The markets should make an explosive move in the next three weeks, or so. When they do, it will resolve one of the most difficult questions facing investors…do you “gamble your future” on markets rolling skyward?
We have a number of critical indicators to watch, such as this morning’s Chicago Fed National Activity Indicator:
“Led by slower growth in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) declined to +0.10 in March from +0.98 in February. Three of the four broad categories of indicators that make up the index decreased from February, but two of the four categories made positive contributions to the index in March. The index’s three-month moving average, CFNAI-MA3, decreased to +0.27 in March from +0.31 in February.”
Reduced to a picture, it looks like this:
This doesn’t seem too bad – and the market put on a minor bounce in the next day or two. Friday was a bad day for bulls. But, by the end of the week the party may be nearing its end.
Remember, stocks are speculative and they discount the future. They really need a good fairytale to keep rising. Not may of them around. Even the corporate tax reduction is all but fully discounted now.
We the People are being screwed by two corrupt political parties. They talk solutions and deliver bupkis. The National Debt is going through the roof. At the same time, the Federal Reserve is dialing back its “easy money” a bit – and this will begin to impact markets.
The place to see this is in two summary tables in the H.6 Money Stocks report. You can see in last week’s data that in the period “to March” (which means through the end of February) M1 money creation was puffing up at a 7.2 percent annualized rate based on the most recent three months.
When you look at the second summary, for the week ending April 9, that hefty annualized rate of M1 creation had been dialed-back to 5.2% annualized. It’s a big swing and it’s likely one of the factors behind the market beginning to look “toppy.”
As of Friday’s close, our Peoplenomics Aggregate was at 22,584. Since the first week of 2018 came in at 22,991, one MIGHT argue that stocks are down 1.78% from the first week of the year. And optimist would “cherry-pick” the data, using the last reading of 2017 (22,362) instead. This would support the idea that there has been a (whopping 1%) rise in general stock prices.
It’s a foolish discussion, however, because there is so much more money sloshing around the system.
The Federal Reserve in this period was “making up money” at better than a 5% run rate, while even the bullish argument that 1% for the year suggests an annualized 3% for the markets.
Here’s the problem with that: If the market’s up 3% for the year – and the money chasing the market is up 5-something percent – elementary economics says there is still systemic deflation in play.
Which is why even though gold and silver were “strutting their stuff” about in the past few weeks, in deflation the prices of hard assets tends to decline.
Rising Prices on Declining Volume is another key concept to understand.
This basically says that as prices rise, the number of sales will decline.
Tomorrow morning we’ll see the latest Case-Shiller Housing data and the go-go markets (Bay Area and Seattle) will be the most revealing. That’s because prices have been going up like crazy. But, when prices rise on falling number of sales (called ‘volume’) then a top is most often at hand.
The NASDAQ, for example, set a very short-term high volume rate on March 27 and the low came in April 1. Since then, prices have been marching steadily higher, but volume has been steadily declining.
Most important point of the week is this: What kind of “health” and “growth” are we seeing in the real economy?
The concentration of money in the “hands of the rich” continues. But for most, something as simple as a power steering unit going out on the family card, can wipe out all the savings of this year, and maybe last.
It’s then that real people wonder, in effect, “Have I just worked my ass off for six months of savings, only to have it taken away by a single car repair?”
Neither political party has delivered on the higher standard of living that real people work for. While the FBI has lost the confidence of the American people (because of its political witch-hunting), the truth of the Mueller fishing expedition with a side of hookers is that the whole political distraction has been designed to keep you wrapped around the political axle, so you don’t complain about the power steering unit costs.
The charade is revealed, though, when you read stories like the AP’s “Russian lawyer questions why Mueller hasn’t contacted her.” NSS, unless, of course, it’s more fun chasing hookers, perhaps?
The problem, in other words, is that “The richest 1% are on track to control two-thirds of the world’s wealth by 2030.”
We’re not looking forward to an economic Depression, but such catastrophic events do have their silver lining.
It goes like this: When markets collapse, so do savings. And, since most of the savings are held by the rich pricks in the one percent, they will finally be stripped of their wealth.
If an economic depression doesn’t come along to save the middle class, the Rich will simply write big checks and “buy a longer life” while the rest of humans will be doomed by “managed healthcare” which is, in itself, another rigged game. (They often treat only symptoms, not causes.)
Not to start you off with a Monday Bummer. There are companies that appear to be making an effort to both “do business” and “do good” at the same time.
Late Spring This Year
Ran the data out this weekend and sure enough, temps here are running about 6-degrees cooler, on average, than last year.
Not just here that spring’s late: Heavy rain and thunderstorms from the Southeast up to the Northeast this week.
If weather sucks, so does farming, and that set up much higher food prices for the coming fall and winter.
The Coming ‘Trade War’
Although it has dropped from noise headlines for the finally illerate, the problem hasn’t gone away. So we will keep pointing to stories like U.S. fund managers brace for trade war with focus on pricing power.
Wearable Tech the Answer?
Not so much:
World of Bizarre
Don’t touch a shaman, huh?
Moron the ‘morrow…