Thursday I tossed out a projection that according to a new model I’ve constructed, the market was “due” to head down – and seriously so – in the next week.  In fact, I put an S&P number under 2,500 on the table with a target date of next Friday.

That might be aggressive, but despite the Dow “gaining” 70- points Thursday, “The Turn” I was telling you about has, indeed, begun.

That’s because we are not swayed by the Dow.  Our approach to markets is to look at the totality of things.  So, while the Dow was up 0.29 percent, the NASDAQ Composite was down 0.39%.  No rocket surgeon needed:  If you had equal dough in those two vehicles, you’d have been down.  Toss in the further decline of a smaller 0.02% in the S&P 500 and we can see how this (rather gracefully) is turning when our latest (Golem II) model was inferring.

Tomorrow on the subscriber side, we will pursue that “Did AI come into the markets in August of this year?” question.  Most intriguing.

For now, given the future’s pricing this morning, we are in a position go begin the “big slide” as we begin to move down from the indecision zone in The Only Chart That Matters:

Today, things could go one of two ways, in our thinking.  One is that the Fed could intervene in a BIG way and push out enough money through their trading desk to continue to attempt to avoid replaying 1929.  The other possibility would be a late-session rally so the Big Money can continue selling to weaker hands and maybe pull something like a -400 opening downer Monday.  You saw where World stocks tumble on weak economic data from China and Europe?

A lot of this – as in poker – will be tipped (as in poker “tells”) by the flow of news over the next 96-hours.

As you know, we’ve been warning that a Russian take-back of Ukraine is very likely in the cards and there’s a deadline looming overs the Kremlin.

Remember, they pulled sailors off the Ukraine navy and the whole world was deafeningly quiet.  With this is mind, Vlad Putin may rtead this as a window during which he can take back Ukraine – including Kiev – but he would like stop 30-40 miles west of Kiev.  My consigliere and I think that’s all the closer the Russians would venture to Poland where not only are fresh missiles in place, but also (unlike Ukraine) Poland has its NATO membership card already.

Putin is no one’s fool.  He knows that his pressure-point on Europe is Russian natural gas deliveries.  If Europe gets too uppity about Russia taking back Ukraine, they will have a mighty cold few months.  The ground is also hard this time of year and the workers aren’t needed in the field.  Reports of new-version Russian tanks positioning near the Ukraine border add to our concerns.

Were we the long nutters thinking this could dwarf the Trump inquisition, rest assured we are not.  According to the Institute for the Study of War, which has a dandy article on Russian opportunism available here…

“Key Takeaway: Russia is poised to escalate its campaign in Ukraine at a time when domestic crises, partly fueled by the Kremlin, distract key U.S. allies in Europe. America’s three most important allies in NATO – France, Germany, and the United Kingdom – face ongoing political instability even as events in Eastern Europe divert the attention of NATO. These crises all have domestic roots, but nearly all of them are being fanned or influenced by the Kremlin.”

We are not predicting that Russia will roll in this weekend and snatch Kiev.  But, it would be something like that which would make markets plummet, especially if the Fed raises rates next week.

The Global investment community has put the Fed in something of a box:  With rates low, there’s little incentive for investors to buy bonds.  As the rates go up, however, and the purchase discount on the bonds increases, they might become more interesting.  And this, in turn, would help plug the hole in the exploding Federal Budget deficit.

None of this is certain, of course, AND we’d never be so foolish as to omit the our standing edict “This is not financial advice.”  So, rather, think of this as amateur financial futuring because, as all good students of behavioral economics know, people do EVERYTHING in their own beneficial self-interest because?

EVERYTHING’S A BUSINESS MODEL.

Especially war.

We see it this way:  “Tick-Tock Vlad Putin.  Ukraine will be in NATO shortly, winter will pass, and Europe will be less subject to blackmail.  John Bolton’s neocon inclinations aside, we doubt president Trump would take us in WW III when it’s been an “understanding” that post Cold War Russia would be allowed a “sphere of influence” on its west.  The megalomaniacal expansion of the “grow or die” European Union financial model aside.

News overnight that Putin is allied with the Russian Orthodox Church which is calling for the UN to protect believers in Ukraine, well, all sort of fits.

But it’s not just the risk of war.  Story out says U.S. recession risks jump, Fed rate hike expectations slump – Reuters poll.  While keeping rates low might seem like a good thing, when we are in a major market decline news works backwards.  In other words, on the way up, low rates would be a positive.  But now that we are moving into “glass half empty” territory, failing to raise will be taken as “It’s weakening – and the Fed knows it…”

Which Gets Us to Retail Sales

Just out from Census.  Where we wonder if Santa is on the distro list:

Even with Retail out, there is still the matter of the Fed’s Industrial Production and Capacity Utilization report which will be out just ahead of the market opening in a few minutes.

Besides War and Money?

Storming here in the south, again: Severe storm system brings heavy rain, flood threat to the South.

Are things looking up?  We wonder as The year’s brightest comet streaks by Earth this weekend.

Now, lettuce prey: Tainted Romaine Lettuce Has Been Traced to at Least 1 California Farm.

Turn off the TV and Move Department:Regular trips out guard against depression in old age.

New Political Correctness concept sighted:  In the NY Times Tech Fix section: Tech Fix: Yes, You Can Be an Ethical Tech Consumer. Here’s How.

Passings: Nancy Wilson

Music lesson:  Before I was a rock & roll news director – back in the day – I was a transmitter engineer while in high school and first year of college.  At the same time, I worked for a couple of years at KYAC 1460 AM – “The Soul of the City” – with some AMAZING people.  Like Sonny Buxton and Lloyd Jones.

It was then I first started listening to Nancy Wilson.  Who, I’m very sad to report, has just passed on at age 81.  One of my favorites?

Some of Wilson’s finest included her recordings with Julian “Cannonball” Adderly.  Cannonball had become famous with an instrumental titled “Mercy, Mercy, Mercy.”  Here’s the session with Wilson singing and Adderly playing his break-out hit…

Not many people appreciate artists like Nancy Wilson – or Cannonball Adderly. Damn shame, that.  the music was – and is – special.

Feeding the brain is important. So, to “balance off” all the left-brain “facts” we collect, music – especially jazz and baroque – help to calm, center, reflect, and support increase creativity.

Oh-oh..back to the moment. End of Music Appreciation time:  Market’s about to pass Judgement  on our financial models.  Will we be among the quick or the dead?  Somewhere  in the distant past, God passed Judgements.  Later in life, Account Balances took over that gig.

This weekend, some notes tying environmental studies to prepping which I hope you’ll enjoy.  Moron the ‘morrow…

Prepping: "Cat-Balancing" Part 1
Turn-down Thursday or Friday?