My friend Robin Landry and I are both watching the 1,950 level on the S&P closely. He’s looking at it from the Elliott wave perspective while I’m looking at how our Aggregate Index approach would begin to look at those levels.
Somewhere in that vicinity, 1,950’ish, the market will make a commitment on whether to turn into a major fifth wave up – that could power the market to new highs between now and the fall of 2017, OR the market could just be doing a bounce up, completing what would be a wave 2 (in Elliott wave counting) of larger I down and from there we are off and running with the Second Depression right now.
It is hardly an academic question: Trillions of dollars are riding on the outcome world-wide and that’s not even the half of it. The more important question is what about people’s lives that will be impacted?
Yesterday, the Japan market took off like a rocket. Overnight, though not has high, the Shanghai market put on a pretty good showing, up more than 3%. Europe is flat to up and the US futures are screaming rally early on.
Still, we should have a lot better handle on things as the week moves along. There is, to begin with, the Empire State Manufacturing Survey just out:
“The February 2016 Empire State Manufacturing Survey indicates that business activity continued to decline for New York manufacturers. The headline general business conditions index edged up three points, but remained firmly in negative territory at -16.6. The new orders and shipments indexes indicated an ongoing decline in both orders and shipments. Price indexes suggested a slight increase in input prices and a small drop in selling prices. Employment levels steadied, while the average workweek index pointed to a decrease in hours worked. The six-month outlook remained weak, with the index for future general business conditions up only slightly from last month’s multi-year low. “
So hold the phone: If the numbers are still negative, doesn’t anyone bother to ask why all the government figures are painting such a large and rosy?
That’s just the start of the data flow. Housing starts and Producer Prices come out tomorrow. Thursday we will light up with the Philly Fed Outlook, weekly unemployment claims, and then leading indicators.
But the piece-de-resistance will be Friday’s Consumer Price report.
The problem here is that we have a double-edged sword: On the one hand, we would like to see some modest price increases, because that might signal a pick-up in demand as people are getting off their wallets.
But the other side of prices is that we still don’t have a reliable way of tracking back to unit sales volumes and that’s a much better picture of how pull-through is working at the consumer level. The idea is simple enough: If you sell 100 widgets this year, and you sold 100 widgets last year, you have zero growth.
But the way economics has gone crooked, if you sold 100 widgets last year for $1 each and sold 75 widgets this year for $2 each, then it would be adjudged to be 50% growth. You see the problem, right? Unit volumes are dying (down 25%) but with the price hikes, the government (or whoever) can blithely report “Hallelujah! The Economy is growing…are we great, or what?”
Since it is a sober Tuesday morning here, staring at the global House of Cards, we will pick the “or what” option and whatever is behind Curtain #3.
There is some guidance which we will round up for Saturday’s www.peoplenomics.com report: We can look at the actual container shipments, how much rail traffic is moving, and so forth. It’s a much more useful view.
The civilian/non-subscriber version, where you just look at the collapse in the Baltic Dry cargo index – which used to normally run an index level around 1,000 or better during actual expansion – is now bumping along at 295 this morning. And the Harpex Index, some would argue a better judge of conditions more focused on containers, sits at 383. During the peak of the frenzy called the Housing Bubble, the Harpex got up to 1,402 and then collapsed to 275 at the bottom of the wreckage in 2009. Between then and now, it climbed to 901 in 2011 and hasn’t been back since.
So we are left with this terrible conundrum: What will happen next?
Well, my buddy Howard thinks what is needed is a big fat stack of new money and new buyers of stocks. I don’t remember him asking me to hold this confidential, and I’m sure if you bought a copy of his book (Finance Monsters: How Massive Unregulated Betting by a Small Group of Financiers Propelled the Mortgage Market Collapse Into a Global Financial Crisis) he would forgive both of us. You, anyway…
Where could all this money come from?
The source of oodles and gobs of “new money” to drive up the market would be for one of the two corporate parties to endorse a partial privatization of Social Security. The way this would work would be simple: People might get some portion of their future retirements from a much-reduced government fund. But most would be able to invest in stocks, bonds, or other approved instruments – and that could mean the opening of a gold mine for Wall St.
And I can think of one potential cheerleader for such an event…someone who’s already been a paid speaker at Goldman, et al. She’s the one with “issues” in Nevada. Could anyone else pull this off preemptively?
Of course, what no one would mention is that future retirees would be creamed by this privatization idea because of actuarial math. You see, when people die at the moment, their money is left in the pool. But if you are your own pool and die, there’s no left-over accrual from your account going to the greater good pool. A kind of double-screw job which is what makes it so desirable for the greedster class.
The problem with this is that while it would fuel the kind of blow-off top that I expect to see happen, it wouldn’t so much for average working people. How so? Well, we know that one of the characteristics of a blow-off top is when the insiders and professionals unload their holdings onto the average and small players who don’t see the big picture clearly. They could orchestrate the kind of 2017-2020 collapse that I envision and make far, far more money than if things collapse in the present timeframe.
I hate to say it, but it would be a damn graceful solution to allow one last haircut to be administered to the dull/lazy-witted public. Though it would be more like a scalping.
On the other hand, I think that if the Big Money could just be convinced that interest rates are going up – and scare some of the huge piles of money off the sidelines and back into chasing equities (stocks) that might do the same thing without caving in the last of the social safety nets that could really help in a coming Depression.
Tomorrow, by the way, we will be focused on the matter of gold confiscation by the government when we go slamming into the last wall.
And along the way you might want to stay up late (or download the www.coasttocoastam.com app) because Catherine Austin-Fitts is scheduled to be on tonight with George Noory. It will be very interesting to see how she sees what’s ahead.
I’m still in the camp that holds that Crashes of the “take-down-world” size will not be perpetrated (yes, we know who the perps are…) until they have lined up every last nickel to scam out of the public purse. With all those dollars of retirement accounts sitting in slow moving bonds and such, what better than a huge stock rally to get everyone clamoring for “More stocks, More!!!”
We shall see…but either Howard’s nightmare, or mine, it still looks too early for the Ultimate Final End-of the Line Crash and Second Depression. There’s the spice of optimism from the presidential race, then we will get the 100 days of new administration holiday while they find the ladies room and such. And then we will see a “Wall St. Love festival” of some kind.
And then the top and then the crash. At least that’s how it feels this morning.
Once upon a time I used to be a great believer in “people doing the right thing.” But with the take-over of government by corporations, what we know without a doubt is that “right” no longer figures into the equation. We instead reduce everything to simple arithmetic. And if that means trading on the side of the Devil, anymore that’s where most of the money is.
Like it or not.
I can just see the 1040 in a couple of years: “Did you invest 5% of your gross earnings in stocks via an approved retirement account? [ ] Yes [ ] No
If NO, did you pay the Social Security penalty required by Form 666?” [ ] Yes [ ] No
Remind me to sharpen my pitchfork.
Like I said, I don’t think the top is quite here yet because I don’t smell enough sulfur yet.
At least for today, the market agrees and
Expect Oil to Rise
Another biggie for the markets to digest this morning: The OPEC’ers have decided to freeze production output.
This is great news for a lot of people including many in Houston where the oil price collapse has been trying to implode the Housing and growth process.
The bad news is that the current glut should be working through the pipeline (bad pun, sorry) eventually and we hope one of those 19 cars you own includes at least one getting 30 MPG or better?
How Stupid is Politics?
When I read about a Clinton “firewall” crumbling in Las Vegas, I can’t help but laugh. Here’s a woman under investigation for abusing secret and top secret emails who supposedly didn’t know better and firewalls are floating around her lingo space now. Meantime, I expect since she is a lawyer that the whole email sharing scam was just another fund raiser and structured to prevent her from having any personal exposure. Expect only aides to be indicted if anyone ever is.
Meantime, wouldn’t Hil make a fine Supreme Court nominee? (That was our Monday nightmare if the missed the column.)
Across the aisle, Donald Trump is upset that the Republican National Committee has gone partisan already. He’s threatening a third party run if they don’t clean it up.
Of course, none of this is surprising as they are republicans after all. And anymore, that just means what? The OTHER Corporate party.
Reader comments are pouring in over my nominate Hillary or Loretta Lynch ideas.
Yes, a disaster in either case, but now we are seeing stories like Scalia’s replacement likely to be Loretta Lynch: Analyst and Ures truly is Club O will exploit another chance to divide the country. Which seems to be a higher priority than doing the will of the people.
Ryan Sells Out
Oh yeah, like we’ve been saying: The turncoat division of the republicroid party has spokesmouth of the House Paul Ryan saying no, they aren’t going to tackle closing down the overflow at the borders.
Like I said…there’s only one party in America and that’s the corporate party.
I’m going to stop about here since I need to go out and talk to some snakes around the property. It will be a pleasure, too, because I can always trust a copperhead to act like a copperhead.
I can’t trust many republicroids to act like republicans. Snakes are, in my estimation, considerably more honest lately.