America Loses Hope

The Universe has a wry – some would say sick – sense of humor.  But that’s one way to read the departure of Hope Hicks who has been White House Communications Director.

There are many ways to read this.  The MSM approach over here seems to broadly tie her departure to the appearance before a congressional committee.  An appearance that at 9-hours in length border of abusive duration.  What could take so long to ask, unless that was the point – to run her out of office – which is the real agenda of the Trump-hating Lefties.

Meantime, the NE Liberal Press has had a field day with Hicks admitting to telling occasional “white lies” on behalf of the administration.  We don’t have a problem with that since there are times an administration must act in one way while speaking in another.  Black lies matter, as it were.

(Continues below)


There are three other points in Hicks departure that bear closer inspection.

First is Trump seems to have a habit of hiring attractive females for top positions.  It’s his privilege to do so, of course.  But I, for one, would be a little more confident if there were a few more ugly people on his team.  Appearances are one thing…

You know, in the corporate world, if the CEO of a company starts to run a “revolving door” operation – and blames failures on key people departing and such, Boards of Directors will accept that but only so long.  Trump, in our view, reports to the Board of Directors known as the American Public and this turnover rate may be OK in his world but in real-folks’ world, it’s looking questionable.

We also know the Left has been trying to put a wedge between Trump and his wife Melania – bringing up the Stormy Daniels story and beating it to death.  Perhaps Hicks’ departure will relieve some of that pressure.

This item is the metaphor:  America Loses Hope.  That’s an immediate concern because the stock market is in nothing short of a precarious position.

With president Xi Jinping in China walking not in, but certainly parallel to Hitler’s footsteps in the early 1930’s, this morning’s story about the Russians claiming to have been nuclear forces than America has to me an eerie resonance to Mussolini’s efforts to “make the trains run on time.”

We “HOPE HICKS'” replacement has better staying power and as we see it, someone very ugly but at the peak of effectiveness would be ideal.  Trump has an opportunity here to worry less about physical appearances and more about getting a very smart pit bull.

Seems to me the Board of Directors needs some reassurances.

Markets Stumbling

The stock market is likely to open down another hundred points, or so, this morning.  That isn’t good.  Because the stock market is likely to crash around March 22 in our work IF WE DON’T GET A NEW ALL-TIME HIGH.

When the market has a rout like yesterday’s nosebleed, and the selling follows through into this morning, we have to look at the Boolean Scorecard approach we outlined for our subscribers and report the odds of collapse were 57.14% – based on out nutjob approach and original analytics methods.

While it’s hardly a reason to mortgage the farm and go short, it leaves the market with a difficult equation.

We can build a pretty good case as follows:

  • The market (and we’ll use the Dow to keep it simple here – it’s not so simple in on the grown-up’s site) will likely drop 100 points today.  That’s just a dart. But let’s suppose we stop today around 24,936.  (We could go up, which is why I don’t go back to bed after writing a column, lol).
  • We also know that the old all-time-high (ATH) was 26,626.71/
  • Which means that before March 22, the stock market needs a Dow rally of 1,680.71 points.
  • Now we go to the calendar.  After we back out today (it’s already almost “in the bag” as a down day) and we take out March 22 because that’s the “finish line” – we notice that we have just 14-days to run.
  • In short, the market needs to gain 120 POINTS PER DAY or the odds of collapse in March seem  pretty good, to us.
  • Even if the market turns up today, anything less than 120 points is NOT convincing.

This is not investment advice per se.  Nor, is it a prediction… It IS however, why I have been sitting in cash.

On the Peoplenomics side, we have been tracking the monster head and shoulders technical formation that built the 1929 bubble peak.  There’s one case that the left should (before the peak) track is the one we’re on, but that case today is 52.17 percent basis the Wednesday close.

The right-side (brace and be ready for hard times) odds that we are past the peak are 69.56% basis the Wednesday close.

There’s also not much left in the way of reason to believe in a massive upsurge in business.

Not only has the Corporate Tax Break already been figured into markets, but we are closer to Q1 operating results and we still hold that earnings will likely be weaker than expected for a somewhat complicated reason.

Specifically, when the corporate tax rate was 35%, when companies acquired firms (in the quest for almighty Growth)  the tax loss carryforwards of the acquired business had a certain value.

With the decline in the corporate rate to 21%, the value of tax-loss carryforwards is down a good bit.

This COULD result in some unexpected one-time write-downs in Q1 to reflect the changes in accounting.

Don’t forget that quote the other day about what Warren Buffett said in the 2017 Berkshire letter either.  I told you to read his letter (you’ll learn something) but since you’re too busy, here’s how accounting changes will be contributing to market “variability” (as nice a way to put it as I could!).  From Buffett’s letter:

Berkshire’s gain in net worth during 2017 was $65.3 billion, which increased the per-share book value of both our Class A and Class B stock by 23%. Over the last 53 years (that is, since present management took over), pershare book value has grown from $19 to $211,750, a rate of 19.1% compounded annually.*

The format of that opening paragraph has been standard for 30 years. But 2017 was far from standard: A large portion of our gain did not come from anything we accomplished at Berkshire.
The $65 billion gain is nonetheless real – rest assured of that. But only $36 billion came from Berkshire’s operations. The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code. (Details of Berkshire’s tax-related gain appear on page K-32 and pages K-89 – K-90.)
After stating those fiscal facts, I would prefer to turn immediately to discussing Berkshire’s operations.

But, in still another interruption, I must first tell you about a new accounting rule – a generally accepted accounting principle (GAAP) – that in future quarterly and annual reports will severely distort Berkshire’s net income figures and very often mislead commentators and investors.

The new rule says that the net change in unrealized investment gains and losses in stocks we hold must be included in all net income figures we report to you. That requirement will produce some truly wild and capricious swings in our GAAP bottom-line.

Berkshire owns $170 billion of marketable stocks (not including our shares of Kraft Heinz), and the value of these holdings can easily swing by $10 billion or more within a quarterly reporting period. Including gyrations of that magnitude in reported net income will swamp the truly important numbers that describe our operating performance. For analytical purposes, Berkshire’s “bottom-line” will be useless.”

Got that?  So we have these accounting changes plus the writedown in tl/cf’s (tax loss carry-forwards) and all that adds to what?

Market Uncertainty.

Again, why is Ure in cash?

Bitcoin at press time around $10,745.

Dances with Personal Incomes

This from the Bureau of Economic Analysis for your dining and dancing pleasure:

“Personal income increased $64.7 billion (0.4 percent) in January according to estimates released
today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $134.8 billion (0.9 percent) and personal consumption expenditures (PCE) increased $31.2 billion (0.2 percent).

Real DPI increased 0.6 percent in January and Real PCE decreased 0.1 percent. The PCE price index
increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.”

Yes, translates to a 1/2 of one percent increase in disposable personal incomes in January.  But it’s the fine print that matters:

“Personal income (table 6) increased 3.1 percent in 2017 (that is, from the 2016 annual level to the 2017 annual level), compared with an increase of 2.4 percent in 2016. DPI increased 2.9 percent in 2017 compared with an increase of 2.6 percent in 2016. In 2017, PCE increased 4.5 percent, compared with an increase of 4.0 percent in 2016.

Real DPI increased 1.2 percent in 2017, compared with an increase of 1.4 percent in 2016. Real PCE (table 8) increased 2.7 percent, the same increase as in 2016.”

You can skip that first paragraph – that’s all political double-double-speak-speak.  Because you need to back out inflation from the happy-talk.  Which gets us to REAL Disposable Personal Income up 1.2 percent.

That’s good…but far from great.  Here’s why:

If you’re REAL disposable income went up 1.2^, how are you going to afford a home that we know from Tuesday’s Case-Shiller numbers was up 6.3% in the same period?

It’s the old “nuts in the financial vice game.”  Or, whatever the female analog to that would be.  Breast cancer screening, maybe?

Meanwhile, new jobless claims are the lowest in almost five decades.

The NewWar on Truth

Liberals are nuts department: “French far-right leader Marine Le Pen charged over IS photos.”  French truth-haters?

Energy Independence

While the “U.S. crude oil production hit record high in November: EIA” we have to worry we’re not getting enough for our oil that’s exported.

Should the US join OPEC’ers?

Meantime, Trump prepares tariffs on steel and aluminum,  so we’re not going to just keep bending over on the trade front.

No, It’s Not Climate Change

Stories out of Boston like “Life-threatening’ flooding, 1-4 inches of rain forecast” remind us no one is America is really talking about the variability of weather which is not climate change.  Remedial math is a good prescription for America.  Kind of like Schoolhouse Rock! only aimed at the stupid fraction of American voters.

Unless you’re an easily-programmed left-wing sycophant raising money for a cause, of course.

Remember Scooter Computer & Mr. Chips?

On the dark side:  “Former Google exec: AI movie death scenarios ‘one to two decades away’

Just freakin great.

Maybe we should start with a little voter education like this one...

Where’s my coffee?

Moron the ‘morrow…


America Loses Hope — 28 Comments

  1. There sure would be a lot less noise in the world if people would remember that any change less than 2% is statistically insignificant. All statistics have that possibility for error.

    Problem is, the situation in the USA is on such a razor’s edge with nothing for days on either side, people are really jumpy, like the herd during a thunderstorm waiting for that close lightning strike to start the stampede, a stampede nobody wants to miss.

    Thus George is in cash. Unfortunately, even if he goes to the bank and gets FRN’s to put under the mattress, he is still holding someone else’s liability. Not so with silver or gold.

  2. Buy The Dip (s), Buy The Breakout ..then HODL. HODL is non-realized gains and/or losses in Cyrptos( Bitcoin,Etherium,LiteCoin)
    Stock market trend is our friend ! And the trend is looooonnngg term Bullish in US Stocks. Bond market is rolling over and in a slow motion correction/crash. Serious overreaction by market participants/Algo’s, Yugely huge opportunity to profit from overreactions in price action. I’ll take .52% odds for a small piece of action, ratio up as the stock market follows the “left-side” up up up.

    Beg borrow and steal grandkids college fund $$ (just kidding bout grandkids,State College vs Ivy most parents probably don’t care about the difference between a Ivy League Education versus a State College Education) Buy Bitcoins or fractions of Bitcoins – your US Government has been and IS buying them…perhaps “they” know something the general populace is not aware of yet…..

  3. High Sir George how will the new rule effect holding kryptos and selling cryptos

  4. ““Personal income increased $64.7 billion (0.4 percent) in January according to estimates released”

    Interesting.. where did they do that.. around here hours were cut .. wages .. 2 percent on the working class.

    • Where are you?

      Around these parts staff and hours were cut too – Michigan, Zip 48103.

  5. Hi George,
    “East Coast, USA” is going thru the housing bubble nonsense too. I have been looking for the better part of 4 months to find Anything. I sold my Hurricane – damaged townhouse in nice neighborhood after (yes, kinda cute chick with 2 graduate degrees) learning how to do some work with tools (did my own thermostats, some minor electrical & plumbing leaving major to pros). Got building envelope in decent shape & moved on finally. Now trying to find something a little inland to run lovely Dad’s mess. NOTHING to rent (apparently they keep “show” apartments now & don’t tell u about the murders or needed repairs). NOTHING to buy as even Crackhouses are being hopelessly snapped up & flipped – I mean serious CRIME neighborhoods. Anything semi-OK is gone even faster – hours. Have gotten so desperate that I even looked into buying a camper or extended-stay hotels. Poor service or no vacancies. Not sure if this means influx of people as well as the Absolutely Unsustainable housing situation. Literally crackhouses priced at $20k have been flipped into $140k proerties in rundown neighborhoods. As u often say, FMTT. A joke here.

  6. 2cnd amendment is severly under attack and you do a fluff piece George? Comments are getting flushed into the aether about 1 out of 5 gets considered for moderation.

    Trump is saying some very dangerous things. “Take guns first the due process later.”

    Adding he said total ban on any guns with a higher capacity then 10 round magazine. The drum of civil war 3.0 is getting louder. They are preparing so should everyone on this site. This generation has not seen the likes of what’s abouit to go down. It will be wako on tv evry night. Clock is ticking. I still have us 18 months out. But i could be wrong. Most of the time I’m not wrong.

    Dud you bump your head George?

      • I had to quit reading this crap.. even congress agrees that they shouldn’t be forced to read that crap either.. it’s just to hard on me to have my blood pressure spike like that.
        Considering the idiots in congress.. but then hey.. on their side.. if their that bad consistently why then do we the people keep voting in the same old group that would have been canned from any other position years ago. Wouldn’t that make the general voters the real idiots.. deserving of anything the puppet masters deem they should give us.

      • I read it earlier. It reminds me of Hitler’s gun control in 1937. It’s insane and totally against what real Americans stand for.

        People need a stable and minimal regulatory framework so as to plan their lives and actually want to be productive. When things change at a whim(or a drama setup), there’s no incentive to even continue living. If you can’t predict anything, why work. Just use up your money on drugs and girls before it becomes worthless.

        I’m seriously considering liquidating fixed assets and giving up on anything other than a hedonic lifestyle for however long I live. All the things I live for are under attack with no effective way to fight back, and that’s far more than just weapons.

      • Hi Andy as you probably already know Google YouTube has pull thousands of people off they didn’t strikes close down their accounts to call the videos off anybody that confronted the Florida shooting is the top down operation which includes the FBI and CIA and most judges congressman and senators in this country as you remember earlier this last year president Trump said the swamp was deeper than he thought it was is deeper because is controlled from a pedophile group at the top that has worked its way all the way down yes it’s a sad song and our freedom of speech what’s happening with YouTube Google whether or not Trump will do what he’s done in the past play a great chess game and come back and take over all the mess TVs and Networks under the military rule that he declared in December if he does that you can imagine what will happen.

      • Good luck going house to house confiscating all the weapons. If you want America to go through a REAL blood bath just try doing that and the politicians will still skate through with no blame attached to them.

        Andy, did you ever get a chance to check your hard copy of “Behold a Pale Horse”? Is it a first printing from 91 or 92 or were there others? Is the quote about intentionally instigating mass shootings with semi-auto firearms to make people push to get rid of the 2A really on page 225?


    • That’s why there should be nothing but the Second Amendment as far as no restrictions no Addons no nothing no age limit know anything because once they start adding things to it , they don’t stop.
      technically speaking if you have a person that’s using a gun and everybody else is armed the person that is not using a correctly will get killed so you don’t have to worry about them reproducing anymore dummmies.
      Follow the Nazi regime this time will exterminate us from the air not in fire Chambers

      • We’ve already seen that YouTube video where they use miniature drones to to kill everyone with

  7. George, since you are all in cash now, what is your plan? Any recommendations for retired people and their cash at the present moment?

  8. George:My daughter was told from her realtor the other day, there is a rumor that there maybe another housing bust coming soon. Approx one to one half years down the road. Thought I would pass it on, take it or leave it for what’s it worth.

    • My realtor friend said houses in our area can now be bid down for the first time in years. Another one is saying wait a year to two and prices will be down 100k. Inner city living was popular but safety issues from growing homeless ranks causing young families to seek safer environment.

  9. George, another excellent economic piece. But per usual, your take on politics/the media is all messed up — if the media addresses newsworthy topics, it because they out to get your guy? Silly. Like it’s not newsworthy when a US President pays off a porn-star to quash her story right before an election? Not to mention that it’s likely illegal? Because of course such a thing could never, ever make someone vulnerable to blackmail, right? And it’s not newsworthy that a US President runs his administration like an incompetent clown show? Or that there are a lot of facts pointing to at best being used by foreign operatives like a raw rookie just off the farm and at worst being in bed with them? And if not newsworthy, why are you yourself discussing it all? Mike.

  10. It is woo woo odd that you mention Mussolini at the top of this section. I have always been drawn to your web site because stuff I usually have discussions on with various people ends up as the subject of your blog the very next day. This partly why I am back participating again in your fascinating views on the world.

    I had a long discussion at the local watering hole last night with a brilliant young scholar on how there are similarities between Mussolini and Trump. He pointed me to a six year old op/ed piece in Forbes magazine on just Mussolini’s traits called…”The Economic Leadership Secrets of Benito Mussolini. Here are some excerpts…many direct from Mussolini’s own words and it sounds earily like Trump.

    “a strong man must not be hampered by an archaic constitution that unreasonably limits his power. If a constitution makes it difficult for a strong man to appoint his cronies to high positions, he should disregard the constitution and appoint them anyway – challenge adversaries to stop him! Similarly, a strong man should disregard laws or judicial decisions that interfere with his ability to carry out his program. A strong man must follow the command of his conscience to make a power grab….

    Political leaders must be willing to play hardball. Mussolini didn’t see any reason to tolerate publishers with politically incorrect views. He bragged, “I abolished the subversive press whose only function was to inflame men’s minds. Not a day goes by that we do not feel in Italian life how much good has been wrought by these measures against the forces of disintegration, disorder and disloyalty.”

    Build up political slush funds by awarding subsidies, tax breaks, tariff protection and regulatory carve-outs for capitalist cronies. They will become dependent on continued special favors. During the 1930s, reportedly three-quarters of Italian businesses were dependent on special favors, and they were anxious to make more political contributions.


  11. George I’m ashamed of you and this fear mongering bull&hit that’s nothing more than propaganda to feed the MIC,other than that I enjoy your site..