This is a little complicated – future directed – and certainly not an optimistic outlook for the period ahead. But, it’s something to think about. So we will approach it stepwise this morning beginning with Futures pricing…
Market prices are a function of several variables, as everyone knows, so it’s useful on a “Monday on Tuesday” to look at the variables and try to guess where we’ll go next:
- Today’s “Rally” isn’t major…at least based on foreign exchange.
When we eyeballed the U.S. Dollar chart today, we noticed that it had dropped from 0.827 Euro down to 0.824 Euro. Dividing the newest price by the starting, we come up with 0.996372430471584. Which – divided into the closing S&P of last Friday (3,768.25) suggests we will trade through 3,781.97 at some point today.
We conclude the S&P futures could be up about 14 points based on the exchange rate.
However, in fact, the futures are up 28 on the S&P, so there’s probably something else going on.
The answer – we think – is that fear pricing is coming off the table. The transition between presidencies tomorrow at high noon, D.C. time, will [likely] go smoothly and that there will not be any issues related to the transition. Beyond typical media histrionics.
Thus, some of the short-side hedgers (*including moi) will experience the Bulls running things up in order to make the Bears pay for their lack of faith in process.
Another way to put it is “Buying the Rumor” which could last into tomorrow morning if things go perfectly at transfer time. However, after that, will we see the return of “Sell the News?”
Is a Long-Term Top In?
It’s too early to make any such claims, but we’re at a place in market history where being open to a Major Top completing has to be on the short-list of things to consider. Because when we line up the market bubble 1920 to 1929 and the bubble from the 2009 lows to present, we look at this:
This is not a perfect analysis. Because this Bubble has been slower forming (faster information flows paradoxically slows market extremes) and the 1929 formation looks faster on the timeline because there was Saturday trading back then, as well. Thus, I use this chart as a source of ideas. It’s a ball park. It doesn’t predict the game-winning pop fly to the left infield game-winner.
The Biden Crashcade?
As the new president takes the Oath tomorrow, he needs to pull an economic rabbit out of the hat. Yet, due to the glacial speed of everything in D.C. we don’t think Biden has much of a hand to play.
- The sword still hangs over millions of Americans facing evictions.
- The understating of ACTUAL new filings for unemployment has been manipulated via “seasonal adjustments.”
- We saw last week that – with the exception of autos – retail sales were in the crapper.
- At some point, real estate deals will falter because when rates begin to move up, sales will fall.
Against this background, the forces of inflation are strong. The Fed will keep Making-Up-Money and at Treasury, former Fed boss Janet Yellen knows well how to play the “paper-games.”
There’s a similar global bubble going on, since the G-20 has been making up money like mad, as well. Peoplenomics readers get the views of our Global Index.
Consumer Confusion – Illusion of Progress
The most important thing to remember – through however this all shakes out – is that REALATIVE VALUE MATTERS. People (being mentally lazy, which is underscored by sheep writing contend for social media empire-builders to get rich off, lol) don’t thing much about transactional values.
Say the entire world economy was in a classroom. And every student going into the room was given $10-bucks. 20-students. So the “table stakes” are $200.
In such a world, a hamburger might cost 25-cents. An ounce of silver might be – making up a number here – $1-dollar.
Now we are going to rerun the same scenario, only this time, we multiply the money base times 10.
20-students and each with $100, so the table stakes are now $2,000.
And since prices follow money supply (we’ll skip velocity and details) over time the cost of the hamburger becomes $2.50 and the price of the ounce of silver becomes $10.
Except, until this morning. When it’s not hard to find a $7.50 burger at an inside sit-down joint. And silver? Well, up to $25.20 when I looked earlier. (Ultra long-term readers will remember when, in 2003, I told you we were buying silver at $6.94 an ounce. Over time, if you understand monetary inflation is not the price of THINGS going up – it’s the WATERING DOWN OF MONEY’S PURCHASING POWER.
Politely, it’s a swindle by government. Reminds me to write a PN article one of these days on “illusory gains” and a process I describe as “transfer-back” and how that works.
Quality Of Life also referred to as QLI – quality of life – indexes are the immediate problem of Joe Biden and the democrats controlling Washington. They don’t seem inclined to do much other than a “holding action” since the U.S. political system is effectively a subset of global corporate governance despite the hype about cutting off political
For now, what matters is that the U.S. – which was the #1 country to be born in back in 1988 when scored by the Economist Intelligence Unit – has now slipped to the 15th best place to be born based on quality of life.
Most of the “slip” happened between 1988 and 2013 which you can review from the Wiki article here.
When the market comes to realize that Biden doesn’t have a “magic growth card” to play – and later on, we get word today that Coronavirus deaths in the U.S. have passed 400,000, the mood of America will not likely improve.
And with China ramping up pressure on the Biden administration for Chinese companies to advance their infiltration of American business, we don’t hold much hope for a golden future any time soon.
With the exceptions of the government class and the tech giants, most of America eyes a future mired in low wages and bare subsistence living. Which is “averaged out” by the 1%’ers.
Digital Delusion strains are propagating in Covid-like fashion as Ethereum Surges Above $1400, Hits Record High.
Assuming you know “dark money” is the way major corporations pay-off government (money for policy favors) be sure to read the NY Times (biz section, the worthy part of the paper) on Dark Money Is on the Supreme Court’s Docket. Corporations have more rights than humans in terms of taxes and influencing – and they don’t want to see that eroded.
One thing market bears may wish to note (following up to PN comments this weekend) is this: Bitter, Trump skips chance to say splashy, high-profile farewell. Oh-oh….
Dow futures were up 200 at click time – so as far as we can tell, America is still money-obsessed and not clear that there has to be something of value involved at any level whatsoever. Other than names on paper and dividends be damned.
Marketing: Social Media Experiment Results
We explained this little project last week: Our budding 16-year old, soon-to-be-millionaire, Judah Tyreman has got some initial results on the social media experiments he’s conducting on YouTube:
“According to YouTube, we are now 30% away from them beginning to recommend our channel.
We have now linked one video to another, so they show up at the end of a video. According to the algorithm, the real key, is to get people to watch the whole video and then click on the next video that pops up at the end of the first one. The more of those that happens, the faster you move up the list. You might want to mention this tomorrow to your readers if they want to help out. [I left this in for social media managers to be aware of – G]
Judah also found that video response rates were MUCH higher when a free prize – chance at a free prize – was included. So, owning a gem and mineral museum, he’s giving away…what else? Bunch of gems…
“Offering the chance to win one of seven evergreen opal rings if you subscribe and leave a comment. The more of the five videos you watch, and the more comments you leave, the more entries you have.
- Will the chance at a potential win increase the response rate (which has been very low).
- Will it beat just asking for people to help out of the goodness of their heart, and by what amount.
Regarding offering the chance to win, once we offered the rings, the engagement rate went up 400%. It should be interesting to see if the same reaction comes from your readers.”
People who subscribed are already in the pool.
Judah’s dad, Chris Tyreman, is the “talent” on the videos and mentioned that:
“We have a bunch more videos in the wings, and started using two cameras. A little better each time. The last vid uploaded tonight will be an interview with (his daughter) Avi showing people that if an 11 year old can start a company with her own money, you have no excuse.
According to people who do this for a living, we need a minimum of 35 videos on the channel. (Yikes!) Well, the experiment continues. I will send you the charts of responses after your post (Tuesday) is up for a couple of days.”
Interesting experiment – to see how fast and importantly how to structure videos. Useful stuff for social marketers to see evolve… Kind of interesting seeing how social media can be engineered like this… I know a musician could do things like include a “free .MP3 download” or other near zero-cost incentives… Corporates can do the “free sample” approach…
OK, time to put on the feed bag. One last thing, though:
Cynics Want to Know: With Dry Inauguration Day forecast for DC, strong winds and fire danger for Southern California, where will there be the most hot air today?
Write when you get rich,