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Year End Number Flashes
As we’re about to put another year in the can, some truly astounding reality-check numbers to roll with.
Which we will dig into after the breaking news (and in a few minutes, a second report with the Case-Shiller Housing report – so be sure to click back for that…)
- A year ago, on the equivalent Monday-after-Christmas week (*30th), the Dow closed at 28,462.14.
- Yesterday the Dow closed at 30,403.97.
That’s a gain of 6.82%. Which sounds OK, given the low interest rates and all.
While the S&P 500 was up for the year, as well (15.96%), the real Miracle on Wall Street was the run in the tech sector:
- Equivalent Monday last year: 8,945.99.
- Nose bleed country Monday closing at 12,899.42.
If you do it in your head, ball park 40%. Or, with a calculator, 44.19%.
History Screams a Warning
Since we use a multiple-market Aggregate Index over on the Peoplenomics side of the house, it’s easy to do a comparison of how equal bags of money in the Dow, S&P 500, and NASDAQ Composite fared in 2020.
Our Aggregate yesterday closed at 34,079.02. On the equivalent Monday a year ago, we were down at 27,316.76.
So, three equal bags of paper in the Dow, S&P, and NASDAQ would have produced a gain of roughly how much? 24.75%
Tech Wreck II in 2021?
We should note in passing, however: The week of January 25, 1998 (a year and three months before the Tech Wreck began, our Aggregate index stood at 8,077.74.
The following year’s equivalent week was 11,950.21.
So that’s a gain of 47.94%.
As a result, in our view, we could continue on this wild and crazy blow-off rally a bit longer (we toss around a target date over on Peoplenomics). But I think you get the point.
In the Tech Wreck, the Nasdaq peaked the week of March 10, 2000 at 5,048.62. A year prior it was 2337.11. So the “hot Internet sector” screamed up more than doubling (2.16 times) in it’s final blow-off top.
In my work, comparing this morning’s future’s prices, it looks like we have a ways to go.
“Why Caracas Then?”
Well, just getting to that.
We need to talk about “Making Up Money” – MUM for short.
You see, unlike the run-up bubble of Tech, the Fed has been making up money at an astounding rate.
For example, in November of last year, M2 (the broadest measure the Fed admits to measuring, having hidden M3 as too useful) the (Not Seasonally Adjusted) M2 was $15,422.8 billion.
For the most recent full-month data we have (Nov 2020) the same measure now reads $19,099.3 billion.
Revelations galore! The Money Supply gained 23.83% (plus or minus a cheeseburger).
As a double-check, we can look at Kitco.com and see the price of gold last year in November (month’s high) which was?
I took the easy route with the January 2, 2020 high fix in London at 1527.10 and we see the Monday London high was $1,872 on Christmas morning. Not a perfect date-match, but it goes to Ure’s point: Gold was up 22.6%, call it.
When we look at the Fed Money Stock growth (23.82%) lest the “honesty check offered by Gold” (22.6%) and we subtract the latter from the former, we’re getting real/honest U.S. GDP for the year will be about 1.22%.
That has the “ring of truth to it” – especially if we look at unit volumes, not prices as the metric since they’re hosed-up six was to Sunday.
It also suggests that in order to hold its own on a PPP (purchasing power parity) basis, Our Aggregate Index approach would have offered a (24.75% return less the Gold honesty check (22.6%) for a “loaves of bread and six-packs of Bud” gain of 2.15%.
Except, well, Bud hasn’t gone up that much. But be patient. Summer is coming and we’re betting beer may be a good investment this year.
The inflation is still out there and will be along in 2021 in the grocery stores. And that’s when America enters “The Vise of Caracas.”
Details of the Vise
We will be surrounded on most sides by rising prices – much of it for necessities – and that will fuel two things: First, there will be waves (by late 2021) of housing refi’s as people try to hold on to an otherwise declining lifestyle.
Then secondly, the cost of servicing the National Debt will begin to edge upward such that government will have to figure new tax angles to make their (cooked) books balance.
Which means (and this is our topic on Peoplenomics tomorrow): New Federal taxes and fees. If your hair isn’t white, yet? Wait until you read this week’s first Peoplenomics report.
Now, let’s leave the shores of
Lake Maracaibo the Chesapeake where we will await the Potomac flood as too many paper fiat dollars repatriate to ‘Merican shores.
A Note About Cryptos
Meanwhile, between Ure’s ears:
There’s a fascinating dialog between my play-driven brain (the judge) and the “other George” (the maniacal voice) about whether it would be constructive to devise an Aggregation Master Indicator incorporating non-fiat indicators.
Obviously, Bitcon, which was around $8,000 as 2020 began, should have gone up AT LEAST what the “hot tech sector” did. Which argues for a $12,000 zone.
Since it’s MUCH higher than that, we have to look at the behavior of “fringe hot money” (deeply greed possessed) and wonder about this:
Bitcon is up let’s say 340 percent. Tech is up 44.2%.
Since we know that the Internet Bubble burst when the Aggregate went up call it 48% in a year, what is the equivalent Aggregate where 44.2% up for Tech and 340% up for Bitcon equals 48%? We would have to do a lot of work on the weighting schema but you can see the gist of what the (screaming) voices in my head are getting at:
The STOCK market ebullience is diluted to the degree that crypto madness spreads. Lower peak than spring 2000 is possible – Bitcon and crypto madness is a steam relief valve of sorts.
A corollary: If – as a way of corralling all Americans into a necessary Made-Up-Money Fiat (or government backed digital hoax equivalent), as we have stated before, there is absolutely no economic reason that the government would have to offer ANY CONVERTIBILITY from a (fiat competing crypto) into an “Officially Allowed” coin.
100% gov’t-only crypto. Which will be required because at its core, the outcome of Modern Monetary Theory (MMT) lays the groundwork for a disastrous two-tiered (domestic and external) valuation scheme. (You can think of this as like a “digital gold analog” consisting wholly of made-up, specious numbers, but with enough rancor and bullshit as to turn sheep into users.) Or, a 1930’s style asset seizure except instead of gold and silver being “called”? Bitcons! Lightcons and all those…
Stephanie Kelton’s book is a socialist con-person’s
dream road map. Remember Our advice? When the term “the People’s” is used around policy, a radical (or socialist) is usually nearby. Usually with half-baked selling points that appeal to have-nots and do-nothings in particular.
Or, as her (admittedly slick) book The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy.
Which maps the current radical attack on hard money and genuine stores of value. I mean, if money is only transactional, then…er….maybe…
BUT it’s not only transactional! Never forget this.
Historically, money has been a store of value.
Ure learned from watching Zimbabwe – and you should too: Get property. Get sustainable. Get out of debt. Government is in the printing business. Making up lies as they see fit and printing financial paper as necessary.
(I mean, give socialism its due: Used the Courts to take down the Laws of the country. Now all that’s left if the money…and if Bitcons are outlawed…well, don’t say you weren’t warned. This is quickly becoming Caracas on the Potomac, right?)
Where Were We?
Park the Gulfstream, we’re staying home: Croatia Rocked By Powerful 6.4 Earthquake.
Passings: French Fashion Designer Pierre Cardin Dies Aged 98: Family. Remember when fashion was an industry, not a housecoat and slippers?
And the Hype: House passes the $2,000 bonus check. Will die in the Senate. Never miss an opportunity to hype, though: Dow futures up 133.
Hopium sells well to dopes.
Write when you get rich,