Markets Look for Cherry, GovDown II Looms

Today promises to be like one of those “perfect crossword puzzles” you stumble on every once in a while.  You know the kind.  Hard as hell with just the right mix of brain-expanding terms and gimme’s.  The closer we move into “future” the more words we’re bound to “get right.”

Another construct – as useful as the crossword puzzle analogy – is a jigsaw puzzle.  We can piece a few things together, but since we can’t see the “pictures on the front” we’re not sure if we can get it right, or not.  Again, as in the crossword analogy, though, future will turn those puzzle pieces over, each in their turn, and we’ll begin to see enough of the whole clothe that we can revise our outlooks in a few days…

Puzzle Piece #1

The border/budget.   As everyone knows, the Congress did not pay attention to what president Trump has been saying from the get-go.  He wants a “clean” $5.7 billion for a Wall.

This is a puzzle piece which could be from a different puzzle, entirely.  That’s because if you read the partial critique on conservative websites, like the Conservative Review over here, there are at least five “insane ideas” embodied in the bill.  We doubt Trump will sign it.

Unlike the (mainly value-less fools on the Hill) president Trump is pretty easy to understand.  He’s not a baby-kissing suck-up, a wannabe Native American, a radical socialist, or a smooth-talking, do-nothing bureaucrat.  He’s Trump.

What that means, for those who miss it, is he is willing to negotiate, but he’s not willing to be made the fool.

In real estate terms, if the Congress has made a “good faith offer” – something on the order of 85% of the “asking price” – or, in our guesstimate around $4.85 billion (and in a clean bill) – there would be no plan for head down the “National Emergency Path.”  With an 85% offer on a property (imagine selling your home , which is what the border is very much akin to) would you take 85% of asking?

I know Elaine and I have kicked it around, but when someone comes in with an offer that’s 30% of his “asking price”  – you think he’s going to take that deal?  I mean especially when local officials, mostly liberal, have a veto on wall plans?

Why, it’s not only like asking you to accept 30-cents on the dollar of your asking price, but it’s then demanding a carpet and paint allowance, then new appliances, and oh yeah…new landscaping be put in.

Pretty obvious to us how this puzzle piece isn’t going to fit.  And it’s why we have been expecting GovDown II ever since the previous shutdown ended.  The UK Daily Mail calls it this way: “Trump will announce a national emergency to spend $8BILLION building his border wall TODAY and sign bill to avoid another shutdown – after bitter standoff with Pelosi and Democrats in Congress.”

On the other hand, Trump will, according to this AP story, sign the (again, unread by virtually anyone but insiders) bill and then will declare the emergency.

Of course this will may almost everyone mad.  Except for the Lawyer Class which is near-enough to being an American Aristocracy of it’s own to label it as such.

Even Politico seems to agree this will all be decided by the courts – and that means delays.  Except, well, will it?  In a National Emergency?  Get stocked up on popcorn and sodas.

We don’t think Trump should sign a damn thing except a clean continuing resolution.  Absent that, everyone plays by last year’s numbers.  As we see it, Congress is playing hostage with America’s future and that’s why everyone who is in Congress and complicit in this sell-out of America needs to be “dis-elected” at the earliest possible moment.

Data Critical, Selling a Cherry Topping?

We continue to look at the market and wonder “Where’s the cheery topping?”  In the Thursday column we laid out a specific target for the market to peak and it was a minimum of 23,723 as measured by our Aggregate Index. we would move slightly higher (based on futures 90-minutes prior to the opening) but that would still bring us to 23,475.

Something needs to kick-things-up a notch.  We have a little bit of data coming out.  Our thinking is that somewhere in today’s ambling of the markets there will be a cherry found and massively hyped.  We’re in an area where “strong hands” could be looking to unload.

What of the Fed?

Yeah, what about the Fed?

Remember what a miserable month December was?  Know why?  You can see in the latest H.6 Money Stocks report that the Fed was standing on the brakes of money creation.  M1 was being increased at a rate of only 2-percent annualized for the 3-months ending December 31.

This sucks money out of the market at an unimaginable rate.

What’s more, the current rate of increase (In the sliding reporting window closed a couple of weeks ago) was only 3.1 percent.

Translation from the H.6 Money Stocks report?  Regardless of what the Fed says it’s what they DO that matters.  And right now, there’s little indication in money growth that the Fed wants the market any higher than it is about at these levels.  (In our view, this is not investment advice and so forth…)

Import Price Data

The story in words:

U.S. import prices fell 0.5 percent in January, the U.S. Bureau of Labor Statistics reported today, following a 1.0-percent drop in December and a 1.7-percent decrease in November. Both fuel and nonfuel prices contributed to the January decline. Prices for U.S. exports decreased 0.6 percent for the second consecutive month in January.

The story as a picture:

If I were going to drown this in whipping cream as a “cherry topper” I would write something like “Markets don’t see it but we think the decline in import prices will add to the coming decline in the National Debt because this will help turn around the Balance of Payments Deficit….”

But, of course, who would read such a thing?  Requires logical thinking skills and lots of other rarium and unobtainium.

Dropping US import prices aren’t good for everyone.  Take Mexico to pump $3.6 billion into ailing oil firm Pemex in relief plan as an example. And off in the distance?  U.S., Chinese officials to meet in Washington next week on trade.

Let’s Hear it for Socialism!!!

Exclusive: Trafigura halts oil trade with Venezuela – source.

What do you mean it isn’t good…why it’s gotten their oil trade turned off..

Digital Mob Rule: A Case Study?

Ah…the “power of the platform” is revealed as we read “Sources: Police investigating whether Jussie Smollett staged attack with help of others, allegedly being written off ‘Empire’...”  On the other hand, Chicago Police Dispute Reports That the Attack on Jussie Smollett Was a Hoax reports Time.

We’ll go back to this morning’s jigsaw puzzle analogy and find out in due course whether the Smollett case is “hate or hoax” and the details…  Just remember we look for an Everything is a Business Model angle because there sometimes is one…  Think in terms of web traffic and search:

Further monetization of Smollett’s web presence may depend on police findings, if any.  But he’s fr-sure popped out of the search “noise floor.”  For how long?  This case study will continue..

Also on Digital Front Lines

Facebook is facing billions in fines according to a report out of San Francisco…  Privacy breeches.

Renting Your Life

May be about to get more spendy:  Visa, Mastercard mull increasing fees for processing transactions: WSJ.

We’re pretty sure “big iron” to process isn’t getting more spendy per transaction.  We also don’t think storage is going up.  And Internet rates have been higher.  So either write-off may be going up OR someone’s looking to pad profits… Hmmm…bets?

But maybe this is a trend to pad profits because consultants like me might offer:  Risk of U.S. corporate recession rises as earnings outlook dims.

Contrary to some jokes on the net about the Bezos domestic changes, we don’t see it as a factor in Amazon cancels plan for NYC headquarters.  More likely they can read the numbers better than we…

OK busy day with our house guest and then Peoplenomics writing this afternoon.  Tomorrow we “rescue a Weedeater…” too…

24 thoughts on “Markets Look for Cherry, GovDown II Looms”

  1. I hope PT veto’s this Wall Building Bill. It is full of traps to place limits on how the Wall is built, gives local mayors veto rights on whether a wall can be built in their city, gives MS 13 gangs ways to manipulate getting around immigration laws to increase drug smuggling, & prevents a National Emergency to build the wall to succeed. PT signing the bill admits there is not a National Emergency, & why it is in the courts for a year, this bill will allow illegal immigration to run rampant. The problem is will PT read & analyze the bill before he signs it. So far with the wall, PT has appeared inept. Where’s Mexico on paying?

    If we collapse totally into a Police State, the Dem’s win.

  2. Credit card companies raise transaction rates? I guess if you gotta offer 2% cash back on purchases you gotta raise something somewhere. But please explain the logic of a consumer who carries a balance at 15-25% carry cost frothing over 2% cash back on a purchase from a retailer who bumped his price 5-10% to account for his costs to use the system.
    I offer cash on all significant transactions if I can find the owner manager for a 10% discount, and get it enough to be worthwhile. It’s madness and will collapse eventually.

  3. Be careful of what you wish for George for other things may be included in his “state of emergency”, and its a well known fact that they never tell the American people only half, if that of what those laws really contain,and I see you must subscribe to the republican line of B.S.that nasty socialism (which will replace the orange clowns making America great again slogan when he tries to run in 2020,when of course,the only one he piled with money is himself and the 1%) seeing the 1% is running scared of the social or populist part of the society he and his minion’s (the press and media included) will try to paint every program from food give away to the needy to Social Security as nothing more than socialism and must be stamped out….

    • There has NEVER been a successful, totally socialist country. People who argue that several Nordic nations are socialist do not understand the differences of what Forbes calls “compassionate capitalism” and raw socialism. The governments of Nordic nations often claimed to be socialist do not run the businesses operating within their borders. None have mandated minimum wage laws and parents/guardians have complete school choices. A socialist America betrays her founding principles, earned with blood during the American Revolution. Ayn Rand, who grew up in socialism/communism, warned her readers in Atlas Shrugged: “There is no difference between communism and socialism, except in the means of achieving the same ultimate end: communism proposes to enslave men by force, socialism—by vote.” Animal Farm author George Orwell penned a similar warning. “So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.”

      if what I read on the laws passed by those that don’t do anything at all. If it is interpreted the same way I interpreted them… it could have been the opening of Pandora’s box for a future administration with ulterior motives that are based on evil actions..
      get an evil dictator in.. those that don’t and refused to read what they signed, could possibly be facing a similar fate that legislators in other countries that had to endure, that had similar provisions written into law in their countries..

      the big question I have is.. WHY? ( not why build the border wall.. we need that and tighter border security).( I still say go after the money). but why did congress play that card, even though they run their campaigns on popular issues, like increased border security and abortion.
      Does anyone seriously think that our Congress wrote that damned thing.. hell they don’t like to go to work during regular working hours.. then actually sit down and write a thousand page bill much less read it. especially when they basically laughed Rand Pauls read the bill act off the floor of congress.. ( I haven’t read it yet.. and since I get the access denied when I go to the thomas library from the home computer I probably won’t. I wonder if Rand Paul read it though and would like to hear his response.. he is about the only one that actually sits down and reads them)

      an interesting news story on Yahoo said that the younger generation aren’t old enough to remember when congress worked together.. I started reflecting back and you know I can’t remember when congress actually did anything at all together or apart..

      • I am not sure/ I am no lawyer and just love to read..but what i read and interpret may be totally off base to the exact.. Yet we never get rid of a law it is put in a state of limbo.. ( you still can’t ride a horse or mule in the capital building while congress is in session. dam them anyway I wanted daisy the mule to see the murals).. that is just one law passed.. congress passed what over a hundred in the eighties alone..
        don’t take the puppeteers lightly they are a crafty bunch and we the people are stuck with idiots at the helm willing to give them anything they wish. they craft these laws where they seem to give in one take it all away in another giving them full reign as to what they can achieve. As long as no one is reading these damned things before they vote on them, much less contemplate what it truly is saying.. it pretty much means there is an open game board for them to craft what they seek.
        the only times you can hear of congress doing anything at all is when they are in session voting on a raise for themselves.

  4. You used the wrong analogy for Trump and his overpriced wall. As a real estate expert here in my community, I run into sellers all the time that “Think” their house is worth more than it really is. Sometimes a lot more…You see, people that sell usually don’t have the same tastes and standards as people that buy…especially here in the Silicon Valley, where the buyers are spoiled and highly paid millennials with boatloads of cash…The sellers are more than likely California born and raised, that bought their home for a few hundred thousand dollars 30 years ago and haven’t updated in nearly 20. But to them…it’s a palace…To the buyer It’s a Fixer upper.

    And, no matter how much data and metrics you throw at them to prove otherwise, they won’t budge on their high price. This is what Trump is doing. He is overvaluating and overstating the crisis on the border..when the data and metrics say otherwise.

    Back to the real estate analogy. After getting nowhere with the stubborn sellers, I do a take away and I usually tell them to seek out other agents that will list their house at the price they want. I usually get a surprised look from that seller when I say that. Two things happen. Scenario #1 …They interview up to 10 agents to try to find that one that will agree with them. The agent they pick lists it for what they “think” their house is worth, and it sits and sits and sits. Whatever offers that do come in are way below that list price. Why? Because that’s the price the market thinks it is worth.

    Scenario #2. They are surprised that I feel so strongly about what I think their house is worth that I am willing to walk away…and knowing my successful track record, plead for me to reconsider selling their home. I play hard to get, but I end up saying I will list their home, but at my price, with my stagers furniture, decorating ideas, and I insist that they spend money to properly update…After they agree, I re-adjust my price and let the market decide what the house is worth…which after the improvements is higher than I originally quoted. In scenario #2, the house gets sold…fast…and sells even higher than the list price…but still below their original perception…Yet, they are happy. Why? They realize they were way off base…They know that if they had not made the improvements, it would have sold much, much lower…and with the improvements, they got way more robust open house traffic and interest as well as multiple offers and it still sold way below their original perception when I first met with them…In other words…I was right…the market does dictate the price.. not the seller.

    It makes me wonder if Trump ever really sold real estate before. He is overstating the border issues without any data to back it up. He won’t listen to real metrics and concede that the real issues lie at the border check points. The market data says one thing…Yet Trump…without any proof and conversely, a lot of lies to back his perceptions, stubbornly wants more money than it takes to solve a problem. He wants $5.7 billion, when it only takes $2 billion to solve the problem. And Congress is doing a take away…He will re-enact my scenario # 1 and try to do it his way…but his way will get tied up in the courts and he will have wasted his time, tax payer money and his lowly integrity for what? His stupid, trash talking ego. Trump painted himself into a corner on this one. For a guy that claims to be a negotiator…he sure sucks at it.

    • Border Patrol agents apprehend ~2000 illegal aliens via non-POE border crossings per day. USBP officials estimate that 2500 illegal aliens make it into the U.S. undetected, via non-POE border crossings, per day.

      Regarding both this and current/initial border security cost breakdowns:

      The numbers are available; the stats are available — please get the actual data from its actual sources and do the math.

    • That’s strange! I usually have to argue with RE agents to get my selling price down! When I really need to get out of a property, I want the price low enough to sell within a couple of months and I want real offers within a couple of weeks. They can fight it out among themselves. Generally, I sell as is and where is. Buyer beware. The whole nonsense of guarantees on anything limits my ability to walk away and stay away. I’d rather sell that way and be done with things. Most agents want to preserve the perceived value in the neighborhood rather than essentially auctioning the property for best price today.

      Taking a year from listing to closing is IMHO a disservice to the seller.

  5. Sure looks like a “cherry on top” this AM! Interesting to see rest of days action, still dont understand where all the buying is coming from..algos/machines?

    So with POTUS declaring National Emergency this AM, must be time to to roll out AOC’s next campaign slogan…MABA! – Make Andrea Bartender Again!

    FREE $#!? For Everyone !

  6. George, You vilify safety net issues as socialism. (An emotion laden, pejorative misnomer, to be sure, like calling anything from traffic signals to Rockefeller style anti-monopoly laws socialism, but I digress.)

    So how do your square that Your Team just added 10% to the national debt with debt financed subsidies to the stock market and rich guys’ tax cuts, when that amount is probably a lot more than Medicare for All would add???

    At least with Medicare for All, the money goes to Main St. instead of to Wall St., and gets spent in the real economy. Now don’t go turning into a coastal elitist on us. Ha. Best, Mike.

    • Government “safety nets” are not socialist, they’re communist. Private “safety nets” are charity. The only people butt-hurt by emotion or of the belief this is pejorative are subversive Marxists, because their tactic has been unmasked, and those of their followers whom Marx referred to as “useful idiots.”

      No one refers to traffic flow or the regulation of a draconian monopoly as “socialist.”

      You fail to mention the $1.2tln increase in revenue which, although it doesn’t offset the Liberal spending of Congress, does help.

      The most-optimistic projection of “Medicare for all” is $36 trillion over its first 10 years, and $4+tln/year thenceforth. Since real world costs tend to be 2.5-3x higher than government projections, that’d place actual initial cost at $9 trillion per year, which would then escalate rapidly as the out-of-control insurance/medication/physician circle jerk (which is being addressed by NO-ONE, since it makes the Wall Street types, untold billions per year), gets ahold of all that money.

      BTW, glad you work for a poor person…

      • Farm subsidies began as a bribe to farmers, to encourage them to allow the gummint to regulate their crop rotation and periodic furlough of fields. The idea was to ensure that “nationwide,” there’d be no season-long shortage or significant oversupply of any domestically-grown crop and no “terminally-overworked” field. Because of the Law of Unintended Consequences (and Congressoids’ advance knowledge of seasonal requirement numbers), it has evolved over time into a means of defrauding USDA (and taxpayers) out of billions of dollars per year.

        Local tax incentives and abatements are wagers, essentially bribes abstracted from local residents and taxpayers and paid to corporations, the wager being that the corporation will create enough local jobs, elevate the local standard of living, and stimulate the local economy sufficiently to eventually pay back the wager with interest.

        The FEDERAL government has no business, in the tax abatement business. I honestly question whether STATE governments should be involved, since such programs are designed to promote local stimulus, via principally local taxes, bonds, and assessments.

        IMO farm subsidies should go away, and the USDA’s involvement reduced from a regulatory, to an advisory (and data agglomeration) role. This would eliminate the gaming and abuse without significantly affecting local or family farmers.

  7. My congressman says the bill is not what he wants and voted no. It was supposed to be a replay of one voted on in December, but the Dims tinkered with it to weaken it in favor of unfettered immigration. He says Trump will sign to avoid hurting the FedGov employees again and then declare an emergency. The Dims will immediately file suit in the 9th circuit to stop this, so it could be a year or more before any action is actually taken. It somewhat depends on which funds Trump decides to move around.

  8. How much do the wall building jobs pay and who is paying the workers?

    Not to mention, “We had to spend the money, to spend the money.”

    Note: U.S. taxpayers should be reimbursed any monies confiscated from Joaquín Archivaldo Guzmán Loera because the U.S. taxpayers had to front the monies to the DEA for his capture in the first place.

  9. The other side of the CR critique: The bill limits what EOP can spend, where, and to what effect, OF (only) THE DISBURSEMENT GRANTED IN THE BILL, and attaches certain other limitations to these funds, in an attempt to handcuff President Trump with respect to border security.


    Any building limitation placed on him by the bill does not apply to funds from any source other than those granted by the bill, and building limitations or restrictions are legally circumvented by his Declaration of a National Emergency.

    Despite the noise made by Pelosi and Schumer, I see no action Congress can take, other than a Joint Resolution affirmed by a 2/3 majority of each Branch, which can do anything to stop Mr. Trump’s Emergency Declaration. I also see nothing a Court can do LEGALLY, other than question the legality of 94-412, the National Emergencies Act.

    Should some entity successfully void Mr. Trump’s power or authority regarding this ED, it’ll really suck for a bunch of people, whenever they’re affected by an earthquake or hurricane.

    Note to 9th Circus: Beware, the Law of Unintended Consequences…

    Trump’s Declaration may be found here:

    The National Emergencies Act may be found here:

  10. In the bill are provisions for illegals can sponsor all their friends so there no need for f-:;-:; Wall. Why did he signed another politician that don’t care about America

  11. The market was up big today, but this craziness will take its toll on the market. A day of recogning is around the corner. You can’t keep being irresponsible without paying the consequences.

  12. A border city doesn’t want the fence? How about running the fence around the North side of the city?

  13. When Ron Paul was talking about the $21trillion that went missing from the DOD and HUD
    (Catherine Austin-fitts says $26trillion) he talked about the stack of bills reaching to the moon makes you realize they could actually fund health care for all. By the way something like 60% of all bankruptcy’s are from medical bills. I live in Ky. and everyone makes fun of hillbillies without teeth and all the problems poor Appalachian’s have trailer trash and all. I think it would only be fair if each person could go to the Dr. and receive care if they needed or wanted it. Tell me why everyone is so against helping people instead of funding war and subsidizing Bankers and big pharma? Seems only logical. Feed the rich and starve the poor thats the right and moral high ground right?????? Karma’s a bitch……………..

    • I’m right with you in total agreement Jane.. What you forgot to mention is that people without insurance still love their families. They will seek out medical care. Clinics refuse them and send them to the ER where the prices are ten times that of the clinic.
      These people still don’t have the funds and end up in bankruptcy or just can’t pay.
      I personally had a boss that took money for insurance gave us the cards then played the stock market in the early eighties. I had a child that fell out of a tree impaling himself on a branch. The cost half million. Doctors flown in then weeks in intensive care.
      I made under three dollars an hour. My boss lost his shirt during the Reagan recession.
      These funds don’t disappear instead the clinics office rent goes up. The rest is split up and prices on goods and services increases. The insurance companies pay more so they in turn increase the rates of those insured.
      None of that happened before deregulation.
      The price of high profit.
      The elderly race to southern Texas campers in tow so they can go to Mexico and get their medications. The price differences pay for their winter stay.

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