Markets Enter “Upside-Down” Mode

You may be wondering “How did you manage to blow the outlook for Monday so badly – usually Ure much closer to right?”

The answer is simple:  The markets have entered “Upside-Down” mode.

Here’s how it works:

In “right-side up” mode, the market would have looked at the trashy job numbers of last Friday when the market was closed.  The futures seemed to have it called right – down well over a hundred Dow points in the pre-open.

This would be a normal reaction to sucky data. 

When markets entered the “Upside-Down” mode, however, bad news becomes good news.

The market fears higher rates like some people worry about a heart attack.  What’s going on now is that the bad news is seen as running the Federal Reserve out of the rate-raising game.

This upside-down (bad news is actually good) would persist a while, too.  2,100-2,150 on the S&P is not out of the question. 

The risk of such insanity is also why I have made no secret of my love of cash – the third way – and in Depressions, in which –  as the history books teach us –  Cash is king.

Critical Fed Data Due

imageThe one thing to be aware of in markets today is the release of the Federal Reserve’s Consumer Debt figures.  Called the “Consumer Credit Report” (because they’re on the receiving end of the debt – on this side of the table it’s the yoke of debt slavery) it looked like this going into today’s data due out at 3 PM Eastern:

There are two types of debt reported:  Revolving which is things like credit cards.  Non-revolving is the other and that includes things like student loans.

One of the real problems with the data is that it is aged well before release.  The numbers coming out today will reflect data for February and this is April, right?  So trying to get much more than a general sense of things is like trying to drive by looking in the rearview mirror with binoculars.

This data series, along with retail sales and consumer price data are conditions where “upside-down” market thinking could be a plus for bulls.

I forget where I read it, but the term “best dirty shirt in the laundry pile” certainly is a fair summary of how the US markets look compared to Europe and many other places.  Our Peoplenomics™ Trading Model has been consistently right through this market – proving my gut (although smaller from dieting – see Coping) is still not as good as my math.

Here Comes Paul

I think Rand Paul would make a dandy president.  He comes from good stock, my ultra liberal friends hate him, so he can’t be all bad.  And he’s trying to walk a fine line between Tea Party ideals and conservative GOP purse strings – not an easy hike at best.

The announcement will be coming up at Louisville.

Since we’re months away from football season, this morning would be a fine time to kick off the UrbanSurvival Fantasy Politicians League.

That’s because the American public is denied real choice because of the duopoly that the R’s and D’s have used to smother good ideas.

Hence, I think it would be dandy if voting laws could be changed so we could elect president and vice presidents from either party.

I think a Rand Paul/Elizabeth Warren ticket, for example, would make a lot of sense.  It would chill the reactionary right, be progressive on TP and conservative D issues, yet not wander off the board on the socialist path.  I believe the two personalities would keep each other in check, too.

The Wikipedia discussion of how the VP process worked early in the Nation’s history is worth review:

“Under the original terms of the Constitution, the electors of the Electoral College voted only for office of President rather than for both President and Vice President. Each elector was allowed to vote for two people for the top office. The person receiving the greatest number of votes (provided that such a number was a majority of electors) would be President, while the individual who received the next largest number of votes became Vice President. If no one received a majority of votes, then the House of Representatives would choose among the five candidates with the largest numbers of votes, with each state’s representatives together casting a single vote. In such a case, the person who received the highest number of votes but was not chosen President would become Vice President. In the case of a tie for second, then the Senate would choose the Vice President.[28]

The original plan, however, did not foresee the development of political parties and their adversarial role in the government. For example, in the election of 1796, Federalist John Adams came in first, but because the Federalist electors had divided their second vote amongst several vice presidential candidates, Democratic-Republican Thomas Jefferson came second. Thus, the President and Vice President were from opposing parties. Predictably, Adams and Jefferson clashed over issues such as states’ rights and foreign policy.[29]

The key part was the development of adversarial political “parties” which is really an American tragedy – it really spelled “The End” of more directly representative government – and the “forced consensus” that the TP still riles against today.

“A greater problem occurred in the election of 1800, in which the two participating parties each had a secondary candidate they intended to elect as Vice President, but the more popular Democratic-Republican party failed to execute that plan with their electoral votes. Under the system in place at the time (Article II, Section 1, Clause 3), the electors could not differentiate between their two candidates, so the plan had been for one elector to vote for Thomas Jefferson but not for Aaron Burr, thus putting Burr in second place. This plan broke down for reasons that are disputed, and both candidates received the same number of votes. After 35 deadlocked ballots in the House of Representatives, Jefferson finally won on the 36th ballot and Burr became Vice President.[30]

This tumultuous affair led to the adoption of the Twelfth Amendment in 1804, which directed the electors to use separate ballots to vote for the President and Vice President.[31] While this solved the problem at hand, it ultimately had the effect of lowering the prestige of the Vice Presidency, as the office was no longer for the leading challenger for the Presidency.”

Frankly, I find it surprising that the press hasn’t jumped all over a return to the old method. 

Most recent presidencies have been darn near boring, unidirectional edict issuers who have taken a fondness to ruling by decree. With few on the Hill willing to call them out, it makes for a pretty boring news read.

But, can you image how much fun a Bush-Clinton presidential/vice-presidential split would be?  Or a Paul/Warren set-up?

Better minds than mine have decided to hijack the process – which is why the two major parties are responsible for much of what’s wrong with America.  Neither party has a clean slate of “best practices” and when you spend a bit of time at you can get a good sense of what it costs to buy legislation.

But you knew all this – and while I wish Rand Paul all the luck in the world, he’ll need it.  The process is has devolved from selecting the best ideas to bidding, pure and simple.  It’s a sad fact that anyone with enough money can simply buy their way into office.  The candidacies of the YAB-YACs is proof enough of that.

Drought and Borders

High on the agenda for Peoplenomics tomorrow is the detail level of the Mexico and Central American drought.  In the meantime, the report that children jumping borders at even higher daily rates now is hardly surprising.

The serial calamities of Border XXI, Border 2012, Border 2020 etc is interesting ground to till.

Where to Live?

Gallup figures North Port-Sarasota-Bradenton Florida is a dandy spot.  Honolulu, Raleigh, Oxnard-Ventura-Thousand Oaks and El Paso round out the top five.

Call me skeptical about Washington DC environment’s being #9. I figure the well-being there is from all the cush gov’t jobs and bidding wars waged by K-Street mobstahs.

2 thoughts on “Markets Enter “Upside-Down” Mode”

  1. El Paso? Seriously? I was transferred there & couldn’t wait to get the hell out. It’s really stinky from all the dairy farms upwind. There’s bullets flying over the Rio Grande from the drug wars in Juarez. There’s drugs, illegal aliens hiding in the shadows, high crime, kidnapping American girls to be sold as Mexican sex slaves. There’s Police & Border Patrol checkpoints everywhere that you have to deal with daily. It’s ugly as sin. The day I got out of El Paso was high on my best-days-of-life list! Whoever made this list is a complete idiot!

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