Cyclical Thursday, Summer Rallies?

We begin today with a short review of economic cycles, what this being the first day of summer, and all.

There are two kinds of investors:  The pragmatic “mathemetists” (quants) who believe is there aren’t a few arcane math symbols in someone’s forward view of markets, there certainly can’t be any accuracy to the outlook.

Business schools focus on this while quietly teaching in background the context of “false precision.”

Take driving your car, for example.  It you know that your stopping distant is X feet, and a brick wall suddenly appears in front of you at a distance of X-20 feet, it doesn’t matter if the quants have worked out that the wall is really at X-19.997448542 feet.  It’s still going to hurt.

In the fraction of a minute before you hit the wall, a few obscure decimal points won’t save you a nickel at the body shop later on. Nor in the ER or ICU.

Yet, when comes to investing, people are anxious to seize on “false precision.”

Such precision is a sham, a fraud, useless, and misleading.

Why, any day you can find – often within a single advisory firm – one “sage” who will forecast a target price of 5% higher for one stock in the next six months while the contrarian at the other “sage desk” (same firm, same stock, mind you) will argue no, that stock will be down 5%.

In fact, because of variability in how noisy trading ranges happen, we expect that both will be right, but only at a particular instant in time.  That’s why I advocate games of chance to hone your “take the money and leave” sense.

Fast forward to the first day of summer.

We often have what is loosely called a “summer rally.”  Why is this so?

Pick a domain of knowledge – and you will likely find a reason.

In medicine, for example, summer is when Season Affects Disorder (SAD) hits an annual low, most years.  People go outside, get more sunshine…the old ‘bod makes more Vitamin D (D3 being our fave) and this lifts people’s spirits.  Ego the phrase “sunshine vitamin D.”

The dairymen were onto this, and along with the FDA they put vitamin D in milk.  As a result, people who have SAD (*and invest) will possibly find the occasional mid-winter craving for a glass of milk.  It’s not the calcium (depletion of which is more insidious).  It’s the Vitamin D.  Gives you a boost.  Sunny mood…right?

That’s why, by the way, if you map heart attack rates, you’ll find them generally lower as you get closer to the equator and in countries with lower cloud cover and….but you know all this, right?

So let’s skip over a further medical dialog (I don’t want both the FDA and the SEC ganging up on me, lol).  Let’s go to cyclical finance.

One presumes you know there is an 11-year real estate cycle in California?  And others.  See Johnson, et al, 2004 as a starting point.

And then, of course, we have Clement Juglar’s Cycle which Wikipedia describes as:

“T…a fixed investment cycle of 7 to 11 years identified in 1862 by Clément Juglar. Within the Juglar cycle one can observe oscillations of investments into fixed capital and not just changes in the level of employment of the fixed capital (and respective changes in inventories), as is observed with respect to Kitchin cycles. 2010 research employing spectral analysis confirmed the presence of Juglar cycles in world GDP dynamics”

Which, when I was doing my masters jumped out at me as oddly timed relative to the solar cycles of 11-years, or so.  But we note that shorter solar cycles do occur – such as Solar Cycle 2 (1766) – that displayed a 9-year periodicity well within the Juglar range.

Of course, 5-Juglas Cycles come out to the 55-65 tear range of the Kondratieff (Kondratiev) long wave in the economy.

However, as we zoom out even further in cyclical relations, we see how Four Kondratieff Waves come out to the 220-year range and you do remember what that is, right?

Why, it’s our old friend the DeVries 210-year solar cycle!  See Raspopov (2006) in “The influence of the de Vries (? 200-year) solar cycle on climate variations: Results from the Central Asian Mountains and their global link.”

Of course, we all know that the Maunder Solar Minimum was a 1645 to 1715 event – conveniently before someone decided to count sunspots as a solar cycle proxy with Solar Cycle 1 commencing in 1755.

This, as Anatoly Fomenko might argue (in the series History: Fact or Fiction?) might be viewed as one of those “how interesting” quirks of the Scaligarian historical timeline, which Fomenko argues with his New Chronology was mostly “made up” in the so-called Dark Ages.

Please note that Fomenko is labeled (Wikipedia) as offering a pseudo history, despite the obviously Medieval eclipses and such scattered through the Scaligarian timeline.  Seems when monks were busy rewriting history, no one bothered to notice that a three-hour eclipse well north of the equator would have been a matter of a few minutes in the alleged holy lands…but a bit off point relative to this morning’s discourse on cyclical economics.

Not that an inquiry into why European languages have so many Slavic roots isn’t very interest.  As is Michael L. Gorodetsky’s  discussion of the historical make-over by the monks in “The Theft of the Millennium.

Anyone who reads history and has the high-level view, can see at once that anyone west of Kiev has been indoctrinated to believing the monk-tales (Scaligarian timeline) while anyone east of there understands there is an alternative chronology.  In fact, I just sent a note to a colleague Wednesday seeking advice as a Sinologist, of Fomenko’s claim that the Great Wall of China is not such an ancient work, at all, but something more recent – Medieval period – not thousands of years old…

The old expression “History is written by the winners” is one reason Fomenko is anxiously labeled pseudo history in the (winning) West.

While such cycles in business are in the history books, they are nevertheless contentious.  Does solar activity make humans a lot more excitable? Unpredictable?

Solar Cycle 3 was approaching peak (1778) when a certain country near you underwent revolution.

The US Civil War broke out just about the peak of Solar Cycle 10 (1860).

The Knickerbocker Panic 1907 immediately followed adjacent to Solar Cycle 14’s peak in 1906.  And there was that earthquake out west..

Not long after the Solar Cycle 15 peak (1917) a series of panics spread through markets lasting until 1921.  A difficult solar decline.

Similarly, the Great Depression began with the 1929 Crash which was (again) just on the 1928 backside of Solar Cycle 16’s peak.

The peak of Solar Cycle 17 coincided with the peak of the Secondary Depression (1937).

Then the Cold War broke out proximate to the 1947 peak of Solar Cycle 18.

The US Vietnam war-frenzy peaked in 1968 arguably and that was the peak of Solar Cycle 20.

We could go on with the discussion but in all the evidence you’ll read, there’s a sense that humans are a little more “nutty” around the solar cycle peaks and a bit more pragmatic around their bottoms.

US Futures this morning are recovering a bit – after being down about 100 early, they look to trim losses.  The past week of panic in global markets may be lifting.

The study of psychology and human events also implicates moon cycles, as well.  With a manic decline seeming to pass, will there be a manic rise into the next full moon.  You know, that big piece of cheese in the sky for lunatics?  Or, will the mania be to the downside?

Six-days time should tell.

Commies in the News Stream

Credit where due to the Washington Times for reporting on how Russia has been exploiting the non-critical thinking mainstream media in the US.  Exploiting the misunderstanding of the border mess with Mexico and dividing America further.

In our report Wednesday, we mentioned how the Obama administration did precisely the same thing – yet since he was “special” the left-wing media gave Obama a pass.  Double-standard, you see?  No republican obstruction, either…just so’s we’re clear.

Looking Ahead

Philadelphia Fed outlook just out:

Still, a pretty good outlook.  After the release Dow futures were down 60 but the NASDAQ had turned up.

Am I the only one who has noticed how the NASDAQ keeps bumping upward?  And isn’t there an old saying “Tech leads the way?”

They Still “Don’t Get” Trump

Washington’s ‘capricious’ trade actions will hurt U.S. workers, China warns.”  They still don’t understand him, do they?

Unelected Governments

Don’t work worth a crap, so we’ve said – while pointing to the megalomaniacs of the EU.

Now, someone agrees with us: Fiat slams EU regulators for acting as supranational tax body.

Duh…it’s always about what?  THE MONEY!!! Capiche?

Personal Motivation

In Time magazine?  Uh-huh.  Try their “How Setting Big Goals Can Help You Achieve Your Wildest Dreams.

Hmmm…my wildest dreams would be shouted down by #metoo, lol…Well, they did say wildest dreams, did they not?  Get dial-a-Harvey on the line and let’s get a second opinion…


Koko, the csat-loving  gorilla who mastered sign language, dies at 46.

Zeus the Cat eyes me with concern.

More on the ‘morrow.

17 thoughts on “Cyclical Thursday, Summer Rallies?”

  1. Somehow we received a print subscription of Time Magazine. I have never gotten past reading the cover …straight into the garbage. Then I think of David Rockefeller gushing a couple decades ago about how much he and his ilk had “accomplished” with the help of publications like Time.

    Everywhere I’m seeing media talk down the economy and the markets. Wonder why? Also pondering how their planned “accomplishments” relative to markets interact with solar and lunar cycles? More importantly, are “their” accomplishments good for them or us?

  2. NK leader Kim, went to China after his meeting with President Trump to learn how China set up their Economic Develop Zones to become an economic powerhouse, and still remain in control. NK is looking to learn & follow the Chinese model to economic prosperity. Kim got President’s Trumps OK at their meeting. That was NK’s goal for the meeting. Nukes were a non issue because the program was financially draining the country.

    The Democratic liberals are up to the same thing at least in turning the US into a Putin like Russia. Let in as many immigrants as necessary to vote Democratic to assure the Democratics win every election and gain total control to impose their will on the people without any more Trump like interuptions. After the democrats accomplish that goal, will their view on immigration change. Yes, they will be against illegal immigration because they don’t need the immigrants anymore & have enough citizens getting handouts to assure their reelection.

    In Today’s world, how many crybaby democrats live in the neighborhoods they cry about – NONE. Do their children go to the same schools as the people they are crying about – NO. They live in rich, gated, walled communites with armed guards, to insulate them from the crime out on the streets. It is OK for their security guards to have guns, but not OK for citizens to own guns.

    This is the direction our country is going in unless we all vote Republican at the next election & future elections until the swamp is defeated.

  3. So far, not much of a summer rally going on. Welcome to the smell of summer volatility!

  4. Summer rally not really happening so far here on the solstice. Could be a summer of volatility rather than a rally in anything.

  5. Let’s be the smart team for once.
    A much better way to solve the US immigration problem (assuming it’s a true problem rather than another political ploy to stir up The Base and distract them from realizing they’ve been had, again, on tax cuts):
    1.Legalize All Drugs. The War on Drugs is over — we lost. Since it set this Central American migration problem in motion, break up the artificial monopolies we are giving to these violent, murderous Drug Cartels. Will save us and make us over $1 trillion/year. Plus, it costs us over $60,000/year to keep one person in federal detention — both immigrants and nonviolent drug felons. More savings. Go to the Portugal model, and use say $50 billion/year of the savings or taxes for rehab. Far, far less negative social consequences.
    2. Impose Huge Criminal Penalties on Employers. Say 10 years mandatory, first offense. A couple examples, and Big Farming, Big Manufacturing, etc. will get the message. Pronto.
    Way better than spending $100+ billion on a useless wall — a ladder in Mexico costs $10 to make, plus it’s reusable. Best, Mike.

    • The CIA and Bush family make too much money on “illegal” drugs. The murderous cartels are just the middle men.

    • I have to agree with the Portugal model! It’s actually reduced drug use and eliminated the criminal monopoly at the same time.

      We need to control the border – that’s an absolute. Walls/fences help, but never without monitoring. Tech can’t replace eyes and instant action. We also need to have appropriate penalties for the invaders and the employers. These need to be significant, yet fair, or juries will never convict. If we have a formal “guest worker” program, it would eliminate excuses on the part of both of the above groups.

  6. ” I advocate games of chance to hone your “take the money and leave” sense.”


    Thanks George, for this sentence! It fills gap in my understanding of the method in your madness.

    Other than enjoyment, I could never figure out why you’d spend time in casinos(other than the female viewing pleasure). Count me in for a big goal that will infuriate #metoo.

  7. Why are a small select group of athletes so much better than the crowd…ie Michael Jordon.

    The have anti gravity DNA in their bones.

    • I tend to think of disasters as not being planned; this immigration ‘cluster’ sure was . . .

      It’s becoming apparent that what Trump needs to fear is NOI anti-Trump people, but rather his own fevered attempts at ‘being president’.

      Panicking about the mid-terms much?

  8. Who reads 99% of the Romance novels (and there are a lot of them)…WOMEN. Why doesn’t ME TOO banish Romance Novels. Might as well neuter women too.

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