:
When you look at the S&P one-week chart over here, you can see that there was a large gap open on Monday.
One of the axioms of trading aggressively is that often-times, but not always, gaps like this will be filled.
What that means in practical terms is that while I entered my short position this week too early, I might be able to still make money on the position by holding on until the decline to fill the gap takes place.
This brings me to the second point: What goes up always comes down in markets if you’re willing to wait long enough. There is no particularly hurry to exit, at least just yet, because there is what MAY be this historical analog and under this view, we could still pull back down to even as low as the January/February level.
This gets me to the historical analog part.
Odds are looking to me increasingly like the notion we had the the Peoplenomics.com site a number of months back (Trump as Hoover II) could be coming to pass.
The key part of history to understand is that Herbert Hoover assumed office in March of 1929. That means that he had 186-calendar days before the stock market actually peaked.
In other words, his first 100-days were pretty good.
I’ll save the rest of the date line-up and specifics for subscribers this weekend, but I would recommend that even if $40 bucks a year is too much, that you flip $5 bucks to support Wikipedia.
Then read everything you can about the Great Depression and the election of Herbert Hoover and the basics of the Roaring Twenties (the TV show with Dorothy Provine is a simple way to learn).
Things are different now, sure. Back in the last Depression the daily OMG came from flappers. And the modern analog there may well be the LBGT movement.
Sh*t dude, the national marijuana legalization battle…our Modern Prohibition replay, right?
It’s all there, all in-your-face and you have to be truly dense not to see it.
Another key: Commoditization was key. Prices were low and consumption was high.
Stock prices were at absurdly high prices then, and going higher, I figure another six months (at least) from here. And did you happen to catch the remarks – what last week? – of former U.S. Budget Director David Stockman?
Look, he’s no fool so yes, once we get the final decent correction before the run at the ultimate top, we have no problem playing the long side of this puppy aggressively.
But when we being to line up with history next year and the S&P is up in the 2,300-2,500 range (and we’re counting out winnings) it will then to be time to load up on the short side.
The chart above may not be perfect, but there are some hard times coming – but not just yet.
Part of the reason? The current fiscal budget will run until next October and the shape and priorities of that new budget will be what shape not only the economy, but it will limit the president and congress ability to manage the initial declines.
In the meantime, the Fed will continue to live “in a box” because if they raise rates the economy will implode and if they don’t then the Roaring part of this modern analog will roar a good bit longer.
Then Next Political Crisis
With an up week likely, I have been scanning for news items that could rock the national confidence a bit and might give us one more pretty good decline (to fill gaps) as the market may be a better forecaster of human events than most people realize, at least if you line up the historical and modern events correctly.
Do I have a suspect in mind? Sure, a couple of them in fact.
It is already starting. The attack on the Electoral College. Move-on.org, which I think (could be wrong) gets Soros money (another sore lefty loser) is again demonstrating how good hearts, but weak brains work.
“And to the Republic for which it stands….”
Oh, yeah, miss that did yah? We live in a democratic republic which is different that the direct-mob rule of a pure democracy.
This is something the Founders agonized over for a whole decade before striking the right balance. It’s why we have an Electoral College instead of the “direct popular vote” mantra.
What the well-intended (but simple) don’t understand is that pure majority rule always turns into a lynch mob that will appropriate all assets to their own use.
In a sense, “democracy” is what worked as a rallying cry for the Bolsheviks. Except – as always happens in such mobs – leaders come along and seize control inside and there goes the notion of democracy.
It happened with Lenin, with Stalin, and so on. What people don’t seem to grasp is that Obama-Clinton was our direct path to the socialist/communist take-over/take-down of America had it been allowed to continue.
Direct popular vote sounds good (and it ought to be a money-making for Move-on. But, as a practical matter, Electoral College decisions are what we have exactly to prevent “the mob” from running away with all aspects of normalcy.
You see, the mob consists of coordinated special-interests. The Climate crowd will throw in with the BLM crowd, the voting illegals crowd, the bleeding hearts, the stricter zoning, the bigger government spending crowd…and next thing you know, we have managed to transition into a collapsing democracy of vertical interest demagogues.
The Founders and the Constitution are what America – the only grand melting pot that has worked in world history – is all about.
And at some point, when – as I predict it will – the simpletons and youthful dumbkopfs manage to whip up violence, which is surely their path now that president Trump has been chosen – the leaders of any such violence should be arrested and charged with “inciting to violence.”
Just like that Baton Rouge cop who has sued one of the BLM activist/leaders for inciting, we have a pretty good system of law that is designed to keep domestic peace and tranquility.
The spoil-sport, sour-grapes, whiners ought to go back to their worker hovels and think about making something productive for America rather that promoting the continuation of division that the election decided.
We are NOT a democracy. We are a Constitutional Republic.
And revolutionaries too dumb to get it should get an education and get back to work like the rest of us.
Violence in the Streets, Then?
The reason I say “garbled” is that the shooting took place at a convenience store, not the nearby anti-Trump rally.
Another example of MSM making things up to make things happen? It wouldn’t surprise us in the least, of course.
Once we get past the Move-On stuff and media possibly “connecting” dots that aren’t there? Who is suspect #3?
Well, then we would have to put up China in our economic lineup.
There, state media – the Chinese government owns it – is warning Trump against isolationism and is calling for a status quo.
The problem the Chinese have internally is they are trying like crazy to build a powerful middle class, like the one that just flexed in the U.S. elections this week. And the one thing they can’t afford would be a huge decrease in their output to the United States. A huge – or sudden – shift in U.S. supplying manufacturing would toss China into a recession, and that’s the kind of thing that leads to wars.
Suspect #4: Russia
There is no doubt that president Lame would like to use his last 70-days to whip the U.S. into greater involvement in the war in Syria.
But on the other side, remember that Russian fleet we were telling you about a couple of weeks ago? The one that sailed down past the U.K. and then turned left into the Med and is now around Tartus, their naval base of operations in Syria, courtesy of president Assad?
Well, a report over here says the Russians now have their naval pieces in place and they are ready to take to the skies and I’m not so sure they won’t go a little “push-button warfare” with their cruise missiles.
Suspect #5: The Super Moon Quake
‘Hasn’t happened, yet. But as I told you last week, we have to be ready both at the personal prepping level and psychologically, for a major quake because this year is ending with three Super Moons in a row.
The link between Sun-Moon-Earth alignments was covered a good bit this summer. And example here.
But not everyone lives “five minutes in the future” like UrbanSurvival readers and Peoplenomics.com subscribers.
People not so blessed with a “look-ahead view” of Life will no doubt be “shocked” with a 7.5 to 8+ quake happens – perhaps in the next month or two – but that just sure as hell could cause a massive decline in the markets, especially if it happens to be in an economically sensitive area like the U.S. West Coast.
Today? Rally to Continue
Not really any big metrics to model until next Tuesday when the retail sales figures come out. Already, though, just talking informally to our UPS and FedEx drivers, they tell me that the word on the street is that now that the election is over, people are de-pressurizing a bit from all the stress and will open their wallets a good bit for Christmas this year. They are anticipating a LOT of work and we might even see a pop in November car sales.
Consumer prices come out next Thursday along with housing starts.
But I expect a lot of people – like Elaine and I – who have been looking at possible moves have been watching to see how rational states are in their presidential choices and how they are working the modern-Prohibition analog problem (marijuana).
The election this week should give comfort to Arizona people nervous about owning property in La Raza target real estate on the one hand, but suffering the pain of no weed to dull things up a bit. Florida, though? Well, still good home prices down that way, but plain terrible summers. Best weather Pappy ever found in the US seems to have been Hilo. I’m just not fond of living atop volcanoes, myself.
Back to markets, the futures are up a hundred, but whether the gains will hold, or is some of our “suspects” will soften the week and keep our trading model short or in cash…well, that’s what Friday is about.
Oh-oh… I hear my table saw calling so time to go build cabinets for the guest quarters…
Write when you feel like it…I do.