George Ure

Hawaii’s getting its butt kicked this morning.  With the market set to tank further at the open we are wondering if the markets are discounting possible big problems in Hawaii from the two Hurricanes that are about to have a close brush with the place?

Step over to Mr. Ure’s whiteboard and we’ll run you through why the next three weeks will be key for the Islands.

We start with the report referenced in our unusual afternoon update Thursday that suggests (and this is per the NY Times so it must be true, right?) that changes in atmospheric pressure can trigger (gulp!) seismic stuff.

While I sit here and hit off the whiteboard marker, here, you go look up the barometric pressure range for the coming week at, oh, Hilo, for example.  That’s on the side of the Big Island that slipped in the 2006 quake, yeah?

(I’ll wait, another hit on this thing and I’ll be seriously ripped…)

Und zo… about 11 PM tonight, local time, that the barometric pressure will be about 30 inches of mercury.  That converts to 14.733 pounds per square inch of air pressure.  (You are following, right?  Wanna hit?)

And about sunrise this morning it will be 29.87.and that is 14.669 pounds per square inch.  Don’t be dozing off on me here.

So this 0.104 pounds per square in, or just a hair under 15 pounds of air pressure weight change per square foot.

And there are 27.8784 million of those per square mile…Which is 417 BILLION pounds of effective air weight change per square mile  and there are 4,028 square miles of the Big Island..

(One more hit on the market, here)

So that means roughly (exhale)  1.68-trillion pounds of effective air weight change in a period of, oh, 17-hours as the storm pressure center goes by.

All of which doesn’t mean anything at all will happen, but when Ma Nature puts 1.6+ trillion pounds of weight on a place were we just at a 4.5 quake yesterday, I wonder “”hmmm…wonder if anything could happen?”

Usually, when we run the numbers like this, it frightens the disaster demons off and nothing at all happens, but it’s worth keeping an eye on, never the less, and we’ll just keep an eye on barometric pressure gradients along the way.

Oh, we didn’t have our discussion of lateral loading of the 41 mile per hour gusts on the land mass, either, did we?  Hey!  Gimme that marker back!

Economic Fairytales

Before we climb into the next little gem, we have a thought experiment to perform.  Imagine that you live in a town of 10,000 people.

Overnight, all but one of them dies of a mysterious killer disease.  But the lone survivor?  She wins a super-doople-PowerBall for $21 billion dollars.

Now, how would a government statistician report this? 

Obviously, the answer is “Average income of small town climbs to an astounding $2.1 million per person!”

Of course, everyone but the lucky (and alive) Lotto winner is dead, and I’ll sell you her number for a price, bur you see the point, right?

With this dandy bit of mind-curl, you’re now ready to read this from the Federal Reserve:

“In its new Report on the Economic Well-Being of U.S. Households, the Federal Reserve Board provides a snapshot of the self-perceived financial and economic well-being of U.S. households and the issues they face, based on responses to the Board’s 2013 Survey of Household Economics and Decisionmaking. The report provides insight into numerous topics of current relevance to household finances, including: housing and living arrangements; credit access and behavior; education and student loan debt; savings; retirement; and health expenses.

Overall, the survey found that as of September 2013 many households were faring well, but that sizable fractions of the population were at the same time displaying signs of financial stress. Over 60 percent of respondents reported that their families were either “doing okay” or “living comfortably” financially; although one-fourth said that they were “just getting by” financially and another 13 percent said they were struggling to do so. The effects of the recession also continued to be felt by many households, with 34 percent reporting that they were somewhat worse off or much worse off financially than they had been five years earlier in 2008 and 34 percent reporting that they were about the same.

If you have small children who are still awake, the story continues here.

If they’re still awake at the end of this tale, sing to them softly that old hymn from the Church of the Almighty Dollar Hymnal in C#:

Janet loves me, this I know

For the Fed, they told me so…

Lower interest rates will go,

Bright ahead when times are low…

(Chorus)

Yes, Janet love me!  Yes, Janet loves me…  (etc ad nausea)

(The Hymnal will be released in Linux as soon as we can figure out how to put spyware in it, presently x32 and x64 only)

Grinding On Down

And that, brethren, gets us to the collapse in consumer spending.  Revolving Debt (credit card wankers) are increasing their clutch on your life by only 1.3% annualized in the Consumer Debt report out yesterday.

Of course, that’s to be expected, unless you’re a female in a town of 10,000 where everyone died overnight.  No people, no jobs = no spending.  How hard is this shit?

Ah, the Hallelujah Choir from the higher ed sector is still heard chorusing away “Yes, Janet loves us…”  as nonrevolving credit (e.g. student loans) were increasing at an 8.4% annualize rate.

Dow futures up 36.

BUT WAIT!  THERE’S MORE!

Just out is the Labor Department’s latest sack of “good news”

Nonfarm business sector labor productivity increased at a 2.5 percent annual rate during the second quarter of 2014, the U.S.

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The phrase that we consider in this morning’s report is “Ebola as a generalized exogenous shock to markets.”  We also refer to the October 12, 2013 Peoplenomics report “The Solution No One Wants to Talk About” in which the economic efficacy of a pandemic die-off as an ideal plot of the 1% to kill off mere peeps.  In purely hypothetical terms, mind you, but it’s resolving as shockingly close to the mark as headlines come out.

Key for markets, too:  We are down to just slightly below 50-day moving averages in a number of indices we track.  Although it’s axiomatic that “markets don’t crash from all-time highs” it’s also true that the American markets have backed off recent highs and are sitting at first levels of support, and may extend below them when the Dow opens down 50 and the S&P challenges 1,900.

Hence this morning’s outlook.  Not without coffee and headlines, and this begins with a discussion of how cyber security is coming around again – this time with 1.2 billion stolen passwords, and some notes on dealing with that problem.  If you’d read my ebook Broken Web The Coming Collapse of the Internet, you’d likely share my lack of surprise at what’s happening now.  And as a subscriber you’ll be comforted that Peoplenomics has no exposure because of a strategic decision make long ago…

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With the Dow set to open on the downside this morning, and with a possible test of S&P 1,900 out there, we have to scan the headlines  – as we do every morning – and try to anticipate what’s the BEST news that could happen to the markets and what’s the WORST?

It’s only in the testing stage at the moment, but Mt. Sinai in NYC is looking at a case where a patient came in last night who had recently traveled to West Africa.

Not like the US is alone:  Saudi Arabia is testing for a possible case.

In an absolute worst-caser, this person would have had a Ro of 3 to 10.  1.6 is what’s needed to cross the pandemic threshold.

So in addition to all our economic numbers, we need to add this little critter “Ro” to our thinking.

Probably one of the best/most simple ways to look at Ro is borrow this definition from the Medical Center for Public Health Preparedness where it’s explained that Ro  means the basic reproductive rate of a disease (which is generally secondary infection rates):

Ro is calculated using the formula Ro = C * P * D

• C = the number of contacts the infectious person makes per unit time (day, week, month, etc.)
• P = the probability of transmission per contact with the infectious person
• D = the duration that the infected person is infectious to others

And in tomorrow’s Peoplenomics.com report, we will be working out from Ro _I which would be the Reproductive rate over various incubation periods  (the sub i part).

All of which leads to some interesting financial possibilities, since growth is the Holy Grail of markets.  And, since markets generally try to discount prices as much as 18 months in the future (though some research says shorter periods like 9 months) we’re looking at a situation where we may see some market “information asymmetry” develop and that’s the kind of stuff that causes markets to act “out of channel.”

This would especially be the case when the markets are at nearly bubble-like levels.  What could be better for Wall Str. that for some plague, or other, to wander along just to be blamed as the latest “exogenous event” that will replace greed and avarice of the top 1% with a fine bastion of plausible deniability behind which to secret their profits?

Ah…but more tomorrow as we pass out the spreadsheets and ponder some of the other major problems ahead for the economy.  But economic impacts of a pandemic shutdown – gets to be an interesting modeling problem, does it not?

When the World Bank says it’s putting up a $200 million Ebola fund, I think you you can bet your bippy that the potential economic loss is at least ten – and maybe a thousand times – that amount if this thing gets out of hand.

If it hasn’t already…but we won’t know that for three weeks.

Meantime, the U.S.-African business conference is expected to hear how US corporate investment in Africa will be $14-billion….but plans can drift, as I’m sure we’ll find over time.

Truce or Consequences

72 hours of no shooting is supposed to be getting underway in Israel/Gaza this morning.  Israel has begun to withdraw troops, but we have to shy away from bets that this will last longer than another 10-seconds.

Peace is never good for the market, and true to form, the futures are down.  Down 55 on the Dow futures.

More after this…

              

Let’s Beat Up Putin

Yes, looks like yet another round of the media beating down Vlad Putin is ramping up.

Reason for the observation?

“Winging it: Putin has no Master Plan for Ukraine Crisis, Officials Say.”

Officials?  Oh, that would be the US officials, of course.

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We begin this morning by noticing that although a decline in the markets this week to the S&P 1,900 level might be graceful from a chart standpoint, it was almost magical how the decline last week stops adjacent to our Trading Model’s support line.

This morning look for a +40 (or more) opening to the Dow, but there’s still maybe one more leg down to go…and that will depend to some extent on the data this afternoon from the Treasury auction. 

I’d explain the mechanics of this, but that would turn this column into an academic thesis instead of a light-hearted look at global disaster…which is usually our intent.

Curious to note how last week’s Gallup study of consumer confidence eroding presaged the market sell-off.  Yet another indicator to watch.

The rest of the week is “busy” but not terribly important.  Until we get to Friday morning when we’ll be able to look over the Federal Reserve’s consumer debt figures and from this we can infer the PT Barnum of the market. 

“What’s the PT Barnum of the market, Ure?”

Uh…why that’s the “How many people, how much of the time” or, to play off another one of his famous quotes, we’ll find out how much of crowd has a silver lining.

There are plenty of other numbers to diddle with this week, like the Factory Orders tomorrow and International Trade data Wednesday as well as some government energy data.  But this gets us to another Barnum quote useful when considering such reports:

“Be confident, without pulling the wool over your eyes. A lot of people have remained poor, or ruined themselves, because of this destructive tendency. .”

Whole countries, now that I think about it.  I’m thinking even the Once-ocracy.

Water:  World

Remember that Costner movie?  Waterworld?

Is this another play on how long-term, the movie is the message?  That world was cursed with simply too much water.  And our world, contrary-wise, is quickly running up against the stops, being “tapped out” as it were.

Take Toledo (holy, or otherwise) where more than half a million people have been banned from drinking water after tests showed high toxin levels from an algae bloom.  If we didn’t have Ebola and Israel to distract us, this would no doubt be spun into climate change, but we wouldn’t put anything past the MainStream.  You can find a scientist who will say just damn near anything in front of a camera, so be looking for it.

Meantime, the water problems of California just keep getting worse.  A while back we discussed the matter of drought-driven migration from California in one of our Peoplenomics.com reports, but (as so often happens) we were not wrong – just way early – again.

T?his morning people in Santa Cruz are waking up to the toughest drought laws in the state, but it’s bound to get worse, I figure.  But when local thunderstorms open up over the parched Southland, what happens?  You get thousands stranded and at least one killed by mudslides.

The Southwest has a long-term history of drought, and if you look at the US Drought Monitor picture (over here) you can see that the lower left 25% of the country just about plain sucks.

We know this isn’t the first time this has happened:  The Anasazi People likely saw their civilization collapse in the Chaco Canyon area because of drought.  It’s an inhospitable place nowadays.

I’m not telling you how to shave your bets, but I wouldn’t has put money on their implementation of a climate tax would have changed the outcome…and only a damn fool would believe the lairs and….but I digress, sorry.

My point is (and it’s a frequent topic when I rant and rave to my consigliere) that the mislabeled “civilized world” has multiple “soft underbellies” that few people other than worrywarts like us consider:  With no water, there are no people.  No crops, no life, no tax base…and all the rest. 

It’s in that same category along with the grid failing, the arrival of a global pandemic (Ooops!) and all the rest of it.  We won’t like to think about it, we don’t really do much about it, and in the end, taxing ourselves to “cure global warming” is little more than a social vibrator.

You know who does get it?

“ISIS Seizes More Towns and Possibly Control of Iraq’s Biggest Dam.”

You can lead Americans to water, but you can’t make them think.

More after this…

              

Ebola Watch

Cautious optimism out of Atlanta where the first of the Ebola patients flown in is said to be showing signs of improvement.

Call me skeptical, but let’s revisit this in a month or two, shall we?

The latest reports from Customs and Border Patrol show the border leak hasn’t stopped this weekend (like that would happen, right?) and as a result people from all over hell & gone as sneaking into the US.

How many with Ebola?  Back in the days when we actually had a freaking border it wouldn’t have been such a critical issues, would it?

The Problem with Cease-fires

With the report that an Israeli airstrike has killed a militant leader just before (another) cease-fire in the Gaza fighting, it’s nice to see that (another) cease-fire is in the works.

Here lately, it’s been a little confusing to an elderly guy like me:  I’ve been working on what the definition is between “cease-fire” and “reloading time.”

Results of this deep ponder are inconclusive and certainly not aided by the news flow from the Middle East.

China Quake

Many dead (about 400 as of press time) as a major quake hit China’s Yunnan Provide and premier Li is out for a first-hand review of recovery efforts.  And big money is already moving – 600-million yuan which pencils to about $97-million is US money.

If I was going back to school for a second MBA I might consider a paper on “public cost per death” of different kinds of disasters.  Still might show up as a Peoplenomics.com research piece one of these days. 

Farts and the Art of Futuring

I’ve allocated a couple of hours to writing up Peoplenomics today which will basically be a note to Grady of www.nostracodeus.com and Chris of www.nationaldreamcenter.com who continue to push back the curtain on looking into the future using both web-scanning technology and dream content.

A note from Chis at the Dream Center is worth sharing: 

Head’s up: GOLD Crash perhaps 1-4 weeks away.

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As we would expect, the folks in Atlanta who are caring for the first arriving Ebola victim in this country are finding themselves on the butt-end of hate mail for the decision.,

While it’s true that medical researchers generally have a good handle on infectious disease control, I’m all about absolutely risk avoidance as the first step toward any containment strategy.

Not that my opinion (or yours) matters; it doesn’t.  The PowersThatBe are gong to play this out as they will, but we keep coming back to a terribly important question which we’ll be asking our kids up in the Seattle area when we’re up there later this month.

Does it make sense for middle income families to rent (in the city, near work) and then keep a place in the country as a back-up or bug-out retreat?

Just for the heck of it, I put search parameters of one bedroom, one bath, five acres, and a top price of $75,000 over at the www.unitedcountry.com website – a decent place to watch (and lust after) farm and ranch properties.

As you’ll see, most of the properties in this price class are in Missouri, Kansas, Arkansas, and other lower income states and they’re too far away to make sense to people living in Florida, Connecticut, Washington, or California.

Despite the aversion some people have to mobile/modular homes, it’s about the most bang for the buck you can get in  terms of square footage and there were a bunch of home on acreage in Central Florida for under $100,000.

Pennsylvania seems to be a fairly expensive place, with only a few listings, but even in NY state you can find a place that might be a useful bug-out location for less than $100K.  One in the vicinity of Spencer, NY was asking $78,000 and included these tidbits: 

  6.8 ACRES WITH POND & BARN

   3 TO 4 BEDROOMS

   1ST & 2ND FLOOR BATHS

   UPDATED UTILITIES

   NEWER ROOF & WINDOWS

   STREAM ON PROPERTY

   QUIET COUNTRY SETTING

   GOOD FLOOR PLAN

Not that I’d want to winter-over in Spencer, but it’s down toward the border with Pennsylvania and thanks to the Amish, there’s a lot of “other than paper” ways of getting by in that area.  

I’m sure the reason more people aren’t going this route is that it often includes actual hard work and people (me included, don’t get me wrong) are more interested in plugging in a power tool to make something happen.

Or, in the case of real estate, adding some leading numbers and just buying what you want where you want it.

Every so often, though, something like Ebola comes along (though it’s only here in a Petri dish, so to speak, presently).  It’s this kind of thing that makes me consider if I should be recommending to my son that he live in a zero bedroom, cheap as he can studio apartment and then put a actual money into something a couple of hours out of town where he could hunker down if necessary?  About 5/8ths to 3/4’s of a tank of gas would be ideal.

To be sure, there’s always something to do in the Big City.  But there’s always something to do in the country, too.  In town it comes down to which restaurant, which movie, which bar, which concert – and all that further reduces to “How much money do you want to spent on today’s experience?”

Out here in the country,  there’s not too many restaurants to chose from, movies are mostly streaming, though there’s a six-plex somewhere in town, and concerts are a rarity and always local talent, though some of it is good.  The community theater out here is especially good, however.  Shrek the Musical just wrapped up.

Probably, the best of all lives is finding something to do in a small to medium town and then living (ever so slightly) away from crowded conditions.  A few acres is all it takes to achieve self-sufficiency in a pinch, yet surprisingly few people thing about such things.

I happened to be watching a documentary about one of my favorite Japanese musicians while idly working on the studio here.  Genki Sudo (World Order), a martial arts expert turned musician and choreographer, makes a wonderful point when he said something to the effect that “Problems of the Environment are the manifestation of spiritual problems.”

That’s a sobering though to wake up to on a Monday, isn’t it?

As our Monday morning ponder, though, consider what your “ideal life” would be like:  Where would you live, what would it be like, and how could it improve even if you never made a penny more than you make right now?

We are our own prison guards.

Have a nice day…

If You Want to Leave America…

Why would you?  I have no clue, but I mentioned a while back that Uncle Sam wants his due even if you hit the silk.  (Reference to parachuting, as in “bailing out” if you didn’t follow, and it’s early, so no faulting you there…)

Hi George,

We had some communications last year regarding renunciation of citizenship after you had written that it was necessary to pay taxes for another 10 years after renunciation. This is only partially true. You’re making the same mistake in what you wrote today.

“Odd that we are welcoming people from such places, yet when people try to leave America, we hound them for at least 10-years of taxes…but I digress.  Just seems a bit one-sided and seriously denominated, if you know what I’m saying.”

This only applies to people who renounced prior to 2008. In 2008 the HEART Act was passed which changed everything.

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Does a MILLION thirsty people mean something to you?

Word from my consigliere up in Ohio just came in…will be hitting national media today:  A whole city – Toledo – is under a water bulletin:

Real LIVE test as to how long a major city can survive withOUT water to drink or cook with!!
Toledo Ohio overnight issued a DO NOT CONSUME WATER bulletin due to toxic algae bloom contaminating the water which it takes in from Lake Erie. 
At present about 1,000,000 people are affected in Toledo and the surrounding area and bottled water supplies have effectively run out in the metro area.
There IS a treatment for this toxin that can remove it at the water filtration plant, but it is expensive to install and operate (a few smaller places in Ohio have had to install this treatment ability due to recurring problems with their water supply … notably those around Grand Lake St. Mary’s in the western part of the state which now faces this issue yearly).  The problem is caused by farm fertilizer and animal waste run off which creates a nutrient rich environment for growing algae in the shallow warm waters of Lake Erie which then produces excretes a neurotoxin.  The summer Algae Blooms in Lake Erie have been growing steadily over the last decade and are now creating NO SWIM zones even in much of the middle of the lake (the neurotoxins can be absorbed through the skin).
Probably a LOT of problems are going to crop up later today if the tests show the water is still undrinkable. 
Water IS the LIFEBLOOD of any city …

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This morning’s adventure – after the latest on Ebola prepping and my, what an odd coincidence –  involves a trip to the electronics bench for some on-the-job-training (in the wake of EMP) so you may be able to get a critical piece of equipment going again by being able to repair its power supply.

This is NOT a complete course on electronics, but by the time we’re done with this morning’s discussion, you should have enough knowledge to put together a “basic prepping” electronics kit that MAY be able to solve some of the problems that we’d expect on the “back-side” of Dark.

And what does this have to do with the economy and markets?  People did not always live on a diet of paper and plastic.  In fact, most of human history features people actually DOING stuff, rather thank getting paid for “thinking” which usually comes down to scheming.

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Let me see, where were we?   Ah, yes, I was explaining how a nation’s I Q could be inferred by looking at how markets perform.  And since the US decline was greater than others we reviewed on Thursday morning, we’ll have to take this as a sure-fire indicator that all this “least common denominator crap” on television and other media is certainly paying off for the PTB.

The biggest loser though, was Argentina.  Their Merval  index sank 8.4% Thursday and the great I Q lesson here is that you can’t stiff the hedgies and not expect some payback.  The flip side, though, is that the Merval was up almost 7% the day before, so in a lot of ways it’s like going to Vegas:  Some days you win big, other times you lose big.

Asia dropped somewhat overnight.  Not that they think the world is ending, but if the US gets the flu, China and Japan will at least get the sniffles.  0.9% and 0.63% respectively ands that’s a rational response when the Worlds Biggest Consumer drops 2%, which we did.

In Europe this morning this morning, the Brits were down a further 1.22%, Germany down 1.71% an d the French down 0.92% when I looked earlier. 

Is it ALL the fault of Argentina?  Of course not.  We live on a multivariate financial/drug planet.

Another factor, not to be missed, is that the Fed this week didn’t talk up the rate increase (likely in 2015) enough.  That’s something to consider deeply.

If the Fed signals that it will raise rates, it sets a market expectation that the recovery is healthy and demand is coming along much as would be expected in a recovery.  But if the Fed doesn’t at least talk a good line, the market people get all jittery-like and they start responding as though deflation is still here.

As to what an Elliott wave perspective reveals, my friend Robin Landry expects this to hold around/above 1,900 on the S&P, but he figures the real line in the sand is down around 1,740.  Once that is taken out, then yes, the world will be ending, the Crash of a Lifetime is likely on, and make room under the bed because I’ll be joining you.  But in the meantime…

A check of commodity prices (over here) suggests that they aren’t wrong in thinking that things could hold up another year…maybe…before Long Wave reality slaps us silly:  Crude oil is down almost $3-bucks (and 3%) in the past week.  And the majority of other commodities are down, too.

But if you look at a three-month chart of the CBOE10-year Treasury trade, you’ll see that the Treasury traders are not at all in a panic, and since the bond market is many times the size of equities, my outlook for a “turnaround Tuesday” next week seems just as reasonable now as it did yesterday.

Bonds rates are not collapsing,  the GDP is increasing at 4% (with the asterisk about who’s numbers you believe, of course) and that gets us to this morning’s employment report.

Gee, are we having fun now, or what?  (Nose plugs at the ready?)

Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 6.2 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, manufacturing, retail trade, and construction.

| | | Changes to the Establishment Survey | | | | Effective with the release of July 2014 data in this news release, the | | establishment survey began implementing new sample units into production on | | a quarterly basis, replacing the practice of implementing new sample units | | annually. There was no change to the establishment survey sample design. | | More information about the quarterly sample implementation is available at | | www.bls.gov/ces/cesqsi.htm . | | | |

Household Survey Data Both the unemployment rate (6.2 percent) and the number of unemployed persons (9.7 million) changed little in July. Over the past 12 months, the unemployment rate and the number of unemployed persons have declined by 1.1 percentage points and 1.7 million, respectively. (See table A-1.)

Among the major worker groups, the unemployment rate for adult women increased to 5.7 percent and the rate for blacks edged up to 11.4 percent in July, following declines for both groups in the prior month.

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