Although we don’t offer financial advice, we do nevertheless write and opine on both economics in general, the long waves within economics, and some of our own independent research very specifically.
Thus, we feel somewhat driven to announce this is likely to be the transition into?
Deadly Downside Day
We begin in the general economics area with the release of the Challenger Job Cuts report. Going into this, we expected the Markets had gotten a bit oversold at the close Wednesday. In some swing-trading aspects, a respite (in the form of a short rally) is likely due.
However, the general look of the market is “suckish” at best. The odds of Ukraine prevailing over Russia was always a bad bet from the get-go. And now, some of the early indicators are suggesting that we have entered a period like the 1970s. Where inflation becomes incipient, thus, we see gold (and BTC) trying to reprice higher due to the falling purchasing power of the Dollar.
Yet, the Dollar can’t fall too far – because it is supported by the Fed which we keep hearing is buying our own paper – to keep Titanic America afloat financially. Which must happen until the next “election” event a year off.
The problem, clearly visible in our meta-index (The Aggregate) based on putting equal resources into major published indexes at a suitable “time between the lies” tells us that we still have not rallied enough to claim higher highs are just ahead.
Sure, it looks that way to True Believers – and even our view expects one more marginal new high in order to fill an Elliott “trading box” a few hundred points up from here.
But the hour is getting late, as we inspect the chart here:
The problem? While this is daily data, as we showed Peoplenomics subscribers Wednesday, the weekly chart makes the double-zigzag “a” of 2 up disappear. As it does so, the zigzag becomes the “a” wave, meaning we have done a “c” of 2 and the market shills are desperately pushing for this to become the “e” wave (which would complete the larger 2) before we collapse in 2024 into a heap. Rather, more correctly, we begin to have “hot flashes”. Hot enough to melt glass.
“Where’s the Deadly Downside?”
Oh yeah, that.
Well, any damn fool can keep track of the S&P 500 average on a daily closing basis. Then (in a derivative work) calculate both a 2-day and a 13-day moving average.
In our limited back-testing, this ain’t a bad way to see which way the market is likely heading next. When the 2-day drops under the 13-day, it’s “Lookout below!” time. Which, in the pre-0pen pricing today was (wait for it…)
(Color chart on the subscriber side.)
The underlying dynamics of why this is so useful relate to the difference between STM (short-term memory) and LTM (long-term memory). Short-term memory is running low on “good news and fresh hype” leaving “bad shit we’re trying to forget about” ready to overtake us.
My consigliere and I go over this several times a week. As the market isn’t driven by news events. BUT – this is key – news drives emotional states over time and this is what works into people’s thinking.
One other useful observation: In order to be a “good investor” you can’t overthink things. If you can’t pull the trigger on a $10,000 (or larger) trade with never so much as a second thought, then your “hold on money” (fear of loss, or lack of practice) likely means you should use a financial advisor.
That said, demand to see documentation of their entire client list performance compared with the S&P 500 or the Russell 2,000 for the past five years. Be prepared for disappointment. Sorry to report, metrics and benchmarks are what we live by around here.
That said, IF the market closes below the early futures, then we put on the Karnak hat and begin to sense “slaughter of the elves” as the devil tries to kill Christmas this year.
Given events in the world, that would hardly be surprising.
Long Wave Econ Data
Sunday, December 7, 1941 was 81-years ago. We mention this because in the study of longwave econ, figures like Nikolai Kondratieff (Kondratiev, but we roll with the American Economic Society’s 1933 spelling). Yet two-bit pipsqueaks, like my friend Ehor, who worked with me on the 83-year currency cycle back in 2001, get little due.
Same with people from the University of Colorado Long Waves group days. Folks like Tony Plummer whose books are even today pertinent in the study of moods and markets are overlooked in the mainstream.
World War 1 started about 104 years ago. The modern analog (Ukraine) is a nicely (close to two Kondratieff’s cycles) rhyming event.
Which tells us there may be two Kondratieff cycles in play. One was the 52-years from 1914 to the ramp-up in Vietnam in 1966. While another might be seen in the 1941 to 1990 (50-years) between the Japanese attack on Pearl and the launch of the Gulf War in 1990.
In fairness to Kondratieff fans (of which I am one) the K-wave as it’s called can run from 48- on the low side to 56, or so, on the high end.
Notwithstanding, 2024 will put us 51-years, more than close enough in our work, to be a bull’s eye K-wave count from the 1973 Yom Kippur War:
“The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from 6 to 25 October 1973, between Israel and a coalition of Arab states led by Egypt and Syria.”
Thus, a modern analog may be seen blossoming – and in fact it’s doing so right now. Thanks to modern technology, though, we’re thinking this will be more Kippurs and bits, which the news drones on about.
Back At Reality
So, how is that Challenger Job cuts report, anyway?
“U.S.-based employers announced 45,510 cuts in November, a 24% increase from the 36,836 cuts announced one month prior. It is 41% lower than the 76,835 cuts announced in the same month in 2022, and marks the first-time cuts were lower than the corresponding month a year ago since July, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
So far this year, companies have announced plans to cut 686,860 jobs, a 115% increase from the 320,173 cuts announced in the same period last year. It is the highest January-November total since 2020, when 2,227,725 cuts were recorded.”
There is also fresh data on new unemployment claims.
And with this, how various states were feeling the pain:
From here, we’re set to dial-up the outlook for one week from tomorrow which is? Options expiration. Early this month.
Last month, our Aggregate was 38,691 and pocket change. Today (early futures) the Aggregate prices around 39,180. The useful question to be asked is “Are things 1.26385 percent better than they were last month?
(Surely, you don’t need a lot of coaching on this, because that infers an annual rate of, um, 16.2 percent!
Just a dirty little fact (besides Gaza and losing in Ukraine) that could begin to rot the minds of bullish hypsters. After the jobs data from the feds tomorrow, or will it wait?
Ah, to the SSDD part of the morning.
Houseplant by the nuts? Following the republicans doing the right thing (No UKR of Israel money until the US Border is fixed, which we’ve been saying for how long?) Republicans block bill to send billions of dollars of aid to Ukraine and Israel comes word that Biden willing to ‘compromise’ on US border policy as Senate Republicans block Ukraine aid.
We trust Joe Biden as much as we trust George Santos. Speaking of which: Candidate for George Santos’ Old Seat Convicted.
White replacement is still going full-steam in the UK: Rishi Sunak Government Crisis: Backlash Over Rwanda Plan | TIME.
Another “convenient” mass shooting. Yep, as the demonscraps make more moves on guns, another mass shooting to whip the public into support and forgetting of the Constitution. UNLV shooting: Gunman was a professor who sought job at school, sources say – NBC Connecticut. We’re wondering if he was a democrat, though.
The Global Wars drag on:
- Israel, Hamas Engage in Fierce Battles in Gaza City, Khan Younis (voanews.com)
- Russians take Sinkovka and advance into northeastern Kharkiv – Russian sources: “7,000 Ukrainians will be eliminated”
- Seems almost like Gulf of Tonkin II is being set up as we read How the US is protecting Red Sea shipping lanes as Israel-Hamas war continues.
Now Let’s Talk Solutions
Let’s spend money we don’t have for a problem that is largely made up and call it good, shall we? US pledges climate aid for cities, more private sector finance | Africanews
Then, if anyone questions simply “making up money” let’s turn the press on them to smear their position. Binance CEO Challenges Dimon’s Anti-Crypto Stance in Senate Hearing.
And if that’s not enough, here comes more math horsepower to fuel your AI replacement: Quantum computer sets record on path towards error-free calculations | New Scientist.
There…three solutions. Don’t anyone call us doom porn merchants. We’re here to help.
ATR: The “Do Quotient” Problem
One of the problems with computational life is that we have far more capacity to think about problems now, than actual DO something to revise or implement solutions.
Noticed this the other day when I was taking a “beat break.” Which is when I turn away from the computers and look out at the forest and ask “So, asshole, what are you really doing right now?”
(My self-talk is pretty brutal, but given I’m sort of loutish, it makes sense that strong language would be necessary.)
As the screaming match between my ears faded down a bit, I came up with a new way of evaluating my Life Performance.
Say I have spent an enjoyable morning surfing the web. Nominally, I’m “day trading” (Doing, work) but since the market moves a glacial speed and I need only a few seconds to pop off a trade, that leaves a ton of time to “do nothing”. Knowing (*protestant work ethic guilt) that I don’t deserve to really rest until dead, I convince myself that designing new ham antennas, working on an ebook, or just eyeing new eBay listings is somehow “Doing” something.
However, the far side yells back “If it doesn’t result in a worthwhile deliverable, it’s not DOING anything. Only count DOIING when you are on a task that is on a list. Otherwise your DO QUOTIENT is zero.
Working on deliverables is DOING.
Futzing around in TinkerCad on a non-specific Incredible Jaagub or better, my [Tinker this] Neat Vihelmo-Lahdi is NOT DOING.
Out came the stopwatch again.
(Gulp!) As I feared, my actual DO QUOTIENT Wednesday had dropped to just under 50%. Sure, a few things got done, like burning leaves, opening mail, planning today’s grocery run, and working on some server-side issues. But overall? It was a screw-around day.
The Other/Auditor in my head called me out on it.
If you ever get to feeling like your Life is not improving as fast as it should, take the time to run a DO QUOTIENT check.
A highly productive day can still be fun. BUT if the DO percentage of your time is under 80 percent, or so, harden up on yourself. Goggin’s yourself a bit. Focus on deliverables. On time, under budget.
Which is why today’s column might make sense. What a change, huh?
Fake out Dow drop early, then higher is our guess. Buy the rumor ahead of the Federal jobs report tomorrow, anyone?
Write when the screaming between the ears stops,