Here on the Doorstep…of 1929!

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:

(Continues below)

 

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.

Oil Steadies

Although there are plenty of jitters about trade war implace.

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.

Putin-Trump Summit?

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?

“‘Being cash-free puts us at risk of attack’: Swedes turn against cashlessness...”

As a public service, if you have any of that filthy lucre you don’t want…I’ll sernd you the mailing address here.

TUD

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.

Sheesh!

Peoplenomics tomorrow…with more details about our view ahead from here.  Ya’ll come back Thursday, though…

Comments

Here on the Doorstep…of 1929! — 24 Comments

  1. Every time you start whining about Mueller’s “mission creep”, I think about Ken Starr wrecking Monica Lewinsky’s life just so he could have something, anything, actionable on Clinton. And then I ponder that it could just be that you are blind in one eye and can’t see out of the other.

    “…he and his team of prosecutors hadn’t hounded and terrorized just me but also my family — threatening to prosecute my mom (if she didn’t disclose the private confidences I had shared with her), hinting that they would investigate my dad’s medical practice, and even deposing my aunt, with whom I was eating dinner that night. And all because (Ken Starr), standing in front of me, had decided that a frightened young woman could be useful in his larger case against the president of the United States.”

  2. Unrelated. Just finished reading the book…
    Factfulness: Ten Reasons We’re Wrong About the World–and Why Things Are Better Than You Think…by Hans Rosling.
    Great book to put things into perspective…especially If you are a doomsayer. It changed my way if thinking…for the better.

    • How does that book turn the growing homeless drug addicted, heavily tattooed, mad max, crime ridden population into a positive? Im watching my inner city and even surrounding areas become blighted unlike anything ive ever seen. Syringes and human waste are common sights in the inner cities , not to mention camps of homeless and their blue tarp covered dwellings that are nothing but pig pens and all this during a supposed great economy?

      How are we suppose to interpret that into a positive future?

      • It’s only going to get worse. As the economy tanks and the hordes of working poor will more than likely head to the city’s in search of better paying positions.
        One in three are on social assistance many living off of plastic. Everyone is tied to future not the present we are all banking on future earnings instead of past growth. In reality at this point only the top ten percent are showing profits and only the one percent that are propelled into the stratosphere. In 1978 congress sold out the middle class with what was penned the millionaires relief act. The way I read it was A couple years ago the twenty percent plus was sold out by the spending bill.
        Now time will tell. The rest are basically two paydays away from homelessness

      • Sounds like the neighborhood where I work, 7th & Market in San Francisco.

        A perfect description of the 3rd highest real estate market in the world. I’m seeing the same sights everyday. $200 hotel rooms next to boarded up decrepit buildings….

      • yup you were right on.. .. I didn’t read the book but have it now.. its a short book and I think after coffee and a danish or two I should have it done. but from what I have just read .. what I am seeing though is the life expectancy has increased for both sides the developed and undeveloped for one reason.And I agree whole heartedly with what I have read so far.
        Now consider this..Reductions in deaths from circulatory system diseases, such as heart disease, were the biggest contributors to gains in life expectancy through the years most of the gains were From 1921 to 1950, several major advances in public health took place ( medicare..and Medicaid..gains in immunization and antibiotics out reaches to aid those without a health system in place) .

        From 1951 to 1981, declines in deaths from infectious and parasitic diseases, and respiratory system diseases were the next biggest contributors to years gained in life expectancy, while cancer survival did not play a part in improvements in life expectancy. However, from 1981 to 2011, longer cancer survival contributed to a gain of 0.8 years (about 10 months) to the life expectancy of the population.
        Now we as a species live in a time where we have unlocked many of the secrets of the microbe world and gaining in knowledge every day. there is a greater and greater chance that we could go back to the days before antibiotics either by over use where we create super bugs.. or from some disaster where we would be thrust back to stone age days. lets face it.. we don’t build anything anymore.. our nation is fat,we eat unhealthy, we are not fit and we are dumbing down our youth at a rate so fast that it is mind boggling our nation has one of the lowest ratings for general health of our people http://www.who.int/heli/risks/ehindevcoun/en/ http://thepatientfactor.com/canadian-health-care-information/world-health-organizations-ranking-of-the-worlds-health-systems/
        we are better than Slovenia though.. it doesn’t matter if you live in a developing country or undeveloped country.. it depends on access and what medications we have come up with to combat known illnesses.

        . At present our kids no longer can think out a problem they have to use a box to look in for the answer. since the vast majority of our medications are produced outside the usa.. and just sold here we no longer develop them just pay for the development. go to any hospital and see who are the better specialists.. if lets say an emp.. was to happen..or a drought like the one that hit egypt.. or an earthquake where the water quality was to go bad again you and I both would see this longevity we have now go backwards in the blink of an eye a new dark ages.. it wouldn’t take very long at all for the knoweledge we have gleaned off of our recent pasts to pass away libraries lost to time….just like the dark ages and the plague.. we on the other hand take a lot for granted..something I learned a long time ago now.. what we take for granted can be taken away at any time by an illness or freak accident of nature or ignorance of man..
        anyway.. here I am formulating a mental image of what a book that i have only read one or two pages ofs position and I haven’t read the book yet.. it is my opinion though based on what I have read.. and yes I agree with the position the author has so far shown. He is right..there isn’t any doubt on that..

        https://www.youtube.com/watch?v=c7gDBVmgIRA

    • Hans has passed. Things not as good as he thought. :)

      Born: July 27, 1948, Uppsala, Sweden
      Died: February 7, 2017, Uppsala, Sweden

  3. Prohibition of desirable and inexpensive to produce services and products is by far the best way to make them profitable, both for the suppliers, and the regulators. The second best way to make illegal products and services profitable is to overtax and/or overregulate them.

    Imagine if cannabis, a weed which requires no pesticides and little in the way of fertilizer, were legal, unregulated and untaxed. It would grow by the side of the road. Harder drugs and alcohol sales would plummet. Prisons would empty. Police would become far less busy.

    If prostitution were legal, unregulated and untaxed . . . . The mind reels.

    If whiskey were legal, unregulated and untaxed, the good stuff would sell for pennies on the dollar. Vodka would be $5 per GALLON. For the really pure stuff. Beer perhaps $3 per gallon for a light lager.

    If gambling were left alone . . . . Who knows?

    The taxes and asset forfeiture proceeds on these products probably don’t cover the cost of the police, prison, legal and armament purchases by the concerned governments, but those all provide “good” jobs.

    With data becoming cheaper due to supply and demand [e.g. Netflix, $500 UHD TV sets, $100 tablets, cheap cellphones replacing not only landlines, but even network TV, etc.], and wages stagnant for decades, we are entering a new ultra-low-cost set of lifestyle choices for the majority underclass. They have already begun breaking loose from prohibition, and just in time, as they cannot afford to support bloated institutions which feed on them.

    Sometime try driving down rural roads in the outlying rural areas near Metros. Look at the literally millions of decrepit old RVs and mobile homes with multiple old cars parked in front of them. For these people, the Depression has been here for a while. They are just really good at adapting to it, largely by detaching from the matrix as much as possible. Inside those RVs are big screen TVs, computers, and possibly beer and wine fermentation (legal, hence an income substitute), meth brewing and pot growing (illegal, hence profitable). Their freezers are full of wild pigs and other game (income substitute). A number have booty call for barter or $$. Poker and blackjack are everywhere, possibly with attendant forms of entertainment. Most “income” is unreported, untraceable and maybe not actually taxable, in many cases, because it is really income substitutes.

    This is how people survive being thrown under their country’s bus by financial and political interests, and is why there is a future for cryptocurrencies as our civilization unravels, as they all do, from centralized corruption and overreaching.

    I know small towns where more than half the 18-24 year-olds use meth. It forms the basis of their economies. Sustainable? I think not.

  4. Up 400 points so far today. Im starting to wonder if we are gonna get the much needed correction before summer comes.

      • Eye did. Down 500. Jeesh. It’s scary to watch. Good thing I’m on a huge paid for by goverment light rail project.

      • YES,,,its a seasaw …up 400 1 dau down 400 next day , on a weekly basis. I think you and I are both on the same page, and waiting for the real correction. For me, that begins around DOW 20,000 or less. Im not a trader like you are. I dont have the time or interest to do it. Im just looking for the best entry point before
        { I hope} the summer bull market kicks in. This china trade war, can be smoothed out within the next few months, and that would be positive news that could help propel the markets to higher highs, but I wont enter the market until I see a real correction that I think is long overdue. 490 points down 1 day, then 400 points up the next day, isn’t gonna be enough for me to enter this market casino.

  5. So what I did invest in today was an 8000 BTU air conditioner by Haier for my kitchen and I tried it out and I like it I like the functions the electronic functions the remote functions I was able to get it in there in the window but before I did that I fell down with it in a mud puddle is like this is crazy so don’t give up you know so if you’ve ever played in the mud before you’ll know that’s what really gets you motivated special BCAA to women mud fighting you know wrestling in the mud now that kind of exciting but my point is.i lot lost it but maybe you will find yours. lots of laughs and lots of love.
    They say that laughter is the best medicine and it does work very good I know I tried it once or twice hahaha

    • We played in the mud when we were kids, it was fun. We ate our share of dirt, too. We are now told that kids don’t get to eat enough dirt when they are young as it helps their gut bacteria set up nicely. Maybe you needed that mud bath!

  6. So I asked if George should be investing in his downside options and it says a sequence of three

      • I called up about some insurance for the car that I don’t drive anymore and I swear the insurance rates is gone down 50% from last year when I call so y’all to get out there and call around see if you can find some cheaper insurance a lot of people do that and I find out well the market has dropped for insurance because

  7. Well the price of Litecoin and Bitcoin is going up so I asked my dictionary if I should be buying and it said Stand Down stand clear so I’m standing down

  8. So George, what is your thoughts on H.R.5404 – To define the dollar as a fixed weight of gold?

  9. George, good on economics again. BTW. Our two most disastrous wars, Cheney’s breaking Iraq and the War on Drugs, also set mass migration in motion. Thank you, conservatives. You hint at legalizing drugs entirely, which on balance has worked out to the plus side in Portugal. https://en.wikipedia.org/wiki/Drug_policy_of_Portugal

    Lastly George, thought we were finally off this Mueller nonsense. We only see the tip of the iceberg, but 4 convictions and 2 pending indictments (so far, LOL) is hardly a ‘fishing expedition.’ In fact, it is actually its antithesis. Stop worrying about where the facts will lead, and let this Republican career prosecutor finish his work. Best, Mike.

    • You need to look at your history it was the ss FOR that started the drug wars. 1935 made opium heroin and other illegal then in 1937 pot. Both done with dems hold both houses of Congress. It is true Nixon first named it war on drugs but if one looks at his record of wage and price freezes and takeing the dallor off the gold standered it could be argued that he was a progressive. And there is are problem not dem vs rep but progressive vs freedom

  10. Solid article ! This supposed trade war with China could turn into very positive news . They can let it boil over for a few weeks, then announce that the U.S./China have come to a agreement to make tariffs more equal for both sides. This alone could propel the markets to new highs for the summer/fall months of 2018
    { coupled with the U.S. pulling out of Syria, tax reform kicking in, major companies bringing jobs back to the U.S., etc} . Then factor in the wild cards , like a agreement with North Korea and the FEDS deciding to not raise interest rates in the next meeting, all this could make for a skyrocketing DOW/ Nasdaq.

    Im just hoping the Dow pulls back to around 20,000 or less in the next 4 weeks . I believe a 10-30% correction is needed, in the short term, in order for the markets to hit all new highs thru the rest of 2018. These constant triple digit up and down days, are not ” real” corrections, but just capitulation, computer selloffs, and speculators.