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.
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.
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 https://peoplenomics.com 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?
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 truth-haters?
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 a 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.
On the dark side: “Former Google exec: AI movie death scenarios ‘one to two decades away’”
Just freakin great.
Where’s my coffee?
Moron the ‘morrow…