2019: Falling Markets, Digilantes Ride

Time for us to present our view forward – as 4 “use cases” for 2019.  It is not a pretty outlook, but we have to present what the data – and larger non-market contexts are telling us.

With some Maalox at the ready…here goes…

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9 thoughts on “2019: Falling Markets, Digilantes Ride”

  1. Starting at about 8,000 DOW borrowed ‘money’ has been used by ‘the big boys’ to kite the DOW to more than three times the starting price (I refuse to use the word “value”). Many have called these borrowings “free money” but that is false as these loans must be paid back at some point, no? All the way up these loans have been both layered and margined fabricating a yuuge house of cards. All of this took ten years with lots of flim-flam (Corp. stock repurchases, Fed buys 4 trillion of garbage and who knows what else) to suck-in all available money and credit, then along comes Powell who sees that the cupboards are bare, panics and begins a great unwind to undo all of these ten years in one – and he just may succeed. It looks like what is now happening is the borrowers are in a panic as layers are being peeled off as well as margins being called. We were set up 19 years ago with the removal of Glass-Steagall and the ‘uptick rule’. How long before this turkey goes no-bid?
    I’m really not sure this wasn’t the plan all along to effectively undo the ‘Deep State’ which kicked into high gear after JFK was murdered but really started 105 years ago, as this would entail a really massive reset since it could not be done gradually.
    Some 20 years ago Prechter forecast an ultimate DOW bottom around 700 (thats right, seven hundred!) he may be also be proven right.
    If this happens we will see a giant reverse migration out of the Country but the wall would keep us in. Perhaps the wall can be built like a check-valve, i.e. one way-out!

    • AI B,
      I have thought about the wall being built to keep us in…like communist Russia, North Korea and Cuba?…Is the Cabal in charge going to destroy everything we have worked for and then hold us hostage while they do a complete re-set of our lifestyle and economic status? To do so is to totally shut down a free and open internet. Are we starting the conversation by attacking Facebook and Google? All you Tech naysayers…be careful what you wish for. I don’t care what anyone says…Social media has more benefits than risks….more upside than not. I am a thousand times more informed today than I was when a dated encyclopedia and a trip to the library was my only choice to enlighten my mind.

      AI B gave us some interesting food for thought.

    • We are already ‘walled in’, it is called the Geneva Conventions. No one in the United States qualifies for refugee status or immigration into any other country on earth without a passport, or some other reason to try to reside there, work there, lots of maybes, but permanently move and become a citizen, hardly easy. Having your babies in another country, doesn’t work, marriage is a gateway but it takes time. The only thing that will bridge a gap quickly is MONEY and STATUS, and LOTS OF MONEY for most countries. Oh yes, some of you will tote the note saying its only $200,000 in this country, and this and that, but it is much higher in desirable locales.

  2. Great insight today…You are the man!

    Another one of the factors that will expose the volatility of our markets will be our trade with China. As of yesterday, China seemingly has adopted a Trumpian strategy and are turning the tables by gaslighting the US. From the AP…

    ‘Beijing has accused the United States of fabricating its claims that China stole trade secrets and technologies from at least 12 countries through a hacking campaign, and countered by claiming Washington itself is cyber hacking.
    In a statement on Friday, the foreign ministry in Beijing responded to US legal action against two Chinese alleged hackers and said China would take “necessary steps to resolutely protect its cybersecurity and interest”.
    “The United States fabricated facts,” it said. “The US made false accusations against the Chinese side on the grounds of so-called cyber stealing. Such a move is a serious violation of the basic norms of international relations and will seriously damage Sino-US cooperation.”

    While this issue isn’t really trade related, it does affect our ability to negotiate trade and other issues with our partners around the world. Now that China has started the Trump like gaslighting strategy, look for Russia, NK, Syria, Saudi Arabia, and the entire EU to do the same.

    This is diplomacy in the Trump era. If Trump wants to rant, stomp his feet and hold his breath by spewing fact free claims to not only American citizens, but the world, the response is going to be retaliatory in the same tone and context.

    China is a force and you play games with them and they will triple down and toy with us. They know that Trump is a simpleton. His knowledge of negotiating is limited to the swarmy construction industry. Win by bullying is the only thing he knows. Everyone is on to this and knows how to respond. It’s not hard.

    How does this affect the markets? It will YUUgely affect our status worldwide in that we won’t be winning at much, because there is nobody left in the administration to conduct the diplomatic negotiations while changing Trumps diaper every minute. There is so much going on in his world, he may be literally soiling his shorts about now.

    My broker said that a big part of the market sell off is based on the US’s growing debt, plateauing economy and future as a world leader and our ability to maintain our partnerships with China and others. I hope this is averted, but we need new, diplomatic, common sense, conservative blood in the White House to correct the mess we are in.

    • It could be all fabricated about China stealing our secrets.. Why would they have to steal them? Is the question that comes to my mind. Since they are the ones that will be manufacturing the products..just grab a few things off of your desk..or scope out the upc codes..although it may be packaged in the USA but manufactured elsewhere..such as missile guidance chips or other components..

      00 ~ 13 USA & CANADA
      30 ~ 37 FRANCE
      40 ~ 44 GERMANY
      49 ~ JAPAN
      50 ~ UK
      57 ~ Denmark
      64 ~ Finland
      76 ~ Switzerland and Lienchtenstein
      471 ~ Taiwan
      480 ~ Philippines
      628 ~ Saudi-Arabien
      629 ~ United Arab Emirates
      690 ~ 695 China
      740 ~ 745 Central America

      A few years ago I read that they discovered that guidance chips had code written into them to send micro bursts of control information out.. Or could be shut down and altered completely from remote locations..

      Shortly after reading that a ts drone’s controls was taken over and landed in the hands of another country. In my mind Our industrialists in their own greed and our congress by passing legislation that would allow manufacturing of military components from countries that don’t have our interests let our national security be weakened. From our brass for ammunition..how many mm need to be off for them to be faulty..just look at how much of incoming cargo is actually checked..
      I also think the president is right on with pulling out of Iraq Syria etc. If the puppeteers want it so bad then let them pay for it..how many trillions more dies the blue collar worker have to pay. Spend that money here. Build the wall ( even though I doubt it will be affective since as long as employers will hire illegal imagrants and they can get assistance from federal programs it won’t end)..improve our industry and infrastructure.

  3. I have heard “it’s an orderly selloff so no panic yet” a few times this week. I disagree with this statement. I would be panicking if I were long (CTAs have flipped to part short for example & the more it falls the shorter they get, automatically, with no emotion, that is a lot of $$ changing to short) & I think there is panic out there now. It just looks orderly because the whole market now moves to the timbre of automated mean reversion strategies bringing us back to the mean (at every time frame) & then going again. These computers don’t care if we’re going up or down they just do what they do, revert to mean from programmed extremes & then let the market go again. That is why the market is different now to any time in the past. The simple 17 week moving average saying go to cash (or maybe even bonds) has been the great play here.

    • And for those unwilling to part with $40 to support our work…yes the 17 wma of the aggregate is a Peoplenomics thing, lol

  4. Lol lol lol .. Giving the wife some attention..

    It bugs her to no end me totally into a book..or article..building a project etc. So today she wanted me time..anyway….

    We are watching Christmas movies.. When a commercial comes on….

    Behind on your mortgage…. Buy a car down at xyz car lot lol lol then the scope of the lot and cars..

  5. Did anyone dine on frog’s legs yesterday evening? Me neither but indeed the Chinese chefs are dishing out some interesting fortune cookies.

    I fired up my tv for the first time in a long while and the rabbit ear antenna was offering fine reception. First stop was Canada’s national broadcaster with its flagship hockey game of Leafs vs. Rangers. The lead advertising sponsor was the Chinese firm whose cfo received a “get out of jail” card in Canada for a few million dollars in bail.

    Next channel up was Canada’s largest private broadcaster owned by a company building out the nation’s web consumption infrastructure. A Bond movie was playing where a rogue criminal enterprise tried to subvert and control Western intelligence streams. Well, mid-scene a logo of the previously mentioned Chinese cfo’s company red logo appeared as advertising and covered half the screen for a few seconds.

    I opted to continue reading a book already in progress.

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