Longwave economics is not particularly difficult, but it requires an agile mind to take it all in. Although the cycle length is nominally 48-64 years, there is plenty of drift because Depressions are never quite the same.
The US Civil War (1860) to the start of WW I (1914) was only 49 years. WW I being a “peak war” the following Great Depression (and arming) set up World War II as a trough war. Vietnam? Peak war…and since ending (April 30, 1975) that puts us (at the end of this month) 43-years into the war cycling. Thus, my consigliere’s forecast of a huge/global war 2022-2024 would fit the 47-49 year cycle length perfectly.
Tomorrow, on our Peoplenomics side, we’ll look at using cycle’s to set up shorter term expectations for the balance of this year and into what should be the most prosperour Depression ever, if that makes sense. Take a look at this chart for a minute:
This lines up the Dow Jones Industrials from 1921 through 1935 or so, with our Aggregate Index of US markets:
You can see the two points of view: One very, very bullish but one is outright horrific. All depends on which side of the final top in 1929 we’re really on.
It’s complicated: There was Saturday trading back then, which tends to make the 1929 blow-off look more steep than it was on a trading days basis.
On the other hand, just as Hoover started to “diddle with” imports and tariffs with disastrous results, his modern times protégé, Donald Trump, has made the mistake (so far) of messing with economic equilibria.
Meantime, his efforts to us “the wall” as a bargaining chip with Mexico in NAFTA talks is on the verge of blowing up as a caravan of Central Americans continues toward the US unimpeded by the Mexican government.
Yet Mexico’s lack of action is understandable. Most of the people fleeing from further south are economic refugees and part of a drug war after-effects that predates Iran-Contra relations and the US bowing to decades-long lobbying of the Booze Lobby to prohibition competition mainly from marijuana. Had we been less lobbied…but water under the bridge. Drugs were coming anyway and denying them simply drove them underground setting the multigenerational drug lord exploitation (aided and abetted by crooked regimes) until drugs are today a HUGE industry profiting all sides.
People don’t generally appreciate how Drugs have grown the economy. But you have rehab centers, tons of narcs, ICE agents, political back roomers, translators, coyotes, and even high-end car dealerships get a slice. Drugs are all “cake.”
It’s not the first time that drug control has lined up this way with economics. We notice that Prohibition ran from 1923 to 1933 before being ended in the Depression.
With good reason, too: Farmers were going radical and by 1933 there was fear of a rising rebellion against the central government – which is what likely lays ahead a few years on for us. Giving the public access to its “drug of choice” was very much along the lines of “Buying off the poor” to prevent rebellion.
History lays out a scenario for our future that is eerily similar: Although Donald Trump seems to “Have the numbers” (his approval is 50% in some polls). Despite announcing record-early for 2020, by then the economy could be in serious trouble. If it is, then the FDR echo would take office. Which we’d pencil in (as a placeholder if nothing else) as Los Angeles Mayor Eric Garcetti.
“Eric Michael Garcetti (born February 4, 1971) is an American politician serving as the 42nd and current Mayor of Los Angeles. A member of the Democratic Party, he was first elected Mayor in 2013, and won re-election in the 2017 election. A former member of the Los Angeles City Council, Garcetti was its President from 2006 to 2012. He is the city’s first elected Jewish mayor, as well as its youngest, and second Mexican American mayor in over a century.”
Garcetti also echoes of Bill Clinton – he, too, was a Rhodes Scholar. Given his background (and linguistic fluency) not to mention political savvy and being able to put together a slick campaign, Trump’s only path to a second term will by with a smoking economy.
And that circles us back to this mornning’s open.
It feels to me a bit like a “Buy the rumor, sell the news” week from here on in. In our work, a higher open today might set up a dandy shorting opportunity. (I got out of my short position Monday sensing a rally at hand…)
ADP Employment tomorrow “feels” likely to be solid, but as you know, we have those lingering fears about job cuts to come in Thursday’s Challenger Job Cut report. At some point all the promised “performance increases” (fewer employees) from all those ERP implementations ought to land on the bottom line.
Rosenstein Did What????
Says over here that he authorized The Mueller Fishing Expedition to go after Paul Manafort for work in Ukraine that has nothing to do with Donald Trump’s campaign. Wait…only Sessions recusal was from the Russia angle…so is this overstep?
But, hold the phone! If Jeff Sessions can read – and this is the egregious mission creep it appears to be, it’s time IMHO for another head to roll at JustUs.
In fairness to Jeff Sessions, though, he’s been busy doing things like putting quotas on immigration judges – because one of the Deep State lackey’s favorite ploys is to be “too busy, too backed up, to get anything done.
So that way, everyone gets to hang around…right?
Why aren’t they waiting in, oh, Mexico?
Who’s Worse than Hitler?
If you ask Saudi prince Mohamed bin Salman, it’s a short answer: Iran‘s leader.
Word’s out they’re talking about where and when. My guess is Putin will counter-propose somewhere more neutral.
This Kiss of Death Rally
Since, in our work, we’re already in a bear market (globally and now the US as well), it would be typical for the market to rally to the 200 day moving average.
With the turn around yesterday and Dow futures up 145 this morning, that’s very much what we expect to see happening.
Flip over to the Yahoo Finance chart of the S&P 500 here, then click the 1-year and then under comparisons specify the 200 day moving average. We dropped below it, rallied, then under, and now back again. Second time’s a what?
Has the War on Cash Turned?
As a public service, if you have any of that filthy lucre you don’t want…I’ll sernd you the mailing address here.
Totally Useless Department: “The Kardashian-Jenners Throw Over-the-Top Easter Party with a Lawn Full of (Money-Filled!) Eggs.
I laugh at the spectacle of it all, but at some point, these people are going to trade all that name recognition for something more tangible – like political office. Count on it.
Peoplenomics tomorrow…with more details about our view ahead from here. Ya’ll come back Thursday, though…