The next couple of weeks could be pivotal for markets for any number of reasons. It’d be worth your time, though, to follow at least some of the data.
As we have told subscribers to our Peoplenomics.com site we have something of a cognitive conflict going on. It takes a bit of explaining, but it’s worth the effort, I think.
(Continues below)
When you think back to the 1929 blow-off top, in chart terms it looks like a massive “Head and Shoulders” formation. There’s a left shoulder, big peak, then a right shoulder. Oh, and then the financial world was done until the 1950’s.
When we line up the bottom in 1920/21 with the 2009 bottom (when the Housing bubble burst) we are fast-approaching the tend of the right shoulder meaning financial destruction could be here around March 22.
That date isn’t just pulled “out of the air” since 55-days is a very common run-time between market highs and collapses.
Now put that thought aside for a sec. The problem is that we haven’t had as big a peak YET. And there’s a pretty good case that we still could have a blow-off into summer and maybe keep the financial system going until this time next year.
This argues the “right shoulder” case. And yes, the charts are on the subscriber side for both outcomes.
Here’s the problem we’re facing that’s a terrible “cognitive bother.”
If this week is a replay of the LEFT shoulder (the one arguing for a higher blow off high in coming months) this week should trade as follows:
Up today, down Tuesday, up Wednesday, Thursday, and Friday.
With the future’s looking positive (+170 on the Dow) the first day looks like a slam dunk for the optimists.
If we are in the RIGHT shoulder case (where the world ends sooner than latter…like in March….the week should trade like this:
Monday down, Tuesday up, Wednesday & Thursday down, and Friday should be up.
THIS IS NOT INVESTMENT ADVICE. But, what happens when you apply my odd Boolean view of the data, it says the alignment of up/downs is presently running 78.94% in harmony with the directional calls of the “we’re done in March” case. BUT the Bulls (expecting a blow-off up move, yet to come) can take comfort in that their case is right 57.89% of the time.
Visually (a whole different way of considering the data) and it’s pretty convincing that the Bulls have a prettier “picture.”
Still, Bulls have a tall order: Between now and March 15, or so, they need to add 75 points-per-session. Failing that, no new All-Time-High in time to reset the clock. And then…well….it won’t be pretty.
Bitcoin the Spoiler?
While all this number-crunching continues, there’s the question of whether the recent collapse of Bitcoin (to less than half its all-time high, wasn’t a kind of “speculative pressure-relief valve for stocks.”
I mean, seriously? Look how the shape of the curves matches up between the 1929 stock market and Bitcoin’s blow-off:
Obviously, it would be in ideal harmony for the collapse of Bitcoin to resume about the time the stock market turns to Jello, but that’s what get’s us up every morning: Trying to find those days when we can click into Casino Wall Street and scalp a few thousand in low-risk profits.
Even so, we still get it wrong because in a way it’s like trying to paint the Aurora Borealis accurately and in advance. We do have our losers. So for now, we continue in cash not wanting to put an apple on our heads and play William Tell.
After being up all night studying for my six-month blood test (an ordeal that requires fasting) I’m convince that occasional losses are a good thing in a perverse way.
No telling what my triglycerides would be given an unlimited prime rib and lobster. Getting it wrong now and then may actually save me.
CFNAI Out
For those unschooled in economic minutia, that’s the Chicago Fed National Activity Index which now goes like this:
The Chicago Fed National Activity Index (CFNAI) ticked down to +0.12 in January from +0.14 in December. Two of the four broad categories of indicators that make up the index decreased from December, and two of the four categories made negative contributions to the index in January. The index’s three-month moving average, CFNAI-MA3, decreased to +0.17 in January from +0.43 in December.
We might as well finish up the weekly calendar discussion at some point:
Durable Goods, International Trade, and advance Inventory data come tomorrow morning. (Since I’m fasting, I sure hope it comes with sausage, eggs, hash browns, toast, milk, and orange, and a cup of chai tea to finish…say, I’m not obsessing, and I?)
After the sausage – I mean data, we’ll do our usual second blast when the Case-Schiller, Standard &Poors, CoreLogic (and the pizza guy) Housing data. My sense (and some of this is thanks to front-line comments from reader Andy who’s suffering through the Seattle Housing Bubble) we should be ready to peak.
As we mentioned in Peoplenomics this weekend, when “us grays” were young, we could buy an average home for twice annual household income. Today that’s up to 6.1 times average annual income.
Why anyone in their right mind would pay those kind of prices is beyond me. But then, too, who said today’s young have even a clue as to what in their right mind is?
Wednesday GDP comes out. But here’s the slant on that: When the Fed is printing off money faster than needed (look up Modern Monetary Theory for details how this scam works) the nominal (headlines for idiots) number will probably be OK to great. But back out inflation and the money games.
I wonder if anyone has considered suing the G20 for racketeering?
Trends to Notice
Robotics, Vision and Motion Control Industries Set New Growth Records in 2017. They are coming for your job.
We need to tax machines based on the number of humans displaced, or we will end up with no tax revenue. Remember who said it first years ago!
Are supermassive black holes going to eat the universe? Apparently, I’m not the only one planning to break my fasting.
This may not seem like a big deal, but pay attention here:
Berkshire more inclined to repurchase stock than pay dividends: Buffett.
This is downright scary. What it tells me is that a couple of near geniuses (Buffett and his bud Charlie Munger) can’t anything worth buying but their own stock.
Remember last week when I was telling you “Beware: Consumer Super-saturation“?
When Buffett’s buying his own paper instead of putting in American factories and industry…says to me time’s close to “up.”
Inflation Lurks: Corporate America’s new dilemma: raising prices to cover higher transport costs.
And if you’re watching the military bulking-up (by everyone) around Korea, take note of these two items:
China’s Lurch Toward One-Man Rule Under Xi Jinping Should Worry Us All/
Chinese rights lawyer ‘mysteriously’ dies in hospital.
Everything’s a coincidence, right?
Analysis from .mil specialist warhammer:
“Rocket Man is no doubt pleased that his comrade Xi to the North will have his back for the foreseeable future, health and coup attempts permitting.
I wonder how all those progressive Western companies that so heavily invested in China feel about now? Tech giants spreading the gospel of social media and globally interconnected apps will be pumping out products manufactured by a budding totalitarian regime.
Allow me to put on a futurist hat and wargame a worst case scenario – I and many others already suspect that many processors and their embedded firmware manufactured by the Great Dragon State have been pre-programmed with nasty Trojans. How appropriate, should the western tech industry literally find themselves collectively screwed, bent over and held hostage to Fifty Shades of Emperor Xi.
I’ll bet the farm that SecDef Mattis is already thinking ten moves ahead on China’s next moves. Certain Chinese manufactured cell phones are already prohibited in the DoD and in Federal offices (hmmm, wonder why?)
Worse: Is the rise of Xi to power not totally unlike the rise of Hittler in 1933? Thus, one looking at historical rhymes might well ask: How does lebensraum translate into Mandarin?
Will Taiwan have the “Pole” position?
Moron the ‘morrow, so to speak.
This is off the subject, but I read an article this morning about laws in Florida pertaining to guns that prohibit lawmakers from making laws that endanger the sake of guns. This is corporatocracy as it most evil. Here is the quote in the paper. Thoughts?
“In this case, if municipal officials pass a firearms-related law, they must pay a $5,000 fine and lose their jobs. They can also be forced to pay up to $100,000 in damages by any “person or an organization whose membership is adversely affected by any ordinance” — such as, say, the NRA.
Beam Furr, the Broward County mayor, told me he’d love to consider county-level gun-control measures such as a gun registry, a ban on assault-style weapons, or even just a requirement that more information from school and mental health records get added to background checks. But if he pursued these options, he said, “by law, I’d lose my job.”….
Yet… here is what also happened last week in Florida according to the same article…
“days after one of the deadliest school massacres in history occurred on their doorstep, as the child survivors of that massacre watched from the gallery — refused to consider a bill banning assault-style rifles. About an hour later, those same legislators passed a resolution declaring that pornography endangers teenage health. Say what you will about porn, but to my knowledge, it has not been used to slaughter teens.”
Isn’t that an infringement on 1st amendment rights?
Hold the phone, bubba. Let’s talk about the FOUR COPS OUTSIDE who did nothing and the pROMISE PROGRAM OF HOLDER OBAMA
Had the twerp not been nanny-state mollycoddled, he’d have a record and could not have purchased the gun.
17 reasons why democrats are bad.
Hey, the cops are there to protect and serve …….. The State – they ain’t there to keep anyone from being killed, only to clean up the mess after. By the way one of those officers heads up a program to teach firearm safety in mosques …..now we have multiple shooter possibility’s based on a teachers description of the shooter in full body armor…….
Ok, the Promise program is very misguided and should be reviewed, especially given the Parkland incident. Jake Tapper of CNN angrily grilled Sheriff Israel on this very subject the other day.
But, there was more to this story than people are saying. Lynda Cruz, his adoptive mother who died from pneumonia in November 2017, told mental health investigators in 2016 that her son suffered from ADHD, depression and autism but they insisted he received his necessary medication as prescribed, according to the report.
A counselor at the school told the Florida Department of Children and Families investigators that a professional from the mental health facility had visited Cruz and “found him to be stable enough [to] not be hospitalized.” The school counselor expressed concern with the department, according to the report, and said she and her staff wanted to “ensure that the assessment of Henderson was not premature.”
Nonetheless, the Florida Department of Children and Families investigation was “closed with no indicators to support the allegations of inadequate supervision or medical neglect.”
Middle school and high school teachers referred Cruz to individual and family counseling, the records show. They held parent conferences and called social workers. They sent him to in-school suspension, and they sent him off campus. For a time, they sent him to a school for emotionally disturbed youth. Finally, after he was disciplined for an assault at Marjory Stoneman Douglas High School, they asked for an assessment of the threat he posed to his school, and ultimately he was expelled, about a year before he returned with a gun.
A person familiar with the records confirmed their authenticity, and interviews with teachers, administrators, and those who knew Cruz — along with other records and accounts — show that he was well-known to school and mental health authorities, and was entrenched in the process for getting students help rather than referring them to law enforcement.
There are many more reports, but none of it has to do with the Promise program, because up to that point, Nicolas Cruz had not committed a crime to be charged with. He had the signs of mental illness and the proper authorities were made aware, but no action was really taken.
Another thing…the fact that 4 uniformed and trained guards couldn’t stop the mass shooting is the result of either poor decision making, poor training or deputies that were assigned this duty, because they didn’t have the mental toughness for active street duty. We don’t know the answer to that yet…But…what makes Trump think that arming teachers would result in a different outcome? The perp had gone to school there and knew about the armed guards on duty, but it didn’t stop him from entering the premises.
My comment was based on the NRA practically writing laws that punish people for wanting to re-write laws that damaged the NRA. Substitute the NRA with any other industry and see how that would work out. There is precedent, but it involves the laws in some Muslim countries as it relates to their strict religious beliefs. In those countries, you can get killed for even suggesting to change their laws.
Yep, Holder is on record, years ago stating he and they will go after guns. Deep State Agenda written all over this. They set up the parameter rules and Cruz got perfectly caught in their trap
First of all, it is not an article, it is an opinion piece written by Catherine Rampell and published in the WaPo 0n 2/22.
Second of all, she “wrote” her op-ed, a damn’ near word-for-word rip from a Wa-Po op-ed “written” by Travis Andrews, published on 2/21, and which is a “creative rewrite” of an op-ed written by Clark Mindock and published in the London Independent on 2/20.
I shouldn’t need to suggest it is written with a particular political slant, but all three “reporters” can fasten the Velcro on their left shoes without adjusting their posture.
BTW, where does she mention the reasoning for the State law? (So’s ya know, it was passed to compel UNIFORM enforcement of Florida State firearms laws, and incentivize local governments to strike arcane and redundant weapons-related laws from their books. Statutory text may be found here: http://www.leg.state.fl.us/statutes/index.cfm?mode=View%20Statutes&SubMenu=1&App_mode=Display_Statute&Search_String=790.33&URL=0700-0799/0790/Sections/0790.33.html )
I didn’t realize Broward County had a mayor…
People who write opinion pieces are under no obligation to fact-check, even themselves, but that is ridiculous.
Oh yeah, the Mindock piece, (which Andrews copies without attribution) quotes a Florida Representative (Guillermo-Smith) who although a legislator, apparently doesn’t know the difference between a “resolution” and a “bill…”
I wonder why there would be ‘great’ concern over the ChiComs having a communist ‘president’ or a communist ‘president for life’? 100 years ago there were Kings and Queens and Kaisers and Tsars who ruled their nations for life and no one got heart burn over it. We’re quite content doing business with the communists (whomever’s in charge) would it really change any business practices if China declare itself a kingdom? Xi’s rule is just another dynasty.
President Xi is far more nationalistic and somewhat more xenophobic than his predecessors. China was starting to open up more to the west and travel there was relatively easy. If China continues in this direction, it could become a more closed society, to the detriment of the world. It may well become far more imperialistic.
China is defined by its dynasties and has been for 5000 years. “Just another dynasty” pits raw collectivism against raw individualism. This could be a problem both for international travelers and those who wish to do business with the middle kingdom(not to mention war).
Yes, agree in principle with your comments, but those dynasties which you refer to had neither nukes nor cyber-warfare capability.
The China of today could issue commands to ‘turn out the lights on Broadway’ with the mere push of a button, and while doing so, impart great damage to the West at the speed of light.
Xi’s despotic ascendancy is an anathema to American democracy. Xi is the yang, America is the ying. Xi’s China is the yang. The two must either eventually achieve some unforeseen and unnatural balance or destroy each other. The latter is the least preferred option but may be the most likely.
The ChiComs of the 21st Century are VERY important because they manufacture the lion’s share of hardware and computer processors used in the hi-tek West today. These technologies are driving Western markets and services (Amazon, eBay, Wall Street) and are an integral part of our collective lives and financial well-being.
We now know for a fact that the Chinese corporations ZTE and Huawei are inserting malware into their phones and processor equipped products. Take one step forward and imagine a future American-based autonomous vehicle surreptitiously communicating with Xi-landers. What if that vehicle carried a person of great importance? Would they be safe?
If future conflict ensued over the South China Sea or Taiwan, should U.S. leadership fear for their own safety in any number of daily activities due to Chinese cyber-hacking?
Sure, this all sounds very Sci-Fi, but in the world of Cyber, nothing is as it seems. This maps to the guidance of the ancient Chinese general Sun Tzu, who – when elaborating on deception – proclaims:
“Hence, when able to attack, we must seem unable;
When using our forces, we must seem inactive;
When we are near, we must make the enemy believe we are far away;
When far away, we must make him believe we are near.
Every keystroke you and I make, every “Like” on Facebook, every ‘buy’ on Amazon is being tallied and compiled to categorize YOU. The same approach is being applied at national leadership levels.
So, what to do . . . #1)Trust the Chinese people. #2)Do not trust the autocratic Chines leaders! #3) Same advice generally applies to ‘all’ national leaders on this rock
Beware of all things web based. Seriously! Nothing is as it seems. Your very mind is being hacked and you are entirely complicit in the operation.
Politicians are mere ‘hood ornaments.’ The real control is held by ‘the powers that be.’
As far as those powers that be are concerned, “all you are is just another brick in the wall.”
Be prepared to ‘tear the wall down!”
I agree completely. I know many Chinese people and they are good people. Generally, it was safe and fun to travel in China around 2000. I’ve not been back since, though I’d like to. I’m much more concerned about the xenophobia today. Having no large scale fab capacity in the USA for critical chips and devices, we are indeed at the mercy of a foreign power. We seem to be moving back toward MAD as the only remaining bulwark against insanity.
We can hope, pray, and prepare to the best of our ability, and that’s about all. Building bridges between cultures might help to a degree.
I would counter that the empires of the past were as controlling to the people they had under their influence – think Rome, Spain, England – and the United States. The ‘slaves’ and almost-slaves are not the consumers of the most modern devices and will look with envy upon what they think is a better life. This will destroy empires . . . and ‘The Prince’ is still a great book to read.
U S America is dissolving into an also ran Country. Everywhere, everyday, the evidence increases. Pick a subject, anything and there it is, crumbling apart before our very faces. It’s going to be a hard fall with no return.
There is always a return. Look at England, the previous USA, who lost most of its colonies, but still is a major player in the world. Germany couldn’t defeat England. The USA will return, but it first has to pay for its excesses & then, back to business as usual.
Spain. Portugal, and Holland didn’t recover, neither did the classic civilizations. The reason England and France (twice), and Germany and Japan (after WW-II) returned to prominence is directly attributable to the amazing engine of the U.S. economy.
We no longer possess this capacity, nor does any other nation. When we go down, there will be no external industrial and financial engine that is either capable or inclined to “fix” the U.S.
Absent our force of presence on the World stage, everybody else follows us around the bowl and down the hole. Welcome to the Thunderdome…
George, good piece today. Yes, this automation thing will kill employment, and then ‘demand.’ Your idea about taxing robots is sound, but how in the world are you going to get more taxes passed? Since Reagan, the Rs are clearly the party of ‘Borrow and Spend.’ (And the Ds have never been good at stopping them. Even they were ‘stupid’ enough to actually pay for O-care, instead of borrowing for it! Ha. Ha.) I mean, cut 13 million people’s medical coverage so Pfizer, Merck, etc. can get a $10 billion buyback each? And all those good paying medical jobs lost? Taking money out of the hands of people who spend it to put it overwhelmingly into rich sink-accounts where it will not get spent? All because even Rs couldn’t stomach putting more than $1.5 trillion on the national debt, this time. Ha.
It will be ugly in about 5 years when automation hits us full force. We will badly need the deficit stimulus then, and even Rand Paul will have loaded up the national debt so much by then that we’ll have to print money like Venezuela to try to hold off the collapse. This will end badly. Mike
It’s what Depressions are for, Mike. To clean up the books and let a fresh herd of crooks at ’em.
Noticed no comments yet (not back from Dr. to post?). So thought this might be an appropriate link; to fill space. Not specifically appropriate for today,, but since this is on balance, a financial and prognostication site,, it think it is cogent.
https://www.esquire.com/news-politics/a15895746/bust-big-tech-silicon-valley/
Article has parts I’ve seen floating around, but is scary to see the facts in one place. Author is insider, who has been around and knows. Definitely a capitalist, but thinks that is not what is going on now..
Some takeaways from article: (not direct quotes).. $5.8 million produced per employee. (small amount of employees to create fantastic wealth) Best hope for developers is to get sucked up into the whole. (no chance for independence). More billionaires than millionaires. Paid corporate taxes in the 15% to 20% range. Fines paid for malfeasance are miniscule.
More, smaller companies would create more wealth, and possibly save the middle class. Otherwise, we’re doomed (but didn’t we know that)
Lebensraum in Mandarin Chinese? My best approximation(in pinyin) would be “ming2que3 ming4yun4 ding4zhi2”. Unfortunately, characters and tone marks don’t display in the comment section.
Perhaps someone with better Chinese can improve on this. The Chinese have a clear advantage over the USA in that every Chinese person is taught English from middle school onward, and has learned to read and write one of the most difficult languages in the world. This challenges the brain to grow and handle these very different ways of thinking. The tonal aspect of many Asian languages also recruits both hemispheres of the brain in language processing. We can do this too, but China has a 40 year head start.
Ah haaaa, the elites teach their children FIVE languages, can you guess what they are???
DOW Up 340 so far Monday / today, so looks like the can is being booted one more time, eh?
George I would like to comment on your remark about topping next year. I posted it on my favorite Ewave site awhile back. The 7 yr cycle has been very regular since 1980 with our latest
Occuring in Jan./Feb 2016. Ideally the next low would be Jan 2023. If the crest was ideal it would be June 2019. Secondly, the Decade cycle is due to put a top in the latter part of 2019. The 4 yr cycle has gotten weaker and has been inverting with last high being in the latter part of 2015. If this happens again then 2019 would be an inverted high. As I count it the 40 wk cycle which has been very regular going back to the 2016 low. We should put a low in the 1st week of June. This last high slightly right translated so I think this past ATH will be exceeded. If that happens the next 40 wk cycle low would be March 2019. From that low the next 40 wk cycle ideal crest would be Aug 2019. I have formed the hypothesis that next major top could be 2nd/3rd quarter of 2019. This is just a roadmap for me. We must conform to the market not the other way around
In other words, nobody knows the future, regardless of how much we study. The future will be determined by your personal consumption in all respects. Happens to be my conviction.
P.S. Perhaps, this is my last post, because what’s the use? One morning we’ll wake up etc. ;-)
Or not wake up…which is why I post the occasional “:Realms:” content. Make ready content
Come now, have you no faith Bruno?
So all counties in Florida must follow the same state gun laws, well that is common sense gun control. Otherwise we could be compliant in Palm Beach County and subject to arrest by the Broward cowards as soon as we pass the county line. The adults need to think this through and stop with the emtional posturing to “do something for the children.” Gov at all levels failed at Parkland. Legal gun owners did not cause this evil person.
No, I’d say Obama-Holder’s Promise grants – that prevented the perp from being previously busted – and doesn’t put all offenders in the database was all part and parcel of the Nanny State making its own messes for taxpayers to clear up.
All all the school shootings across does America all these mass shootings are contract killings shootings between the FBI and the CIA and all the others these are contracted just like the Oklahoma bombing was that was contracted people are paid a million or two to do jobs like that the person that did the shooting at the school I’m sure made a million but he had to be a really sick individual he was probably a foreign person to kill children for money.
https://youtu.be/PpkEal1obl4
Doesn’t look like the stock market is going to test the early Feb low.
The timeline of evil.
https://youtu.be/hyApkynqr_Y