Anagnorisis:  The Moment of Recognition.  Oh, yeah…it starts today.

We’ve been telling you for several weeks to brace yourself.  You’ve had plenty of time to gently move money and self to the sidelines, to buy isolation goods, stock the freezer, and brace for the worst.   Just in Case, of course.

Right out of the chute this morning, we are seeing wild swings in the market futures, but a reasonable guess is we will drop 825, or so, at some point today based on early futures pricing.

Even if you don’t subscribe to our $40-buck-a-year reports (like above), here’s what one of our key charts in the twice-weekly  ChartPack looks like.  Again, based on early futures trades:

Unfortunately, as Elliott Wave fans know, the curse of such analytics is there is  always an alternate count.  People get very frustrated by this.  We would  think (and THIS IS NOT FINANCIAL ADVICE by any stretch) that there’s a  chance that the market could drop down as low as touching the “red zone” area.  From there, it’s possible the market could launch a rally.  Or,  we rally but no highs this spring or summer and that could cue “end times” in the fall.

Let’s face facts:  The U.S. has been in an almost unprecedented bubble ever since the previous bubble blew up in 2008-2009 and didn’t bottom out until the early spring of 2009.

Over 20-years of research into the somewhat obscure field of long wave economics, the Longwave, and the work of both Nicolas Kondratieff (also spelled Kondratiev by modernists who haven’t read the early papers he contributed to the American Economic Society in the 1920s), one thing has become abundantly clear:  Bubbles and Collapses are a regular part of economic life.

Perhaps, one of the best examples in the 10-11 year California Real Estate Cycle. Not clockwork, but not a bad guide, either.

Another key point is that market bubbles can be readily compared with the classic 1920-21 runup into the 1929 peak and subsequent Crash.  In the history books as The Great Depression.

In my work – based on something called “market aggregation” (so you’re not misled by a “hot sector” like, oh, the FAANG stocks), we have already (as shown in the sloping arrows below) done a solid rhyme on the 1929 riff in markets.

How to Use Your Head

In addition to the mess with novel corona virus, there are several other concurrent “flashes of nightmare” rolling by.  There ought to scare the hell out of anyone.  BUT, periodic Depressions are inevitable, so here’s how we’re pretty sure trouble is just warming up with today’s market drop.

You see, major recessions are linked with what political ideal?


I will make this real easy for you:  America historically takes a “hard left” when a major recession has broken out.  Free lunch sells when people are hungry.

Think back to when the Housing Bubble was beginning to slide people’s life savings off the table.  Fall of 2008, was it not?  And who got elected president?  A left-leaning street corner organizer out of Chicago. Remember?

Which means, as it looks like we may be close to sliding down the slippery slopes again, democrat-socialists – like Crazy Bernie may surprise the complacent middle and conservatives.  See this morning’s headline on Drudge touting what?

Revolution on the LEFT

All of which is fairly predictable.  And, as I point out in my forthcoming book (“The 100-year Toaster“) it’s because we haven’t figured out (as humans) how to “get motivated” unless we “get paid.”  In other words, problem number one is Behavioral Economics.  We have a serious “wiring problem.”

The result of this “something for nothing” mindset will predictably include more social change than you can shake a stick at.  And related social factors?

The Sounds of Socialism Rising

Like the music the next generations are listening to? 

Take a listen to a couple of tracks from a group called “Dustbowl Revival” – Doubling Down on You – and, oh, because this is so very much on point with COVID-19 and Locusts, and all that – John the Revelator.” 

Especially, appreciate that cyclical economics drives a curious circuit and John the Revelator was a “mutha-giant” at the time of the Great Collapse into the Great Depression:

Blind Willie Johnson recorded “John the Revelator” during his fifth and final recording session for Columbia Records in Atlanta, Georgia on April 20, 1930. Accompanying Johnson on vocal and guitar is Willie B. Harris (sometimes identified as his first wife), who sings the response parts of the song. Their vocals add a “sense of dread and foreboding” to the song, along with the chorus line “Who’s that a writin’, John the Revelator” “repeated like a mantra”

Critically important (to using  music shift  as a concurrent indicator of economic outlook for change) is the change in production values.  Forgetest thou?  Ure ran a recording engineer college?  Production values are the heart and soul of the art form.  In the blow-off phase.  Low values, street-corner music when bad times is-a-coming.

Dustbowl Revival tracks harken back to a time when we didn’t have sampling, VST plugins, and high-dollar music production specialists in Nashville and Burbank.  This is  more honest and earthy music that sounds great even without a mic.  No synth I could pick out, either.  Just damn good musicians having fun as a group and being wildly entertaining.

Sorry, I should have saved this for subscribers, but on a day like this, a little brainfood can sometimes open the “doors of understanding.”  Go take a listen to DBR doing “Riverboat Queen” and again:  Real musicians, live performance, and music returning to its roots as a live art.  Roots of the last Great Depression.

Skeptical?  Go listen to the lyrics of the first two 1930s-born Woody Guthrie tracks over here (Do Re Mi and Dust Bowl Refugee) and unless you’re tone-deaf, you’ll definitely catch “the vibe.”

Here’s another economic cycle marker for you:  The popularity of border crossing stations into California.  Used to keep Dust Bowl Refugees out of the state in the last 20s and into the 30s. Agricultural protection was the gambit, of course.

I remember going through one on the 10 driving out to Burbank as it was being mostly shut down (except for commercial rigs) in 2005.  Lights went off in my head:  “They’ll be back” I was thinking.

There’s our future.  And it ain’t pretty.

But, saying “It ain’t so!” never turned back a tide…and this tide looks to be turning, right here, right now.  Left.

Be sure to look at the Fed Repo desk this morning – it’ll be interesting to see how much money they throw at this tide-coming-in problem.  Money bags instead of sandbags?

Then look carefully.  What do you see?  Denial or Genius?  You make the call as Warren Buffett says bank stocks are ‘very attractive compared to most other securities.  On  the other hand, Buffett sees economy ‘a little softer,’ says several Berkshire businesses impacted by coronavirus.

We have to wonder if Trump has called CDC lately since it was Trump teases possibility of US-India trade deal during massive rally.  Uh…’scuse us but isn’t the bigger deal whether globalism is running off the rails?

Naw…the administration is taking the hard line in the story: Mnuchin: Washington Still Expects China To Meet Trade-Deal Commitments Despite Outbreak.

And Costa Mesa, California has won a  court fight (for now) to keep COVID19 infected people out of it’s city.  “Federal and state agencies blast Costa Mesa’s action against sending coronavirus patients to Fairview.”  Big will squash small.  It’s only a matter of time and power.

Should be a fun day here on Asylum Earth.

No worries out in the woods though.  Besides, how is this for an isolation consolation prize? Krispy Kreme rolls out national deliveries.  Just in time for the funerals.

Data Still Matters

Just out is the Chicago Fed National Activity Indicator (CFNAI) and goes like so:

“The Chicago Fed National Activity Index (CFNAI) increased to –0.25 in January from –0.51 in December. All four broad categories of indicators that make up the index increased from December, but only one of the four categories made a positive contribution to the index in January. The index’s three-month moving average, CFNAI-MA3, moved up to –0.09 in January from –0.23 in December.

The CFNAI Diffusion Index, which is also a three-month moving average, increased to –0.16 in January from –0.25 in December. Thirty-six of the 85 individual indicators made positive contributions to the CFNAI in January, while 49 made negative contributions. Fifty-six indicators improved from December to January, while 27 indicators deteriorated and two were unchanged. Of the indicators that improved, 30 made negative contributions.”

“Negative contributions???””  Who are these people who can’t master simple directional language like UP and DOWN.  Political-mush-headedness, thanks for asking.

File this kind of crap under upside corrections and downside rallies?  Or, is that me offering a negative contribution…shit…I dunno sometimes.

The Lying Wuhan Masters Spreadsheet

Fairytale time!

This run speaks for itself:  Have we “talked the virus to death???”  So, cases that had been going up at the 2 1/2 percent rate are now going up at a less-than one percent rate?  Pass the crack pipe and how’s your fentanyl stash?

I’d never say this is hogwash…more like bat crap.  But, to each their own.

Tomorrow morning a two-part report because we will be eyeing the new monthly Housing report.

Just got the first Fed Repo number: $40.75 billion.  Not going to turn a tide with that and the futures were down 825 when I looked just now.

Have a great day and don’t do anything stupid.  I’ll do enough for both of us.

Write when you get rich,