If you are visiting UrbanSurvival today and wondering “What the hell’s going on with Markets…collapsing like they are this morning…” the answer’s simple.
You missed Monday’s column, or you would have already been braced for what’s coming at the (bloody opening) this morning.
I say bloody because we were looking at the Dow dropping between 300 and 400 points early-on. And, unlike the lunch money short-side trade I did to kick the week off, this morning I’m on the sidelines.
Therein lies an interesting tale about trading confidence, if you want to hear it. Sure…
After warning Monday that we were “Eyeing Possible Global Collapse” my dentist called. Not only do I have a tooth-cleaning session, but a crown needs to be made-up for a troublesome tooth. Since that appointment will come right about the time “Big Money” will be placed on the market’s future (after the opening “amateur hour”) I’ll be out there in nitrous-land. Not where you want to be tradiong from.
As a result, we went to cash Monday – no point being locked into a position even if for only 3-hours and not being able to react. Losing money is not our deal. Besides, no market moves straight down…and I would refer you to our preferred global count which calls for a decline now, then a summer rally and then the sheet-hits-the-fan later on.
Write this down in Ure Trading Book: Don’t play if you can’t pay 100 percent attention! (Take care of your teeth, too.)
Second point: Market’s don’t crash from Tops. This assumes you noticed that the 52-week high in the NASDAQ Composite was 7,768.60. Since we closed Monday 7,747.02, that was only 40-odd points from the index all-time high. Hardly a place of concern.
What seems reasonable is for a lot of people to begin panicking. Nervous Nelly’s.
“Oh, I better get out right at the open,” they’re thinking “No point losing money if you can avoid it, right?” That kind of thinking can lHence, my morning of nitrous is no big deal in the greater scheme of things. If markets were 7 percent lower than they are presently? Well that would be cause to reschedule the dentist visit.
But, it’s not. There will be bigger market declines in the future, and it only takes a few of those 1987 and 2001-2003-type events (and let’s toss in 2008-2009 while we’re at it) to not only keep the wolf away from your door, but also land ’em on the endangered list.
I’ll take clean teeth, new crown and Door #2 tomorrow.
The market takes a bite out of people who don’t follow things closely, and in the afternoon rubble, we will sort it all out for our Peoplenomics.com subscribers tomorrow.
So much for the very short-term view.
Are we still at the tippy top of a long-wave economic disaster? Well, now that you mentioned it… uh huh.
I took the liberty of updated our Global Index based on the overnight action in the rest of world (RoW) and tossed in the look-ahead future’s price in the pre-open. Here’s what it looked like:
(Don’t look if you haven’t had your coffee yet!)
A little discussion is in order, ias we grope the uncertain future:
We are in a position where (from 2009 lows) we have done an Elliott I up (complex as a 1-2,1-2) then II down. Then we had a really nice Global III up, followed- by the IV down and now we are (I hope obviously by now) in – or ending (iv) – of V. Down is just ahead for the world.
If that is the correct count, then we could make one more run to the stars. BUT, if that’s it for V, then our first stop will be at the red circle. Be a fine place to bounce. This fall? Who knows? The next few weeks? More the stuff for the subscriber side.
The lower trend channel – as you can see – if where things get interesting. Since the Elliott V already counts as complete at the big trend level, we might get a really solid bounce around the red circle. But, once this is done, down to the yellow circle would make the most sense.
In term of the macro view of what may be coming, the run from year-end 2017 highs down to the red circle (Fall? Next 3-weeks?) might be seen as a 1 down. The II up would be the “rally off red” (the bottom of the long-term trend channel. Then a major III down would follow.
That’s when we could drop down to the yellow level…
As always, this is not financial advice, only a view of how the long wave in economics expresses when everyone’s trying to make money. All the time.
Oh, boy. Slept through Econ 605, did you?
OK: Contrary to what NuThink in Education may tout, there really are semi-predictable long waves in the economy. Lots of them.
The main one (though widely misunderstood) is the Kondratieff (Kondratiev) Long Wave. Russian fellow, working for Joe Stalin, predicted the Great Depression and then that America would come roaring back. Payoff for him? Gulag time. Thanks for the love, Joe.
The K-Wave as we’ve been tracking it since MBA days for me in the 1990’s, should run from 48 to 64 years. A late colleague (Dan B) held that the cycle was very precisely fixed. The data (which we find persuasive – including my consigliere) is that there’s a fair bit of wiggle-room. Guidance not dictates.
Let’s take the K-Wave that ended with the “Trough war” called World War II. (Yes, Vietnam was a “Peak war:). The problem for K-Wave students is no one is quite certain from where you measure things.
A good point. We might measure from peak to peak of the stock market. But, this is fraught with problems because of inflation, confidence, regulation – a litany. In other words, if I asked you “When was the absolute dollar purchasing power peak?” odds are you’d have no idea. (This is the kind of question Peoplenomics concerns itself with.)
“Well, how about we measure from interest rate lows, then?”
Sure about that? There were arguable lows in the 1931-1932 initial Depression bottom. Then there were more lows in rates in the Secondary Depression bottom (1937-1939) and still more in 1942-1943 which was the bottom of the Trough war. There was a time the war’s outcome was uncertain…do you want to count from there?
To an extent this is further muddied by the 2001-2002 work Ehor M.and I did on long-term currency cycles (83.5 year, or there abouts).
But all of it reduces to long wave interest rate cycles as a practical matter and if you flip over to a long-term view of the 10-year Treasury on Yahoo, click to the Max timeframe view, the peak in 1980 becomes totally evident.
America didn’t really need Jerry Ford or Paul Volker to actually do ANYTHING to “whip inflation now” (though it was a fine PR ploy for the sheep). The interest rate cycle was primed to roll over at anyway – it was a cyclical peak. A baboon could have done what Volker did…but not so sure about the Penn Rail turnaround.
Let’s agree for a moment that the half-wavelength of the K-wave is somewhere around 30 years. When should the massive decline into a Second Depression have actually started, then?
Based simply on rates: 1980 plus 30 suggests rates should have bottomed in 2010…and oh, yeah, they did. Accompanied by the collapse of the Housing Market Collapse.
Problem in history was the market breaks in 1920 and 1921 led into the 1929 crash – so are we on the precipice again? We are tinkering with trade and tariffs which rings a bell. Smoot Hawley summer of 1930…capiche?
Since April 2009, we have been rallying like hell, but that’s because of massive technology change. The Internet (and the Dot Bomb collapse I predicted in the September 1999 paper “Death by Dot Com”) was a bump on the road.
Ure is not the only one with keen insight (be charitable, OK?): There’s the matter of the Federal Reserve. And when the economy gets in trouble, they have a dual mandate problem. basically comes down to jobs and prices.
The catch in all this is that there’s no mention anywhere of sound money. If you’ve got any economic sense at all, you’d go over to the Minneapolisfed.org website and run the numbers of the long-term government “Theft by conversion” scam that steals everyone’s money through Inflation.
There, you may confirm my work: what cost $100 in 1913 when the bankster class seized the lawful duty of Congress to ensure the sanctity of America’s money, now requires $2,535.43 to purchase.
Or, if you divide that last number into 100, you discover that the residual dollar “purchasing power” today is 3.944 percent of what it was back then. The rest has been eaten by compound interest.
Again, we get back to the question “Where’s the starting line” from which cycles are measured, then?”
Well, in terms of currency cycle work (and our 83.5 year math which is compelling, though the threshold of public recognition is lower than the 3-5 percent we postulated, so it might be a 93-year (or even longer) cycle. What matters is that you can’t count years when money became more valuable as it did in several years during the Great Depression.
The only considerations worth worrying about today?
1.How far down will the market fall?
2.When it bounces, how much will I make?
Enough. There’s no other story around that matters. We are clearly in a replay of what Hoover was doing just before he ascended to the White House: dinking around with trade.
Which is why we still think Donald Trump is set to reprise the Hoover presidency…with the only question being “Can he avoid it?” And, if so, in the first or second term?
The disclosure that the FBI had moles who influenced the outcome of the Hillary email investigation – and this Obama replay of DACA kids – which he skirted with the help of the co-opted NE liberal press establishment, is all merely another “interesting distraction.”
The only story that matters to your future is what kind of economy do we have now, and with robotics and such coming along, what will it be like in 10-years when the auto-burger store replaces all the lower-end of American food service?
“As you go through Life,
Make this your goal:
Keep your eye upon the doughnut
and not upon the hole.”
Money owns the future. Not political parties. See where the dynamics lead and hedge your bets accordingly.
Which is what we’ll cover in Peoplenomics tomorrow.
Breath deep the gathering gloom. Nights in what? It’s enough to give an investor the moody blues.