A Long Wave View of the Fall

“When Serial Innovation Fails” is our big ‘in-depth’ piece for Peoplenomics.com subscribers.  As outlined in this morning’s restructuring note, this report will be out on Wednesday so that I get more “project time” weekends.  We’re focused on quality now – and innovation, of course.

We take two news stories are very much in-keeping with our goal of relating the longwave of economics to  seeming inconsistencies in life.  Because these two stories are totally predictable in the longer study of history.

The Facebook earnings miss in one.  I have been writing for almost 20-years now about the “fad-like nature” of electronica.  It’s no different that CB Radio or the Hula-Hoops.  Sure, toss in Pet Rocks if you must.

Social Media’s future has clouded over as The Verge reports this morning how “Facebook’s future looks suddenly bleak” after the earnings turd Wednesday.

This is part of a larger phenomenon we have spoken of many times:  When a bubble (which is where the FAANG stocks are) runs low of growth – the holy elixir of Tulips – the end can be sudden and brutal.  Notwithstanding, even such brutal ends can take months and even years to unwind.

Remember, the Great Depression took almost an entire 11-year Juglar Cycle to unwind.  It’s an article of faith that you remember this Juglar variance is the 7 to 11-year fixed investment cycle.

So I’m sorry to break it to you, dear Reader, but ‘Merica’s about to be hit in the Juglar, so to speak.

Go back to 2007 and the first half of 2008 and remember what was happening?  Ah, the No-Doc Loan Bubble was in progress.  Aided and abetted by the marginal “ethicality” of how mortgages were bundled into pseu-bonds and peddled all over the world.  The defining book on this continues to be Howard Hill’s “Finance Monsters: How Massive Unregulated Betting by a Small Group of Financiers Propelled the Mortgage Market Collapse Into a Global Financial Crisis.”  It doesn’t get better than a first-hand account of financial engineering from one of the discipline’s founders.

Our first real “thinking point” today is therefore quite simple:
When one takes the 11-years of Juglar and adds it to the 2007-2008 top, we come up with a loosely-defined topping range from 2018 through 2019.  But, since we have bets on liberals in finance trying to torpedo the republican’s this fall, a slight calendar bias to this period for Big Declines ahead of Elections makes a fair bit of sense.

All it would take would be a slow-down in new hires by the Silly Con Valley giants, a reining-in of capital spending and presto!  Housing prices in the South Bay level-off.  And you’re probably bright enough to figure what follows.

We see the same kind of worrisome indicators out of the PNW as well.  Not only has Seattle local government (a socialist gaggle that makes a Clown Posse look like Bell Labs) tried it’s communist-best to kill the Golden Geese (the fattest of which is Amazon), but we’re seeing the vultures circling in from the direction of the Cascades.

Donald (President Real Estate) Trump has his sights on Amazon single-handedly marginalizing malls.

Of course, it is not a “big wave” yet, but give it time.  In the larger scheme of Life we point you to an article in The Real Deal dotcom “SoCal sales hit the wall amid high prices and low inventory — Last month was the slowest June for sales in four years.”

The end is not nigh…at least  just yet.  We are still anticipating pockets of economic overshoot.  Why not?  When the L.A. Times piece focused on new all-time high prices, there will be some among the herd who get it.  The rest will just follow the tail in front of them as the herd marches on to the economic slaughter house to come.

So, that being the Big Picture, we would expect – based on the news flow and our little Golem Project to see continued downward pressure on the market perhaps through Tuesday and then a rousing run-up into August…and maybe September.

We’d take a great deal of joy in an all-time high occurring September 3rd – which is when it hit in 1929.  And since that falls on a Monday, we hold high hopes that the Universe will reward students of probability quadrature with a wink and nudge-nudge.

I’ll remind you when we get closer if it looks like it will hit.

Is CNN Biased ‘Anti-Trump?’

We raised the question in Peoplenomics Wednesday:  How is it that CNN came by the secret recordings of Michael Cohen and Donald Trump.  Today we not only have the answer, Cohen, but also a shocking revelation:

“Michael Cohen secretly recorded conversation with CNN’s Cuomo, telling him he paid Stormy ‘on my own’: report.”

We will simply add to our notes and recommend the new book just out this week: The Russia Hoax: The Illicit Scheme to Clear Hillary Clinton and Frame Donald Trump.  It’s encyclopedic and it document’s the conspiracy to bump Trump/

Back on point: If, indeed, Cohen’s remarks are as alleged, it would be instructive to learn if CNN’s Chris Cuomo included that little disclosure in his coverage.  I’d offer an opinion but I haven ‘t seen it on the network yet.  Remember I live in something of a media ‘sensory deprivation chamber’ in order to achieve focus in areas of interest.

How fun, huh?

Speaking of Deprivation Chambers…

Did you see they are coming back into vogue as a way to deal with stress?

Let’s have some fun, shall we?  From Wikipedia:

:”The isolation tank was developed in 1954 by John C. Lilly, a medical practitioner and neuropsychiatrist. During his training in psychoanalysis at the US National Institute of Mental Health (NIMH), Lilly experimented with sensory deprivation. After 10 years of experimentation without taking any psychoactive substances, he tried floating in combination with a psychedelic agent, mostly LSD (at that time LSD was legal in the United States).  In 1981, there were about $4 million in sales and rentals in the industry, and expectations were that the market…”

Six Juglar Cycles from invention date would be 2020 so we look for sensory deprivation to be a rising fad for a couple of years.

The Morning’s Data Points

Ah, the numbers du jour:

From Census:

Advance International Trade in Goods
The international trade deficit was $68.3 billion in June, up $3.6 billion from $64.8 billion in May. Exports of goods for June were $141.9 billion, $2.2 billion less than May exports. Imports of goods for June were $210.3 billion, $1.3 billion more than May imports.
Advance Wholesale Inventories
Wholesale inventories for June, adjusted for seasonal variations but not for price changes, were estimated at
an end -of-month level of $632.5 billion, virtually unchanged (±0.2 percent)* from May 2018, and were up 5.1 percent (±3.9 percent) from June 2017. The April 2018 to May 2018 percentage change was revised from up 0.6 percent (±0.2 percent) to up 0.4 percent (±0.2 percent).
Advance Retail Inventories
Retail inventories for June, adjusted for seasonal variations but not for price changes, were estimated at an end
-of-month level of $635.5 billion, virtually unchanged (±
0.1 percent)* from May 2018, and were up 1.7 percent (±1.6 percent) from June 2017. The April 2018 to May 2018 percentage change was unrevised from the preliminary estimate of up 0.4 percent (±0.2 percent).

Or, as a picture:

The market is having a dissociative personality moment:  Dow futures up 44 NASDAQ in the the flusher.  The GDP story tomorrow may let some air out…and if not that, then events over the weekend…

Unlike Maxine Waters who sounds marginally delusion when she claims to have been ‘sent by God to get Trump’ we’ll remain a bit more restrained in our mission statement:

“UrbanSurvival is a happy accident that may help a few people avoid the poorhouse and navigate Digigeddon but only if they actively participate.”

Now, let us all bow our head and give banks….  moron the ‘morrow.  Amen.