Markets: As Good as it Gets?

When I’m not writing books, pursuing projects in Old Man Labs, or just trying to keep up with 30 acres of land that gets 55-inches a rain a year, our main focus continues to be on long wave economics.

The “hero” of this field is Nikolai Kondratiev who proposed that there is a regular 48-64 year ‘heartbeat’ to how the economy runs.

Not that there aren’t other counts – of course there are.  Including one that a colleague and I proposed in 2001.  That was based on the saturation of the currency with debt.  Compared to 1913 when the Federal Reserve seized power over money in this country, we’d down to about 4-cents of purchasing power on the dollar…and likely to go down further.

(Continues below)

 

What drives the long wave has always been something of a mystery.  I belonged to a University of Colorado group from 1996 to about 2003 (when it petered-out) that discussed the problem on a daily basis.

Some thought it was just that every so-many expansions and contractions, an economy would just need a major reset.  Biblical evidence of this is spelled out as Jubilee Years in the book of Leviticus.

On the other hand, my colleague and I looked at it as a major change in the money regimen.  Governments regularly destroy their currencies through debt and taxes.  That cycle seems to run about 83.5 years when we did the math on it.

Another theory has to do with saeculum-based economics.

The core of this is the old saying that the economy renews itself every three generations.  One generation “makes it.”  One generation “uses it” while the third generation “blows it.”

This is closely tied with the notion of an 80-year socio-economic cycle.

One of my colleague from way back in the Long Waves Group (Jas Jain) slices it as a possible 80-year political crisis cycle.

  • 1770-1789
  • 1850-1869
  • 1930-1949
  • 2010-2029???

He goes on to explain:

According to a historian, FDR firmly believed in the 80-Year political crisis cycle and he thought that the 1930s (80 years since 1850s and 160 years since the 1770s) portend the next crisis and he believed that he is the man to deal with the next crisis. At the time he was the Governor of New York and he decided that he would run for the presidency in 1932. The rest is history.”

The problem we have is that it makes America’s survival beyond the 2030 period problematic.

We can attribute this to a couple of things:  One is the coming Robotics Revolution.  We don’t have enough “real work” for humans to do once the serious robotics start hitting the market.

In a recent article in AutoNews, former GM whiz Bob Lutz looked out 25-years and said get ready to “Kiss the Good Times Goodbye.”

Take Lutz seriously.  While at Chrysler/Dodge he was the key force behind the Prowler and Viper projects.  Guy’s got serious vision.

Back to point, as any economy approaches a long wave economic bottom – where interest rates sag to all-time lows, there’s little government can do.

We have such a period coming in 2018.

At that time, the Fed will be trying to raise interest rates.  They need to do so because without an increase, pensions will start blowing up all over the place.  Most pensions were designed for a 7-percent long-term return on investments.

Fast-forward to modern times (like today) and where is the 7-percent return?

It sure as hell isn’t in Real Estate.  Perhaps in a few hot markets like the South Bay or Seattle, but mainly, property taxes are going up most places as fast as values.

Throw in Amazon and Wal-Mart – which I refer to on the Peoplenomics subscriber side as the Barbarians at the Mall, and now we have a perfect collapse scenario:  Down will go malls, and with it  long-term investments from life insurance and pension funds.  Yee gads.

In will come robotics, out will go humans.  But, since humans need jobs in order to earn an income, what will they all do?

In the world Lutz sees – maybe as long as 20-25 years out, there won’t be privately-owned vehicles anymore.  We pointed out to subscribers recently that GM’s plans to launch an automated self-driving car service to take on Uber and Lyft was just the opening round. Timeline?  Two years from now.

Think what happens when – just to use a category – there are no more private cars.  What happens to all those jobs in auto shops?  Accessory manufacturers, customizers, body shops?  Remember, with self-driving cars, the “accidents” should be reduced to almost nothing.

People don’t have a very clear vision of the future.  They tend to “look at their feet” – and not up the trail a ways.

We still see Bitcoin as going higher, perhaps after another pullback.  But the shape of the curve of its valuation is similar to tulips during that mania, or to the shape of the 1929 debacle more recently.

Starting tomorrow, we will get ADP job numbers.  Thursday the Challenger job cut report will be out, and then Friday the Official Federal Number.  They should all be pretty good.

However, I’d hasten to point out that should such metrics have been in place in 1928 and 1929, they would show similarly robust economic conditions.

Again, policymakers run on data and the data is always two to four months behind the world.

When I looked today, the Dow futures were up 66.  But this is likely because going into year-end, Wall St. execs have a major personal financial incentive to “paint the tape” and make things appear rosy – even if they aren’t.  Reason?  Bonuses  are based on performance of investments, not on the actual gains returned to clients.

While it would be foolish to “Call the top” here, it’s also true that “What goes up will come down.”  That applies as much in markets as cryptocurrencies and food prices.  The opposite is also true:  “What goes down will come up.”  We expect that of things like oil in 2018.

In the meantime, we will suffer through one political and social crisis after another.

And this gets us to this morning’s collection of idiocy displayed by public officials of all parties.

Ready?  Here’s Stupid…

Shall we run through the list?

Clinton Aides Went Unpunished After Making False Statements To Anti-Trump FBI Supervisor, headlines the Daily Caller.

Politics isn’t supposed to be fair or even-handed.  It’s all about Teflon.

Both sides of the aisle, too: “Trump’s lawyers mount a new defense: A president can’t obstruct justice. Is that true?”

As the National Review lays it out, the idea is that obstruction means the Mueller (fishing expedition) is trying to play “Pin the Impeachable Offense on the Donald.”  Only, they’re a little less direct is saying it.

Even the Wall Street Journal says Mueller is stonewalling Congress and is protecting the FBI…but the theater of it all will drag out who knows how long…

Trump Travel Ban Upheld

So Here’s What Is — and Isn’t — in the Travel Ban the Supreme Court Just Upheld.

Trade Data:  The Hole Got Deeper

While the Trump Bump continues in markets, we find the latest trade figures (just out) of interest:

“The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $48.7 billion in October, up $3.8 billion from $44.9 billion in September, revised. October exports were $195.9 billion, down less than $0.1 billion from September exports. October imports were $244.6 billion, $3.8 billion more than September imports. ”

Productivity and Costs data tomorrow.

While the Dow (is that the Plunge Protection Team tossing money to arb up the Dow?) is up, Nasdaq futures fall as tech selloff continues.

If the Dow-to-NASDAQ relationship was the same as a month, or so back, the Dow ought to be 820 points lower than Monday’s close.

Rational has nothing to do with markets, however.

With Bitcoins at $11,800 each early, I’m thinking fried tulips for breakfast… U.S. investors overweight in stocks despite market fears: study.

The Real Syria Agenda

Over the past several years, we have been quite clear explaining what the war in Syria was all about and how both Turkey and Lebanon figured into the mix.

Quite simply, there is a HUGE natural gas deposit that begins offshore from Lebanon and goes north – and it can feed Europe for a good long while.  This is called the Leviathan field.

The problem – and why there has been so much fighting in Syria, tensions in Turkey, and obstinacy from Lebanon is that there had been plans to run a gas pipeline from Lebanon north through Syria, through Turkey and into Europe that way.

Take it all off the table…here’s the workaround for regional war:

Israel expects gas to flow from east Mediterranean to Europe.”

If you route the pipe undersea and head for Cyprus and Greece, who needs a war in Syria over (behind the headlines) gas pipeline rights of way?

Of course, this doesn’t mean peace will break out.  Memos take a while to get out to the front lines, so Bomb kills 8 in Syria, IS claims attack.

California, Smoked

As California wildfires burn: Thousands evacuated in Ventura County.

Good Grief…

These Are the 10 Most Widely Shared Tweets of 2017.

Radio Reminder: On CoastToCoastAM

Tonight:

First Half: Business consultant and financial writer George Ure shares predictions and his most recent work tying together unexplained phenomena including missing flights, levitating stones, and the Bermuda Triangle into one unified theory.

Gee, I may have to listen…meanwhile, off to watch ’em pump them futures…


Comments

Markets: As Good as it Gets? — 22 Comments

  1. I thought after the next great depression, war between the USA and partners China-Russia was suppose to anialate the USA around 2022-2024? Who cares what’s out 20-25 years?

    Just curious, what was so visionary about the Prowler and the Viper? I can’t remember the last time I saw one. If I were to call a car design visionary, it would be the 1964 Mustang. That car swept the market off its feet…and no Im not a Mustang fanatic. Just remember how popular they were. They spawned the creation by GM of the Camaro and Firebird, and the Dodge Charger and Challenger…

  2. DudeMan George, why would you ever eat a fried tulip? If U would just exchange some of your US dollars for Cryptos: Bitcoin,Litecion,Etherium, or even some outstanding companies tokens like Veritaseum,Populus,Omisego or Pillar, U could be enjoying Filet and Krystal breakfast..coffees’ burning,toast is burning..seems to me the whole dam kitchen is on fire.No worries if you owned some cryptos – you could put that kitchen fire out with some Perrier!

  3. Did you ever know Dr.Tom Drake (2cents) that was a member of that Univ. of Colorado group? We became friendly over at the old Avid site. He was my go to guy on the Long Wave. Jas Jain has been right on the bond market for so long that it’s crazy.

  4. Make a comparative chart of the stock market and the Bitcoin and then of Real Estate and then of the copper penny and then of seeds and then medical then burial and then cremation then war then total Destruction then media rewriting history then do a little praying or meditating or soul-searching or seeing the light and see in the darkness and see where in the middle you stand at and are you getting a bad taste in your mouth from all these complications of contemplations yeah go ahead get you some mouthwash or something stronger rinse it out find some relief knowing that most of the planet that are learning these things are really flushing their system from what they noun have to put into their past you can call it flushing the system or you can call it drain in the swamp or you can call it any religious thing you want but things are happening there is a spring spiritual World War going on.
    You say what do I like about urban survival well it’s got a U.and its got a S.which means U.S. which means the United States. Supported by us the people teaching others and finding a common medium that we can agree upon that gets rid of the swamp monsters and that we can go forward with to provide a reality for our kids and grandkids.
    Thoughts have wings and may all beings be lovingly fulfilled if you find you are up against a wall and don’t know what to do ,go around it.
    Your body wasn’t made to work hard labor in a factory 12-14 hours a day because you have a brain you can use it for seeking out the universe instead of being a prisoner in a cubicle working like a robot.
    Your spirit Soul has the ability to go anywhere in the universe why would you want to be constricted to a little cubicle.
    Why would you want to be control by an evil force that wants you to do evil things hurt people that’s what they want when you know if you had a father and mother and they were raised right then you were raised right but if you had a father and mother who wasn’t raised right will you got the wrong on you got the wrong end of the deal and if you had no father or mother per se then you don’t know what the hell’s going on you’re going to be easily lead astray.
    May all beings wake up See that there’s a different way all you’ve got to do is setback and see the perspective of that other way and it’s easy to do but it’s hard to do if you have to spend all your time and a factory working.
    You were made to create things manifest things not become a slave.
    You my friends are a square piano which means you have many sides, experience them all !!.

    • I don’t either! lol looks like one continuous sentence. And auto correct.. My God lol.. So I can relate.

    • Yes, the family is the heart of society. Without a Mom and a Dad, the child suffers. It suffers without understanding what is missing. Regardless of whether you were raised by an excellent single parent, the loss is there, trying to be filled. Parents under pressure from wars, financial wars, culture wars, race wars, personal relationship wars, etc., affect children, too. We are dismantling the ‘family’, and in a replacement experimental mode, a test phase, if you will. The husband is the Federal government, the Father is the State, a woman doesn’t need a man for procreation or protection. BUT, the children, the children, what do they need? Oh, the USA says, they just need the village of the USA government – from cradle to grave.

  5. I am not sure if you were being sarcastic or not, but you saying that Bob Lutz is a visionary for introducing one of the the biggest duds in Auto history in the Prowler and the discontinued Viper is not quite the man I would listen to.

    You mention “in a world as Lutz sees it” . Lutz is trying to be relevant to a baby boom crowd that in of itself isn’t relevant anymore. Lutz isn’t even close to having his pulse on auto world. He is a dinosaur. There’s a new generation of innovators in town. You act as if no accidents and the loss of jobs by body shops is a bad thing. I happen to think that an accident free world is pretty terrific.

    Anyway, The world has a way of correcting i’s technology breakthroughs and it always has resulted in net job gains.

    • Be careful what you wish for.
      You will need to walk & talk the straight and narrow, not being critical of any political entity in office lest you get into “your” car the doors lock and you will be driven to the nearest CILF camp (Civilian Inmate Labor Force) AKA Fema Camp, never to be seen again!

    • Bob Lutz is from the day of the Big 3 automaker presidents when the industry had more money than brains. Detroit never realized that the foreign carmakers sold cars that were better made & met consumer demand. Just the kind of automaker the public was looking to buy from. It went right over their 3 heads as the Big 3 began there decent.

      • I worked GM customer service for a short time – one memorable day, while trying to arrange service that was promised by the company, the service manager’ said, “Why do you care? It’s not your job on the line.” I was trying ‘to be professional’ so I didn’t ‘tear him a new one.’ (Although that same day, I was fired when I suggested that someone who was clearly injured -go to the hospital – because my supervisor said that I should never mention ‘that’. Yeah, except I was trained and got a certificate as an emergency services operator, previously – and no one at GM Customer Service mentioned ‘that’ was a problem while training. Emergency procedures require prompt medical aid.) (No real problem though – I got unemployment – and it was a lousy job ‘to boot’. Not the best products to promote!)

  6. I’m currently reading “The Fourth Turning.”

    The main point is that saecula repeat with the same four seasons again and again throughout history. And that we are currently heading into a “crisis” season, which are usually marked by severe economic disruption and war.

    It’s the long game. Prepare accordingly.

  7. And don’t forget the auto insurance industry. Who will need their policies. If I ain’t driving, I ain’t buying.

    73s

    • Using that idea, it would be insurance in general – renters don’t buy as much insurance as homeowners (homeless buy none) – companies don’t offer insurance as much to their employees as they used to . . . I think that stockholders of insurance companies should look for DECREASED earnings from their main area of interest.

      • I am insurance poor. Home, car, health, life, .. It adds up.
        Then .. Cable,telephone,if there is a true cataclysmic event. The pipes are opened since the country will need to rebuild and there won’t be a monetary system per say.
        A few years ago I was out having lunch with some friends and the subject of 2012 came up. I of course am pretty outspoken and willing to share my opinions. Afterwards as I was leaving a gentleman stopped me. He was in the area having some meetings for an organization that deals with events just like the ones that we were discussing. We went back and had a long discussion. He has been an inspiration and a wealth of knowledge. Do you know that lets say you buy an extra thousand gallons of fuel. They have a map and a list of all locations of how much and where. Where there’s natural wells etc. Just for COG and everything becomes available to them in an emergency all manufacturing all farms all means of automation everything is at their disposal goods services resources and manpower.
        Which is a smart plan in my way of thinking.

      • LOOTBox; how is your description any different than what many governments have done during war time or takeover of a nation? Take over all of the preps, housing, distribution, water, oil/gas, resources, roads, food, animals, and round up the people or kill or destroy all of the food supply so as to kill off the people, etc.!

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