Crash — or Dash?

The clock is ticking.

I’ve been telling you for some weeks now – in fact a few days after the all-time-high in our Aggregate Index January 26th – that it is time to be extremely cowardly.  Not that we didn’t score some nice lunch money on the recent bounce.  But the clock is ticking.

We’re also not the only ones to notice. Bloomberg this morning rolls with “Morgan Stanley Says Stock Slide Was Appetizer for Real Deal.”  Unlike Morgan Stanley, we’ll even tell you an idealized date based on our work:  Around March 22nd.

(Continues below)


That’s because it is common (though nothing is guaranteed and this is not financial advice) for major market declines to begin 55-days after an all-time-high.  The best-known of these is 1929 if you need reminding.

This is not baked in the cake, cast in stone, or welded steel as future predictions go.  It’s more like wandering into a sports book and making a show bet on  a horse that has come in first-place under similar track conditions with a similar-weight jockey.  The nag may not be in the winner’s circle, but you can maybe make a little lunch money.

Still, there IS a way the approach disaster could be avoided:  We could go on to a new all-time high before about the middle of March.  We can’t rule that out, so we’re not placing short-side bets…YET.

Talking their Book?

A second Bloomberg story shows this still to be a possibility as “BlackRock Says Buy U.S. Stocks as Tax Plan Supercharges Earnings.”

The term “talking their book” is worthy of deep study.  Let’s say you’re an aging significant player and you want to unload a huge long position in the market.  In other words, you hold millions of shares of stock.

“Talking your book” would involve making fluffy comments along the lines that  the future’s so bright, gotta wear shades.

Thing is:  While the public wanders in, you’d unload your shares into these “weak hands” and sit either short and enjoy the ride down, or remain in cash until the market bottoms.  Which happens when the last of the weak hands capitulates.

Why is the BlackRock a flag to us?

It’s all about the new corporate tax plan.

To be sure, reducing the maximum corporate rate to 21 percent is a good thing.  That likely will in the long-run increase returns on stocks and even make C-level players rich via their options.

But not yet.

At least in many companies.

That’s because in  these times of consumer super-saturation we observe that many companies have expanded through acquisitions.

In many acquisitions – especially including high tech – the acquired company is worth grabbing because it hasn’t made any money to speak of, having sunk so much resource into new product.

Such an acquisition target brings two things to the table generally:  A new product in a usually complimentary product AND A TAX LOSS CARRYFORWARD.

The trick most business writers are not writing about boils down to this:  A tax loss carry-forward (e.g. a write-off) has a much higher value in a 35% corporate tax rate world than is does in a 21% corporate tax rate world.

(Yes, we covered this for Peoplenomics subscribers several weeks back.  They’ve had time to noodle on this and crank it into their investing (and speculation) decisions.

As a result of the tax law change, plenty of big companies – but mainly those who’ve been aggressive in mergers and acquisitions (M&A) will have to take a one-time write-down on the value of the tax loss carry-forward booked from an acquired company.

This is not to say BlackRock is wrong:  In the long-term investing in stocks is a reasonable thing to do.  But with caveats.

The first is it requires a sense of judgment.  Only one way to get this:  Make real investments and manage their outcomes.  My ‘cost of education’ wrought from bad investment decisions is well into six figures over a lifetime.

But the good news is the smart investments have prevailed.

This gets to the second point:  The Fed is ALWAYS making more money that is necessary.  The result of this is the purchasing power of money is almost ALWAYS going down.

The Big Lie in education circles goes back to the liberal spin in the Great Depression (when socialism was flowering).

It was referred to at the general rise of prevailing prices.  But, in fact, prices didn’t go up:  The government printed so much money that it watered-down purchasing power.

It was an easy sell because it seemed that Prices Go Up.

It took unusual depth to comprehend that the reason was it just took more of the “worth less” money to buy the same things.

Now toss in our last big caveat:  Government runs a crooked economy.  What we do in America (printing made-up money) is little different than what Robert Mugabe did in Zimbabwe.

Except Mugabe didn’t have a banker’s marketing machine.  In America we spew drivel about Modern Monetary Theory (MMT) which is a fancy way to printing your way through a massive deflation.

At the same time, we artificially stimulate non-productive sectors of industry because there really aren’t enough jobs.  We make up welfare to – in effect – buy off the poor and keep them from revolting. And if that doesn’t work, we now have NORTHCOM as a backup.

(Read up on chartalism here.)  Bread and Circuses 4.0.  Release candidate 5 should be along shortly.

We’ve circled March 22 with good reason, but the switchman is drunk and this train wreck could still end up elsewhere.  In the meantime, we’re mindful not to stick our hands out the window or trade positions with more than a short-term technical basis.

We Will Find the News – Or Make It Dept.

NewsBusters is out with “CNN and MSNBC Helped Russia Sow Discord by Promoting Fake Anti-Trump Rally.”  Though it’s hardly a surprise.  I think we may have labeled CNN the Clinton News Network at some point.

It’s also no surprise that “Michael Moore Participated In Russia-Sponsored Anti-Trump Rally.

Perhaps Mueller could indict some news organizations?  Is that asking too much?

Speaking of Mueller & Fishing Etc…

After so far only producing a joke indictment against 13- Russians – who are not subject to US law (so why bother?) we think there’s something about to pop in the Michael Flynn case.

Take a gander at “Order by New Judge in Flynn Case Raises Possibility Guilty Plea Could Be Thrown Out.

The basic deal here is the government likely withheld exculpatory evidence when it strong-armed a plea deal out of Mike Flynn.

The judge in the case seems to have made it clear:  The government has to give the defense exculpatory (get you off)_ evidence as part of any plea – not after the fact.

On reason we expect the government has misbehaved?  “Mueller deputy Andrew Weissmann has a reputation for hard-charging tactics — and sometimes going too far

Conviction rates over truth & justice, anyone?

I’m not sure how long Mueller’s fishing expedition will keep going, but until someone takes Clinton to task (and jail) for funding the “dossier” it’s all an insult to all patriots to be force-fed this charade.

Or, maybe that’s the point?

Read about Fake News – the Game over here.

Laughable Europe

With what we take to be a straight-faced headline, the Washington/Amazon Post asks “Can a party founded by a comedian run a major European country? Italy may soon find out.

The story missed the line I might have woven in:  Give the Italian’s Al Franken’s number and seek counsel.

Wrong Headline?

We saw this in USA Today “Are boys ‘broken’? Another mass shooting renews debate on toxic masculinity” and wondered if the headline is back-asswards.

Wouldn’t the forced-feminization of males in ‘Mercia be a valid view, as well?

We are well-down the path to criminalizing heterosexuality – in case you haven’t figured the rad-left & SJW agendas.  No normal in the new normal, yah hear?  (Don’t look at me that way…I don’t feel “safe”…) FMTT what bullshit. GTFU.

Media bullies.  Still, they’re doing the Kremlin’s agenda, keeping ‘Merica divided and imploding.

Market looks to open down 180-odd Dow points.

Face it:  Would YOU invest in a country this stupid?


Crash — or Dash? — 28 Comments

  1. As I recall, the albhabet agency in New Orleans had prior info on the happenings in Dallas on November 22. And where else have we seen their footprints? We must really enjoy watching inspector Clouseau while all around him our society crumbles. Any person at the top of the heap would be a fool not to be obsessed with such treason.

  2. There were at least eight major anti-Trump rallies funded by George Soros. I’m pretty confident in my opinion that after his antics in both Russia and a number of former Soviet Bloc countries, neither Soros money nor his politics would be welcome by any Russian. TBH I don’t remember the specifics of NYC but I’m bored tonight, so there may be an addendum to this, later…

    IF the FISA judge confirms that Trump Tower would not have been bugged without “evidence” presented in the dossier, it will invalidate the covert evidence used to influence Mr. Flynn’s confession, and taint any evidence which could possibly be used in a court action. The MSM is preparing damage control for if/when this happens.

    Yes, boys are broken. They are mean, cruel, nasty, and aggressive, and like to play in dirt, all of which are unacceptable in modern, grown-up society. Accordingly, modern society is attempting to program 100,000 generations of these base traits out of them, in a matter of a few years, without providing any alternative physical, mental, and emotional pathways. The FPS is not a vent, it is an adrenaline boost and training exercise. IMHO it does not cause wackos to go postal, but neither does it exorcise the demons of their base emotions, and it does desensitize people to the concept of “bloody, violent death.”

  3. I was reading in the news Mueller spent 68 million dollars on indicting 13 Russians for a Facebook ad worth $48,000. Only in America!

    • I recall America creating a million dollar pen that could work in space. The ruskies used pencils.

  4. George
    Would any particular index hitting a new ATH reset the clock?
    I notice the Nasdaq is acting kinda independently from the DOW/S&P.
    IF JUST ONE, which do you consider the best INDICATOR, or would you only watch the aggregate?
    I’m tempted to disregard the NASDAQ myself.

  5. George, good piece today on economics. But, don’t we have it completely backwards? Shouldn’t we be paying down our national debt during good times so we can stimulate and ‘print money’ during recessions/depressions without slipping into a Zimbabwe? Typically, the Rs explode the debt and the Ds are left to clean it up, usually during bad times, which just prolongs and deepens our recessions. This time is no different.

    Also, see, I told you Mueller was a Republican. He’s bending over backwards to favor Trump — hence, the unnecessary ‘unwitting’ line. The best place to hang up an indictment is ‘intent.’ From your point of view, you have to hope that Trump’s conduct was so not unconscionably egregious as to offend even a Republican’s sensibilities. If it’s only Trump taking a Russian payoff of $60,000,000 for the FL estate, my feel is that he’ll probably let it go. To be continued. We just don’t know yet. Mike.

    • WHAT TRUMP CONDUCT? Did you miss the whole deal point in the House memo that the Clinton campaign paid for the “dossier?”

      Your continued reliance on falsehoods and fabrications is concerning!@

      • Amen; Squirrels are always searching for new Nuts, cant seem to find the last one they buried- that coined the term “Squirrley”

  6. 3/22 is like 9/11 – one of those critical insider days for S&B and other “elite” orgs. Take it for what you will – it’s always a day to be aware of.

    The sad thing about criminalizing male heterosexuality is that it makes it very difficult to function on a modern campus. Any normal action a guy makes – even an appreciative/longing glance, or a legitimate compliment, can get the guy hauled into a kangaroo court run by female “administrators”. These people need follow no rules of evidence and no cross examination is permitted. They can and do expel with prejudice and ban from campus. I like XX females and won’t be changing my behavior(even if I could), so we’ll just see what happens.

    Happy B’day George, and I do hope you have a great year to finish up your ’60’s. I’m glad you have Elaine – it’s the better way to live.

  7. One more thing. Trump still to this day refuses to denounce the Russians on their meddling in our elections. It is the consensus of every single politician, the NSA, FBI, the defense department, the CIA and more that Russia interfered and continues to interfere in our democratic process. Yet, Trump won’t say it. Two possible reasons..

    1.His ego is so beyond acute narcissism that he refuses to say it because it would in his mind, delegitimize his election as President. It really wouldn’t, nor would it matter at this point, but this is a man that really is seeking out attention and acceptance. In any case, it is a sign of weakness.

    2. He, or his family Don Jr., or Kushner, did have a role with Russian documents, inside info and money laundering tactics. Thus, the hiring of military personnel sworn to a code of obedience to protect him and his family. My Take is that given his difficulty in getting domestic business loans and lines of credit, due to his bankruptcies and repayment troubles, he had to go abroad and seek out loans from not only Deutsche Bank, but Russian hard money as well. The money is easy, but repayment to the Russians is a bitch.

    • “Russians on their meddling in our elections”

      How did the Russians influence YOUR vote? I could’t imagine anyone influencing my vote!!

  8. RE: broken boys – George, the Sisters of Divine Providence routinely broke me many decades ago during 8 years of Roman Catholic elementary school ‘education.’ Growing up a baby boomer, many societal walls came tumbling down around my social construct. With the public education system (from pre-K to graduate school) insidiously and pervasively hijacked by the progressives, it only took 40 or so years of steady curriculum changes to steer America’s societal vector hard to the left. paraphrasing a famous saying, “even permanence is changing.” HAPPY BIRTHDAY, changeling in chief!

  9. March 22 is looking likely on my side of The Pond, George. The elections in Italy on March 4 could have an impact on the Eurozone which could trigger off a few rocks down the mountainside leading to an avalanche.
    Unlike Greece, Italy is a contributor to the EU. Its peoples feel disgruntled that the EU was a stitch up (Old Brit expression) by Berlin and Brussels against their industries.
    Throw in an announcement about Brexit from the British around the same time (timing, it’s always timing) and you could have a Perfect Storm…

  10. Your stance on the Mueller investigation is a bit biased based on your set in your ways beliefs don’t you think? The other day, you mentioned Occam’s Razor. So, what is more logical? Here are some facts to ponder.

    1. Trump has surrounded himself with military figures…Kelly, McMaster, Mattis, Dunford, former advisor Michael Flynn. One thing to note on the obedience training of these appointees. Article 91 makes it a crime to WILLFULLY disobey a superior Noncommissioned or warrant officer. Article 92, more important…makes its a crime to disobey any lawful order. ( the disobedience does not have to be willfull). In the case of Trump, his out of control ego and his certain involvement in the Russia investigation, his closest advisors like Kelly have been sworn to uphold any and all orders to serve the best interests of the commander in Chief, no matter what the circumstances. And no matter if they are active or not, the appearance of a present or former military personnel would stand huge scrutiny from the defense department and military if any of these former military minds were to disobey Trumps orders, no matter how sinister or unlawful. I bet these decorated heroes are now bristling in their boots at the thought of taking orders from a man who on more than once deferred his military service due to bone spurs.

    2. Trump is so obsessed with the FBI and scared about the Russia investigation that he can’t even take one of the most somber and ugly moments in our nations history…the Parkland shooting and make it about him and this Russia story. His tweets were insensitive and off point. Doesn’t he know how the FBI works? The local FBI field office in Miami has nothing to the same group working on the Russia Meddling. Did the local field office drop the ball? Possibly. But his tweet saying that the FBI should spend less time on Russia and more time on the Parkland case shows his ignorance and insensitivity. His tweets makes him look like A scared animal backed into a corner trying to avoid it’s prey.

    3. The truth is, Trump is the worst type of politician that is stuck in a rut. He plays to his 35% core supporters. Does he believe in half the stuff he actually says? It’s hard to imagine he does. He was born with a silver spoon in his mouth and has never once had to think about, live with or rub shoulders with the very people he has promised to help. He strives to be one of the privileged. When he was denied entry into New York Society, he built his own country clubs. He is still proving to the world that he is privileged and every weekend reminds us how “Regal” he is by spending time in his “Palace of Mar a Lago.” He lies about his net worth to rub it in the faces of those who scoff at his success. He is no different in character than any of the elitist politicians he supposedly bad mouthed during his campaign and continues to tweet about today. Did you ever wonder why he only goes to small towns in Red states for his ego boosting Post election rallies? This is the only place where he can avoid protestors and have control of the crowds. I would love to be the fly on the wall to find out what he is really saying about the very people in those small towns that live and die his every word. Anyone that knows him knows exactly what he is saying and it isn’t nice. But, nobody else is talking with these people, so they continue to back Trump. I could go on…time to work.

    • He is no different in character than any other politician — but, what were our choices? We need to think about a total reformation in politics, IMHO, of course.

    • Couldn’t agree more!

      Most people who become president of the United States are humbled by the office; Donald Trump on the other hand makes (or tries to) it ‘all about him’. No humility at all.

    • Trump isn’t a politician.. he was and is a businessman. My thought has always been that as a businessman that’s had as many problems through the years seen the same issues in America being made that he had made. With what he’d learned through the years could use that experience to build America back up.
      Also it is in his best interest to have a strong economy and a strong dollar. In an economy that could possibly see ten million dollar loafs of bread his fortune could be severely damaged. By keeping America strong he also would retain his wealth that he’s accustomed to.
      With a company that can brag an eighty plus employee retention he’s obviously doing something right.
      As for Russians no one came to my door to tell me our political system is broken. I figured that one out on my own. And from the conversations overheard I’m not the only one.

    • Give it a rest. This Trump -bash is getting old. Quit watching the news, already.
      It’s like deer looking into headlights.SMFH

      • As is Trump-adoration . . . God, I long for the days when I thought of Donald Trump as a sleazy casino operator!

        At least I have a reason for following this – my degree is in History – as this one day ‘is’ and ‘will be’ such . . . (previous to this I thought that the seventeenth century was full of ‘strange characters’. No more, no more!)

  11. Happy Birthday George,

    March 22 is World Water Day. Could be the day investors take a bath or see their stocks “plunge.”