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.

author avatar
George Ure
Amazon Author Page: https://www.amazon.com/George-Ure/e/B0098M3VY8%3Fref=dbs_a_mng_rwt_scns_share UrbanSurvival Bio: https://urbansurvival.com/about-george-ure/

21 thoughts on “A Long Wave View of the Fall”

  1. Cohens lawyer, Lanny Davis released the tapes. No favoritism to Chris Cuomo…who by the way is an outstanding CNN host. Shows both sides…ex attorney..extremely brilliant guy.
    About amazon..remember the day when malls were ruining Main Street.? There was a time when the same was being said about the Sears catalogue. Amazon is just another in a very long line of paradigm shifts. Let capitalism take its course. Trump is overstepping his bounds by interfering in the natural order of good progressive capitalistic practices.

    • …which is why we call him President Real Estate, lol.

      But, Seriously, Mark: This does cause a major shift for insurance companies which have never done a particularly good jobs of segmenting their product. Where do they part money for long-term obligations?> Malls and commercial have been a no brainer.
      Until Amazon and probably 1o% of business happens in Starbucks now, am I right?

      • George, maybe in other parts of the country, but Silicon Valley companies want their employees in their buildings..that’s why they give them free food breakfast, lunch and snacks…and other perks. They have re-invented the Company town concept. Remember…the Bay Area has over 30 million sq ft if office space under construction. The home office/ Starbucks concept here isn’t condoned as much.

  2. On hiring practices….in engineering based firms, “new money” becomes available after the start of the fiscal year in October. Depending on the firm and the urgency of one’s situation, “new hire money” doesn’t trickle down to the actual hiring managers until after New Years.

    Thus there’s big wave of hiring from January thru about July….then things really start to dry up quickly. August thru October? Forget it, it’s not happening, except for short term contractors to address urgent problems.

    So unless the Silicon Valley folks have an unlimited money flow, their hiring should be stopping now regardless of politics.

    • Great points – other thing, though, is a lot of the Oct goldmine is based on the Federal FY – and that will be maybe tigher under Trump

  3. So farmers vote for someone completely incompetent, and now that he’s bankrupting them, we have to bail them out? All of a sudden Socialism and Welfare aren’t such dirty words? When their fall is completed, these Takers will probably be crying for healthcare too. Best, Mike

  4. “Golem Project to see continued downward pressure on the market perhaps through Tuesday and then a rousing run-up into August…and maybe September.”

    That’s were you lost me. What is “the market?” How may I be able to trade YOUR “market”? O.K., I trade IWM triple averages and use standard deviations of the 200 period average in 5 or 15 min. charts. However, this “market of 2000 stocks” acts very differently from what I mostly read in your column; Therefore, my question again: What is the “the market?” P.s. I don’t mean this in a negative sense.

    • Switching to SPXL/S will be no problem. Perhaps that will put me more into tune with your prose. Otherwise, great entertainment at an age where every post could be the last one.

  5. Mark,

    What you’re describing (sounds to me)like Silicon Valley managers don’t have confidence in their employees ability (or desire) to work unless they can physically see them pounding keys.

    And yes, I know, “they can collaborate easier due to being next to each other”. Sometimes that matters. Other times cube farms are the most distracting places to work on earth.

    I wish folks in California (tech or otherwise) well, but from the outside it sure appears to be a train wreck in the making.

  6. Dear Ladies, Gentlemen, and LGBTTIQQ2SA,

    Fasten your seatbelts as actuaries may need to increase insurance premiums for individuals either of or identifying as the female gender. The CBC is reporting about an Albertan man who has changed his driver license id from male to female and saved over $1000 dollars in car insurance premiums. Apparently since the requirement for a doctor’s note was rescinded last month, drivers can now self-identify as male, female, or intersex for those undecided between one or the other.

    Now such activity certainly undermines actuarial tables of risk vis-a-vis gender factor variables and premium calculations. An aspect I found interesting in the report is advice that the EU has banned gender bias from insurance premiums. One could imagine an outcome for insurance customers where premiums raise across the board to the highest common denominator.

    Drivers: the medieval highwayman has returned. Deposit money or the bell will toll.


  7. George,

    Love your work. You touch on a wide variety of topics that you make very interesting. I was wondering when you are going to address the Q phenomenon? Keep up the great work.

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