Fed Week and Futuring

A rap on the “Ballistics of History” to start the week.  Stretch some neurons and follow along.

If you don’t subscribe to our www.peoplenomics.com reports, you’re missing a real treat.

This weekend’s report was particularly good.  As one reader put it:

“Wow.  Now I need to run to the store to buy some razors…”

Another said Issue 743-B was worth the whole $40-buck annual membership.

If you are not familiar with our odd ways of looking at the future, including our web-scanning software over at www.nostracodeus.com, here’s the short version of what the future looks like for the next 5-years.  Tack this up on the fridge  and see how well the flow fills in:

1.  Between now and election time, there will be a generally rising sense of optimism.  That will bolster the markets.

2.  The Fed may actually do something besides talk-talk on rates this week.  Initially, that should result in a market decline.  It should end this week, or next, but down maybe a couple of hundred points from here, if history replays perfectly.

But in the longer-term, that will force huge dead pools of capital to come out of the closet and seek something better than ultra low-interest returns.

3.  With this, we should have a massive rally in the stock market in 2016.  Money seeking higher yields will drive the Dow up, I figure, to 23,000.  Between you and me, though, it could be closer to 30,000. 

The precise target, if you were to hold my feet to the fire, is 30,663 on the Dow.  By January-March 2017.

4.  There is one other thing that might be driving the Dow.  The arrival of a rate increase may signal the decline of the American dollar.  It could very well touch off hyper-inflation.  But only in certain asset classes.

We know that is baked in the cake because hyper-inflation (oh, and world war) is the ONLY proven way out of a Depression. 

5.  The run-up should last until September of October of 2016.  And after that, the market will be watching things closely.  Not later than April of 2017, however, and more likely March, whoever the new president is will have a major falter/stumbling, or misfortune.

This could be anything:  A crazy lone gunman, a stroke, a plane crash – who knows.  But whoever the Vice President is would then be thrust into the limelight.

This personality of the VP  will serve the historical role of Herbert Hoover.  Smart, but a half-load short when comes to charisma.

As who which of the likely pairings it would be?  Ah, there’s the rub.  We don’t know.  Biden, Bernie, and Carson as Veeps would be the best Hoover-like profile, though.

6.  At any rate, after the collapse of confidence, the market begins a huge, three-year decline which will take us to the most painful (and I should I mention violent) low in America’s economic history?

At the end of the decline, in 2020, home prices will be reduced to rubble.  In other words, if you have a $350,000 home, expect in purchasing power terms to have a $50,000 home in the spring of 2020.  Pray for better, but plan for that.  It could be a million or it could be $10,000.  Point is to compare loaves of bread rather than “money” because money is crooked.

7.  The profile of this collapse will be outlined in a new book I’m writing – and getting away to a casino this week actually helps me write, sometimes.  The title of the book is “Gambling on Your Future. Should come out in January.

Polarization Arrives

In the Great Depression, there were multiple “national personalities” that emerged.  We saw the Bonus March – people demanding money from government for WW I service.  There was the rise of Socialists, opposite that were the National Socialists, and let’s not forget Technocracy and others.

Even this morning, we can begin to identify the new “divisions” of America in the Greater Depression.  Donald Trump’s focus on immigration issues has caused large number of Hispanics to threaten to over-run the polls next year.

Which is just about a perfect fit:  The refugees from Mexico will flood here and rather than adopt the Melting Pot and become part of the solution, they will instead be the New Problem:  Which is bringing the corruption of Mexico to the USA.  I hope the La Raza groups figure out how they are being played, but, honestly, I am not very hopeful.

It will be another example of destroying the good guys.  We do, for example, have tens of thousands of former Mexicans who have become US citizens who want to live under a single language, shared dream world where private initiative is rewarded.  But the militants want to bring in cultural separatists by the millions (just as the jihadists do) and that’s all for the purpose of dividing America against herself.

And it sucks.

Still, like it, or not, the drill for the next year or two should be a huge market run-up,  widespread disappointment and loss of confidence setting in by the spring of 2017, and from there a spiral of either deflation (or hyperinflation) that will collapse all asset classes.

Once you have this perspective firmly in view, you can see where in terms of prepping, we have another year, or two.  Relax, enjoy, but don’t waste the time.

There’s no particular urgency for Elaine and I to move, nor sell our airplane until August 2016, or so.  The problem will be determining at that point, which asset class is least likely to roll over and in what order will others follow?

There are, you see, two ways we can get to the Dow 30,663 target around election time next year.

One way would be the massive flight to yield of low rate fixed investments.  The other would be a collapse of the purchasing power of the dollar (hyperinflation).

I don’t particularly care which one it is, since we like to stay hedged in such a way that the problem isn’t whether we will get a “Return ON our Investment” but rather whether we will get the “Return OF our Investments.”  ON will get you killed.  OF will see you through.

Which gets us down to where we are this morning.

Global competitive devaluations are slow to organize.  But we can learn a thing, or two, by watching Oil.  West Texas was down under $35 this morning while Brent (EU oil) was in the $36 and change area.

We also see that the price of gold is getting kicked around, but at the same time, our War Indicator, the price of copper is firming.  That is not from housing demand for wiring, friend.  Yes, there is still spec home building because of “free money” but what you need to remember is copper equals bullets (shell casings, but it’s too early to get distracted with a word-quibble).

Copper Tells Future News

As if to underscore this relationship (copper and war) we have to judge the Russian firing on a Turkish ship in the Aegean Sea overnight to be the most important story of the day.

That would explain the contrary move of the copper (up) because Turkey’s president Erdogan is really in a position to drag the West/NATO into war with Russia.

In many ways, a war between Russia and Turkey might slow the second Muslim invasion of Europe…which would be fine, I suppose.  Except that it brings with it a risk of regional escalation and the Russian leadership knows full-well that a simple EMP device (exploded in spade above the Kármán line) would be deniable.

They’d claim it was an exploding asteroid that blacked out the West coast…

Yet with it would come a probably US counter-strike and then we are fighting with stones and bottles after that.

If you wanted to pencil in an EMP “accident” in Q1 2017 as a possible high-point for markets, rather than a great presidential misfortune, that’d be fine with me.  Particularly if the (whoever is president) doesn’t respond, thereby showing weakness and that points to the exit door with “End of American Exceptionalism” painted on it.

No, the LAPD blasting a suspect with 33-rounds is not the driver of copper prices.

The Week Ahead

So we have the Fed meeting tomorrow and announcement Wednesday afternoon and immediately thereafter, a short decline, perhaps into next week.  But then, our rally gets organized as soon as we get past year-end tax selling.  Lock in them deductions!

Consumer prices will come out tomorrow morning.  We expect those will be in line with exceptionally low inflation expectations.

There is a big asterisk, however.

That is the current decline in the CPI has been heavily weighted by the declining cost of energy.  This means, other parts of the index are going up like crazy.

What will happen after we get the bottom in the price of crude oil is that the return of inflation will come into view.

When it does, the prevailing rate of inflation should be heading back up toward the 3% range, or so.

One reason the Obama administration has such a hard-on for bringing it as many people as we can swizzle is that there is a huge Social Security obligation coming down the road.  Despite the promises of a “Trust Fund” back when, Everyone knows Social Security is a pay-as-you-go system.

With the lock in place at zero for Social Security increases, there is a window during which top-loading of more workers (who pay into S.S.) ,makes sense.  The problem is striking the right balance between raw numbers on the one hand, and what portion of the new payers either as) hate us and want us to kneel to their sabers or b) they want to import the bullsit politics of Mexico and the rest of the Corrupto American Countries (and cartels) to our south.

For now, we will await the tiny bump in core CPI tomorrow, see if the fed raises rates.

We will hold off on buying a retirement home in Houston until the size of the crater from oil imploding can be more accurately measured.

And then we will sit back and see how history plays out.  California is already going the way of French Separatist Quebec…and it’s just a matter of time now before there is huge demand for teachers of Bugravian in order to fill out Court-ordered ESL nonsense.

The melting pot is about to tip over, but not until it all comes to a full boil.

And we’ve got a ways to go on that, yet.  The fires of history burn hot.

Whew.  Makes slot machines seem downright friendly, don’t it?

Now…where were we?