Waxing My Crystal Balls (…ahem…)

It isn’t that hard to see the future, at least when it comes to markets and where we go next.  There are a lot of tools that even us “small fry” investors can use to improve our odds, but a surprising number of people seem content to make a single decision and hold with a position through thick and thin, with the off-base thought that things will average out in the end.

Sure, it is nominally true, but buy and hold from the market peak in 1929 would have killed your family fortune.  The stock market didn’t recover from the 1929 debacle until the 1950’s.  From the market peak on 9/3/1929 at 381.17, we went down like crazy and it took a world war and more than 20 years to claw back up.  On December 31, 1949, for example, the market was still down at 200.13.  Buy and hold disaster example #1.

A further example may be found – more recently – in broader indices – as well.  Take the S&P:  Bought at the top of the Internet Bubble (March 24, 2000 and 1,527.46, your portfolio could have languished until July 6, 2007 when the S&P again crested 1,530.

(Continues below)

 

All of this is mentioned because we should still have about one more month to the upside – and maybe longer – before we get to the next significant market high.  And, along the way, we anticipate some short, sharp sell-offs that we plan to play using the trading strategies discussed over on the www.peoplenomics.com site.

And although I almost pulled the trigger on an exit from a significant long position Tuesday, that order was canceled a few minutes before the open, and as it turns out, that was a very good decision.

Our crystal ball is far from perfect; if it were better I’d be aggressively playing options again.  But we have come up with a grand new Big Picture tool and we’ll reveal that for PN subscribers Saturday.

In the meantime, we should trade sideways, and maybe give back a few cents today, but this view I shared a week or three back has filled out exactly as expected, except now we are almost up to the top of a trend channel where the short, sharp reversal should happen within two weeks and then up we should go toward the final highs.

I won’t go into a lot of detail about this chart (that’s for the paying folks in the front row over at Peoplenomics) except to say this is the daily chart of our unique Aggregate Index and using it, we can pretty clearly see how we can go sideways for another three or four weeks and then go short.

But the new “timing tool” we’ll discuss this weekend ought to augment our timing a fair bit.

Buy and hold is great, if you are young, inexperienced with trading, and so forth.  While we don’t offer financial advice, I don’t mind sharing (after the fact) how we play things in our own accounts and we do put a fair emphasis on understanding how to grow wealth in under a wide range of economic conditions we’ve covered here in the last 20 years.

But Don’t Trust Me

Trust genius.  A good starter is “Bill Gross warns of recession risk if highly levered economies hike rates.”

The government – or the non-governmental Fed if you want to look at it that way – has gotten itself in a pickle.  If they raise rates, that will change the forward-earnings calculations and the market will expect higher returns from stocks.  Problem:  There’s ain’t none.

You see (if you’ve never managed a P&L – profit and loss ledger) there are only so many ways to kick-up profits.  You can increase sales or you can decrease expenses.  Since well-run companies are doing this all the time, the major driver becomes generic economic growth.

While the Housing starts Wednesday were OK, the problem is that with our massive change in tolerance for a wider assortment of genders and relationships, family formation – and birth rates are down…

This gets me to a familiar Peoplenomics topic.

The Vlad and Donald Story

There is a very useful story on point over in today’s NY Times.  The problem is that you have to read the whole story to get the economic  tells that are useful when framing a worldview.

The Times went with the angle on how president Trump would not have hired attorney general Jeff Sessions if he had known in advance that Sessions would have recused himself from the Russian email silliness.

But down in the body copy of the Times interview with Trump, we read this which is far more important to framing an economic worldview:

“Describing a newly disclosed informal conversation he had with President Vladimir V. Putin of Russia during a dinner of world leaders in Germany this month, Mr. Trump said they talked for about 15 minutes, mostly about “pleasantries.” But Mr. Trump did say that they talked “about adoption.” Mr. Putin banned American adoptions of Russian children in 2012 after the United States enacted sanctions on Russians accused of human rights abuses, an issue that remains a sore point in relations with Moscow.”

Now the explanation:  This is absolutely critical because adoption is part and parcel of economic growth through immigration.

As we have modeled on the Peoplenomics side (more than a year ago, in fact) the way countries are trying to “buy some future growth” is by embracing immigration-based growth.

The Obama administration, for better or for worse, pushed open borders because it is a BUSINESS MODEL for democrats.  People come into ‘Merica, register and next thing you know, a generation or three of solid demos.

The republicans have a different idea:  They want to work on the utilization and innovation side.  Onshoring may help because it will slow the Balance of Trade disaster and because reindustrialization would be a jobs bonanza at home.

The problem is NEITHER PARTY has communicated this Reality to the voters.  Instead, arriving at this view doesn’t occur until you methodically look at how our favorite (ex?) commie, Angela Merkel has sopped up “growth” for Germany by brining in more peeps.  So has France, a lot of the Scandahoovians, and so forth.  The UK BREXIT, on the other hand, is in our view part cultural memory (the Crusades and kicking Muslims out of Europe once at a great price) and partly because the UK is about up to hear with socialism, especially of the sort that is unelected – exactly why the Brussel’s Sprouts earn the label megalomaniacs in many columns.

Brink-of-War moments – like the Ukrainian mess and the Russian moving into Eastern Ukraine – would likely never have happened had the Sprouts not spouted off about a European Unions “spanning from Portugal to Vladivostok…”   Which was a shocker to Putin and Russia.

In the large context, this worldview also explains a lot of other differences between the U.S. and Russia.  The Russians are less tolerant of LBGTQR (whatever) than we are because they know the straight people actually produce offspring at a higher rate than same-sex marriages.  No, I’m not saying sperm banks don’t work, but run the numbers yourself and you’ll see it in a flash.

As we go into additional earnings reports today, here’s the simple metric we’ll be looking at:  We expect that the winners in terms of gains in profitability will be those firms that have made the most effective use of ERSP and business process re-engineering.

That’s fairly simple to do with financial outfits.  Stick an SIVR phone system ahead of a massive SQL ERP platform and who needs the humans?

On the other hand, the high-human-density firms are more problematic and their optimizations are more difficult to implement.

This should apply – but we’ll see how much today and tomorrow  – as “Futures flat as investors await earnings deluge.”

Philly Fed Outlook

Just out:

“The index for current manufacturing activity in the region decreased from a reading of 27.6 in June to 19.5 this month (see Chart 1). The index has been positive for 12 consecutive months, but July’s reading is the lowest since November. Thirty-seven percent of the firms indicated increases in activity in July, down from 42 percent last month. The shipments index decreased 16 points, while the new orders index fell 24 points. Nearly 31 percent of the respondents reported a rise in new orders this month, down from 45 percent in June. Both the delivery times and unfilled orders indexes were positive for the ninth consecutive month, suggesting longer delivery times and increases in unfilled orders.”

45-minutes before the open, the Dow was up 25, with more upside this week as we should come very close to the top of our trend channel.

Bash du Jour

The award today goes to CNN for “Trump’s first six months in office: 991 tweets and 0 pieces of major legislation.”

As we’ve said before, Trump is going “consumer direct” with POTUS comms and that could lead to collapsing news networks fueled by little more than bizarre stories and Gollywood tripe.

Al Gore: Unrepentant Climate Sales

Time has a Gore spew here: “8 Questions With Al Gore.”

Like ‘old-time religion’ the soft-ball questions get to such important things as what can an individual do?  Rather than coldly looking at the data and wondering “So, what about that audit that shows virtually all of Climate Change is due to unwarranted statistical “adjustments?”

Climate change?  We think snow job.  We observe that Time didn’t ask about the Biggest snowfall in decades blankets Chile’s capital. ”

We will have to lump climate in with religion and politics as a total waste of time if you’re talking to a True Believer of any persuasion.

As of this morning we are christening Mr. Gore The Climate Lama.  (The “Hot Pope” and “Cardinal Heat”  didn’t test well with our focus group which consisted of Zeus the Cat…)

OK, time to gas up and become a lawn boy…more on the ‘morrow or moron tomorrow…we can never be too sure.

Comments

Waxing My Crystal Balls (…ahem…) — 30 Comments

  1. “Waxing My Crystal Balls (…ahem…)”

    OH George… one thing I just have to say our of compasion.. I know how tempting it could be.. but DON’T do it..
    Leave the Waxing to the women folk.. LOL

  2. I think a big reason that people aren’t reproducing as much as in the past, is the expense it cost to raise a family. Back when I was born, I think the hospital bill was under a $100. Now doctors would prefer to do cesarean births. because it generates more revenue and they don’t get calls at 2am to go to the hospital.

    Use to be a time that a factory worker could make enough money to raise a family and allow the wife to stay home. Now two incomes are necessary and childcare cost is outrageous and family members aren’t close anymore, not to mention those factory jobs are practically non-existent now. Many people moved away, so the family and extended family that made up family clans, is no longer in place.

    I heard a man explaining his thoughts on why the family and extended family relationships changed from 50 years ago. It was the development of insurance type products that allowed people to take a chance and move away from the family structures and towns that gave them succor. Before, families survived and gained strength from the various extended family members who would pitch in when things got tough for one of the relatives. Now insurance products like unemployment, medicaid, disability,et al, makes people more reliant on the govt than in the past, when intact family and extended family members like grandparents, aunts and uncles, cousins, all helped each other, if only to give hand me downs to. Even neighbors were an important family type structure to other neighbors. That’s not as apparent as it was in the past. Who borrows a cup of sugar from your neighbor anymore? Our next door neighbors in my youth were like family to us. Shared many meals with them, especially in the summer. I do give merit to that message Hillary said many years ago, it takes a village to raise a family. That’s the environment many of us boomers grew up in.

    • I can agree on 99% of what you say, exception being Clinton’s comment. There is very little she has said publicly that hasn’t been a double edged sword. But as to reliance on family, you are dead on. Nothing short of cataclysmic events will bring that back. I guess massive economic downturn could be classified that way…

    • Not sure I totally believe that – what about the people who left friends, family, jobs etc and like my ancestors moved ‘out west’ or across oceans . . . often they never saw anyone from their old lives ever again.

      Perhaps in ‘recent times’ a social safety net has become important, but the grief to a family when an emergency happens is at least eased, is this not a good thing?

      • When my mothers family came to America from Sicily, they sent scouts first. Then the rest of the family came. Likewise, once they were established here in the USA, they sent scouts to the new hot areas of employment. For my family it was northern IL. I came from a very large extended family of relatives. When I’d go to weddings there’d be 300-400 people…all mostly from Sicily and Italy and with family relationships from the “old country”… they were all proud to be Americans, like in the opening scene of The Godfather. Although they maintained things relevant to their cultural history, they were all so happy to be in America and with great pride referred to themselves as Americans. I think that sense of honor has been lost with many who come here now (not all, but many).

    • Citizens pay, illegals and refugees have babies for freeeeeeee and all the freebies they can stand, po folk who live off all systems also reproduce for free AND freebies… surely this is common knowledge by now. The Rest pay as they propagate. It is the Rest, that are finding it hard to finance babies. All are equal, some are more equal than others.

    • Or even three incomes.. up till 84 you could work one job and make enough to survive in comfort the wife stay home with the kids…. today the wife has to work and the guy probably one full time and one part time job.. the teller at the local bank..has two kids.. we got on the subject of wages one day.. she told me that after daycare and gas to and from work she makes .. ONE DOLLAR takehome.. she has to have the health insurance that they offer that is the only reason she is working.. not even considering insurances health insurance..( my wife went back full time because insurance just for her was going to be 1847.00 a month ( yes the great deal with obamacare.. but before that she couldn’t get insurance on the open market because she had had a couple of health issues in the past.. now consider car insurance home insurance etc.. disability insurance is a waste of money.. a total waste of money the minute something serious happens they run its a joke but then that is another story they should write those policies on five inch wide rolls of paper with a soft quilted patter to them.. if you don’t believe me just ask anyone at a medical facility that does insurance processing about how well they cover). a basic budget for anyone is going to be eighteen hundred a month conservatively without insurances..
      in our area.. the average wage is around ten to twelve dollars an hour.. many young people are working three or more jobs to get by.. many are forced to seek benefits from social programs to survive or move home.. yet.. things keep rising.. the average wage increase around here is two percent a year until you meet the maximum for your position then you maybe get a small raise of like the smallest one I seen they gave all the nurses a penny an hour LOL it was hell around the halls then.. yet many prices are way beyond that.. just with the increase in utilities this year everyone should have gotten a one percent raise to compensate just for that alone..
      I don’t know how it is going to be corrected.. my guess is . the us goes bankrupt on the dollar and has a total reboot.. I remember buying a months groceries for 75.00 for a family of four.. today four.. your looking at 1200.00 plus my budget is 10.00 per person three dollars a meal and two snacks at fifty cents this years budget has to increase.. if someone would have told me I would spend enough money to buy a new car every month on banana’s and fruit I would have laughed in their face.. but our fruit expenses here are between four and five hundred a month if you consider the cost of fuel to get them …my budget revolves around the cost of one hamburger at the local burger barn with fries and one latte or cup of coffee and plain doughnut.
      I personally don’t know how the kids are doing it.. my guess is .. Plastic..I am not sure but have a rough idea what they are making and it doesn’t add up.. none of it adds up.. that is my curse I see an item and I have a figure for it I look at an item and I see a number.. I sit down to eat at a restaurant I have a real close image of how much they made or lost off of my meal purchase and I can tell you sometimes it just irritates me that this is always running through my mind numbers .
      a few years ago.. there was a reduction in medicare funds.. in the healthcare industry that is when you fear the most depending on how many beds they are down etc..after layoffs we ended up without an income for a year.. the medical facility cut everyone of the senior higher paid employees that were under thirty years employment.. of course no unemployment and that is when you discover that over fifty and under sixty seven your unemployable especially if you stayed with an employer for more that a decade.. unless you are laid off and they are intending to bring you back then you get the unemployment benefits..unemployment benefits that is a joke at least around here in our area and from what I have heard it is a national thing.. now during that time the same thing happened to five other people in our area same reason.. well.. we spent six hundred a month in one establishment.. this ended.. one day the manager was talking to me and made the statement that the owner was really getting down on them because they were thirty thousand dollars short so far that year in take in income and he was going to let some of the workers go.. I said well that makes total sense.. if we personally spent six hundred a month how much does the other five in the neighborhood spend in the shop on average..
      it wouldn’t take much to start an avalanche.
      then think .. what about that McDonald’s worker that wanted fifteen dollars an hour and the newspapers were crying it will shut down the economy. but really how many kids today will work ninety or a hundred plus hours a week.. not many.. if you have kids.. you can’t work extended hours .. the daycare would kill you you are screwed..

      • In the city I live in they just had an increase in the hourly wage. Within a month two restaurants in the neighborhood closed due to escalating cost. Wages are just one part. Food cost and rent are out of control. I have a feeling this is happening throughout the city and will only accelerate as we get into the fall and next year. The two restaurants I mentioned had been open for at least a decade and the other over two decades.

      • Obama STOLE 80 Billion from Medicare! He threw our Seniors under the bus, and he did it knowing the baby boomers were gonna need Medicare. So, no surprises that all the healthcare services for the elderly are suffering after that stripping of the benefits to the seniors which trickled down to the healthcare providers.

        He was good, though, with transferring that wealth to the illegals. That’s a fact. See, you the citizen, have been thrown under the bus for the transformation of our nation, the replacement population strategy.

    • Another great article on The Great American Eclipse, how to view it and where to view it; is this on your bucket list???: https://www.space.com/35495-where-to-see-2017-total-solar-eclipse.html

      To take a quote: “This is the first time a total solar eclipse has gone from one American coast to the other since 1918. It will also be the first time in U.S. history that a total solar eclipse will make landfall exclusively on U.S. soil, meaning it will not be visible from any other country. (This technically happened in 1257 — but, of course, the United States wasn’t a country way back then.)

      For that reason, some are calling this upcoming celestial event the “Great American Eclipse.”

  3. Bill Gross is right. He has managed to be wrong on occasion, but he definitely called this one right. Those of us who have been his neighbors for many years have observed that he has been right way more often than he has been wrong.

  4. George…and well, everyone,

    The reality is that we’re living in an ice age that is about a million years old, at this point. Right now, we’re in an inter-glacial period. That means it’s warm and nice. These last somewhere in the neighborhood of 10-15,000 years. As far as inter-glacials go, this one is run-of-the-mill and a little bit cooler than normal. Also, this one is just about over. For all we know, it is over and this is the first year of a slide back into perpetual winter. Greenhouse gases or no, when it starts it starts and then things will get really interesting.

    Of course it takes hundreds of years to get to some serious cold weather, but think about this…the glacial periods last around 75,000-100,000 years. SO, we as humans have around maybe 5,000 years left (at tops) before we get to some serious population reduction. Once the ice sheets really start to move they will literally erase every city and man-made structure in the upper part of the norther hemisphere and lower part of the southern hemisphere. Think every city in Canada and the northern tier states of the U.S. wiped away.

    So, worry about atmospheric trace gases and tenths of a degree of warming if you want, but geologically speaking, winter is coming.

    Here’s a longish read on the subject, for those interested…

    https://judithcurry.com/2016/10/24/nature-unbound-i-the-glacial-cycle/

    MAJ-13

    • MAJ-13

      There were scads of books written about this in the 70’s. The description and timing is accurate that you present. They have yet to ascertain what triggers it outside of the tilt of our system and planet. They have some geologic indications that hundreds of years may be kind of slow for the cool down, that it could be within a lifetime or so.

      Since petroleum only has about a century left at a declining rate (the discoveries and usage are both bell curves, so the backside is a curve as well, even if we manage to shift the slope a little). Our grandchildren will live in a very different world.

      Every alternative energy available today requires petroleum to mine the ores to make the metal to transport to the factories and then to transport and install the tech, service the tech and make more to replace the failed ones. Airlines will not work without plentiful oil, and few will be able to afford them, blah-blah-etc. Merchant shipping alone uses 1/4 of petroleum daily supporting globalism.

      It will be like Benjamin Button civilization this next generation or two – trying to hold on to what we have down the backside instead of searching for more. Lots of extraneous goods and services will die away.

      Globalism will not last – petroleum prices or availability or a combination of the two will kill it off. Carrying inventory will become required once again. Lots of changes back to the way things were in earlier times, yet the internet may help slow the slide, and likely stay with us as long as grid power is reasonably available.

      • Oilman,

        You’re dead right about oil. I don’t advertise on here, but not only am I retired oak leaf cluster kind of guy, I’m also a professional geologist. That article I linked to makes the case that obliquity of the planet’s orbit is the thing that brings us in out of glaciations (obviously more complicated than that). The move in and out of those times follows the obliquity by a 1000 years or so. That’s where we are now. We’re in the last years of the golden age of man.

    • great article Maj.. I hadn’t read that one.. thanks for sharing..

  5. Yesterday I stayed home and watched some history on YT. (1918-1930 Berlin, Paris, and Vienna. I re-discovered that “the more it changes the more it remains the same.” The stages are set to repeat history, only the names will be changed. Blame the 90%-ter in the mirror. It’s a slow process, though ;-)

  6. Come to think of it, Al Gore does resemble a Lama !! And tell Zeus I have already texted him about the focus groups response….Al Gore = Big Bird !!

  7. how many people in our country tweet or follow twitter accounts of others? Am wondering since the WH claims that the Chief Twitter is going directly to the ‘people’ – my question is – what people? Obviously, his supporters, but, what about the rest of the nation? Everyone in our country does NOT have a twitter account so, if the news medias are bypassed – how does the WH expect their info to get out? Beside the entertainment news channel?

    I will admit, we have the latest and greatest personal technology (because we are in the tech business) – we have the latest versions of cell phones (all mfg cuz we test our stuff on them), laptops, blue tooth enabled tech – in home, in car, you name it. Upgrade stuff just about every year. And even with all that, neither of us have the interest nor time to tweet or follow someone else and still get our news from numerous news outlets including from overseas.

    So, not sure who the audience is that gets all those Chief Twitter’s tweets…but obviously, that crowd seems to have alot of time to not be productive….

    • Pepper D –

      With 1/3 of the country unemployed, that’s around 100 million. They claim 70 million in Q1 2017. So I could see where a goodly portion have time to twit, whether working or not.

      Then again, I don’t know what following a twitter account entails – email and just reading are enough for me.

  8. “The only winning move is NOT to play”. I’ve been living by that wisdom my entire life! We do NOT keep up with the joneses! We don’t buy endless electronics, baubles or go in for remodels. We work, we shut up and we put our money in investments. We Don’t finance cars, or houses, we own our farm. Everything is business model and you are NOT running it! Stay clear or get sucked into the propellers! abra

    • Ellen – you are blessed that you own your farm, even if you still have to pay the taxman. You not getting roped into the entire ‘imitate the rich guys’ meme was likely hard to avoid in many cases.

      And kudos for a most appropriate quote….LOL

  9. George, So you’re saying that this cultural purity nonsense is also bad for the economy? Best, Mike.

    • Nope, I’m saying, if our wonderful country hadn’t of passed abortion, and our government and cultural propaganda actually encouraged families and children, our most precious resource, instead of discouraging them, then we wouldn’t need to import 3rd worlders and pay them via the taxpayers to reproduce. It is just one big fib on the citizens, we don’t need the third worlders, we didn’t need globalization. So, if it isn’t really the reason to flood us out and all developed nations with these breedloaders then WHY is it being done? Did we vote on it? Did our elected leaders explain it to us EVER? No, but that handy ole non-peace place called the UN is putting their hand in play, “New Report on Replacement Migration Issued By The United Nations, Population Division.” READ ALL ABOUT IT!

  10. Just saw where a Swiss couple, missing for 75 years, was found as a glacier melted and they were uncovered. There is no doubt that there is change. I just do not believe that whatever happens is
    “man made”.

    • The only thing that is man made is the complete and total destruction of the whole planet and the majority of the life on it! Yet all the while believing they are so smart and ‘know’ the solution to everything! How you think you are right and everyone else is wrong! Like right now when you read this!

      • John….think now and stay with me…..think back to the destruction of the Woolly Mammoths,have you heard of all the hundreds of thousands of animal bodies all stacked and thrown together on top of each other in Siberia, did man do that? What force could cause that destruction on earth or off the earth?…think back to the destruction of the dinosaurs….think back to Krakatoa, dark ages, think think think back…..read, research, think….you are describing yourself, that you think you are right and everyone else is wrong….the actual physical and scientific evidence of the earth’s history demonstrates that your premise is incorrect….come on think!

      • I thought about it . I think what you’re saying is that a comet could strike the earth ( or volcanos erupt) and bring about an ice age that will mitigate the man made co2 greenhouse temp rise.

      • Yes, Edwin, but see other professional comments on her, the earth’s tilt, the sun’s effects, the orbit of the earth, all these things OUTSIDE of man’s control and influence that effect climate on earth. Thank you for getting it.