(Somewhere off Jamaica) Out here in the middle of the Caribbean, I am pleased to report this morning that the meme some doom porn types were trying to whip up about an “attack on America September 8” is pretty much bull snot by now.
This leaves us only three trading days to go before we find out how that other nonsense turns out.
A reader did ask a pertinent question, though.
What is the difference between people considering Schmittah and you using long wave economics?
Well, for one, our use of long wave economic theory is not a specific trading model. Remember, our Peoplenomics Trading Model has been short from the week ending July 3 of this year.
What’s more, back-tested through 2008-2009, it outperformed the current meme d’ buzz by 22%.
Long wave econ looks at the Macro cycles in the economy. Adherents of this other deal (Schmita) are doing little more than rediscovering and repackaging Nikolai Kondratieff’s 48-64 year economic cycles which can be traced in commodity prices and interest rates back into the mid 1100’s.
Long wave economic discussion groups have covered the relationship between Leviticus and the 50-year “jubilee” ad nausea over the past 20+ years I’ve been studying long waves. But the evidence is building that by clever manipulation of money supply, rates, and spending, the long wave of economics can be “pushed around” a fair bit.
In fact, the only time the reality of the long wave becomes apparent to most is when you look at inflation-adjusted stock prices. It’s then that the 2000 peak becomes very clear along with how wave 1 down was into 2003, two up was into 2007-2008, three down was 2009, four up is where we are now.
Within that four up, we have completed (1), (2), (3), and we appear to be in (4) now with a short (5) due over the next year and a half to finish up the rally sequence and then we move into Depression in 2017-2018.
Even this is not really cast in stone yet. We will quietly watch and trade a bit with our Model as opportunity presents.
The late Marty Zweig’s advice is never disrespected, though: Don’t Fight the Fed.
Next week, we will adjust tactics based on what the Fed does. In the meantime, I’m in no hurry to choose up sides (since our Model has been short anyway). I try not to make commitments unless there is a pressing reason to do so. Anyone who feels “rushed” by the multiplicity of bad advise on the net is fair game for the slaughterhouse.
I expect that the market will still have a major move down before the Fed meeting and rate announcement next Wednesday. But, if the Fed raises rates (which they have been talking about for more than a year) and if the Schmita people claim a subsequent market decline as “victory” I’m going to scream.
After the sell off yesterday, the futures this morning look to rally a bit. In Elliott terms, this may be a (ii) rally which as it ends will turn into a (iii down) followed by a minor (iv) rally and a final down before the Fed announcement.
Delicious irony will be if the Fed gets their weasel-wording at Statement time right and a major rally ensues because that would be a very graceful way to a) go down to long-term support around 1, 870 on the S&P, or 1,812 and even 1,740.
Our parallel to the 1921-1929 period would be intact and we’d go back to being guided by historical rhymes which call for the upside resolution at present.
Meanwhile, we’ll be listening closely for any tune-ups by the Fat Lady.
The key distinction is “information” is something you can trade on. Data is all the other factoids.
Bank of England Stands Pat
Which gets us thinking more about deflation (disinflation, then) and here’s something on point: What’s Behind The Big Declines In China’s PPI.
But collapse talk is early as we read America has 5.8 million jobs openings.
Win-10 Whacking Apple?
A couple of readers have opined that Apple seems to be losing its way when comes to innovation.
The war, in case you haven’t followed it, is for Microsoft, Apple, and Amazon to try and force you into their computer ecosystems.
For a long time, Apple was the ecosystem of choice, but Amazon has been much warmer to Android. Apple had Retina displays, but Google is building an ecosystem, too, with Glass.
On the voice control swamp of these ecosystems, Apple has done good with Siri, Amazon’s doing fine with Alexa, and Microsoft’s Cortana is a work in progress, as well.
We have converted all but one of our computers to Win-10 with no harmful side effects and it runs nice and fast. Multiple monitor support has never been easier, either.
So for now, we just watch the war to see what magic Apple can pull out of the hat otherwise, Google, Microsoft, and Amazon are all coming on with a good chance of being Apple-whackers.
Here’s an interesting question for racists and bigots to ponder: Why, when comes to humans, has all the “new product” launches come from that part of the world?
And for breakfast, how about a bowl of 32,000 year old Paleolithic porridge?
Leading Picks in Politics
On the GOP side it’s Donald Trump and Dr. Ben Carson.
I’m still willing to be on GOP stupidity to screw up a winning hand.
If a traffic cop is on a quota system to issue x number of tickets, that’d be called crooked.
New Justice Dept. policy aims to get tough on Wall Street fraud. No mention of money-pushing by the lobbyistas in DC, though.
But when the Obama administration tells the Justice Department to go after corporate crime, is this a quota system in all but name?