Markets are the Turkey; Pass the Paint

While we’ve been yammering on about how there would likely be a “turkey rally” ahead of the holiday, this is getting downright stupid.

Monday’s trading session saw a liberal dose of tape-painting – which is what you call it when one index soars while the rest are left in the dust.

Monday it was the Dow, up 0.36% while the S&P and the NASDAQ Composite were stuck in the lower fractional teens.

Today, looks like Hype-fest 2.0 with Dow futures up another 86 points.  What’s interesting is how much of the present rally is based on reality and how much is based on specious claims.  Let me explain:

(Continues below)

 

One of our readers, who pushed an 18-wheel dump truck around Seattle for zillions of dollars, has been eyeing some of the claims about what’s being called the “Trump Tax Cut” and how it would impact him.

I can’t emphasize enough how sub-par the reporting on this is.

First, it’s no longer a Trump tax plan. See this article?  Makes it sound like whatever’s coming will be Trump’s plan.  This is pin-the-tail-on-the-Donald. Trump-bashing is the media’s way of punishing The Donald for going around their slanted coverage by going with direct emails daily (1600 Daily is one big list) and going Base-Direct with Twitter.

Like the stupid talking-children on television who came on after we heard the debates and insisted on  “telling us what we heard” (and getting even that spectacularly wrong) the media’s liberal and pissed and independently owned and reasonably run, low monetization sites (like Urban) give people too many input choices for the owners of monopolies to support.  Ego: bash Trump.  But I digress.

Budget Reality: It’s as republican (*RINO) plan to give big corporations a tax break.  The theory is, that if corporations get enough of a “spiff” in the Tax Code, they will come running back to the (remnants of) America, We will reindustrialize and start making our own chips again and be ready to take on China if need be to keep the corporates happy.

BUT!  The reality is that while an economic argument could be made to give away tax money to fat corporate interests (and it’s a weak argument dispensed with on the subscriber side:  See the Oct. 18 report on the subscriber side “Why Reagan Tax Cuts Won’t Work Now“), the REALITY is that corporations will lay out oodles of money and campaign contributions and junkets and post-office-holding gigs, to buy-off the sitting collection of buffoons pretending to “lead.”

(Wait!  Did that sound bitter?  Wonder why…hmmm…)

Having a do-nothing Congress, they STILL don’t read bills before voting on them (or if they do, they can’t really comprehend them because they are so gawd-awful convoluted and full of tax treats for the rich).  It’s therefore no wonder why Andy is so pessimistic.

What he may fail to incorporate into his thinking is the admonishment from another reader (Bruce in Ecuador) who (paraphrasing here) says America is nuts.

Oh!  Right!

You mean:

  • Monetizing gender?  Subsidizes the plumbing industry, lol.
  • Monetizing Healthcare insurance? Give those poor healthcorps some tax money!
  • Monetizing social media?  Ads galore…anyone who posts dick on social is supporting the corporate model!
  • Monetizing government?  Hire more private contractors.
  • Monetizing children? Shove through ESL for all, seize parental controls, force immunizations, no parent rights…
  • Monetizing Education…(the list continues some way)  Get a degree and a lifetime debt!  Yippe!  What a fine effing plan that is…and back it up with the power of IRS to impound payments for the bankster class!  Yay!  Obama’s dream world is here.

And then add insult to injury by doing things like stealing public roads and turning them into toll roads and screwing We the People out of our investments?

OK, let’s toss in markets, too:

Most of the stock prices you’ll find these days cannot be justified on the basis of paying you fair rent on your money!  They depend solely on finding some damn greater fool who will give more than you did for a stock.

What should the world look like?  (Sure you want to know?)

We know prices are going up based on the Consumer Price Index.  From the last cost bend-over: “…Over the last 12 months, the all items index rose 2.0 percent….”

Now some economic distortion readings to think about.

In the last 12 months, the M1 money supply is up a whopping 7.4%.

Where do you think that money is going?

UGLY ANSWER:  Speculative bubbles.  Yep, that “excess” has to go somewhere so it goes to hedge funds, banks, and the ultra-rich.  And this explains:

  • Why Bitcoin just hit $8,200.
  • Why the Dow Jones went from 18,868 a year ago this time to 23,487 this morning.

Let me help ya’ll with the math:  That’s a Dow gain of 24.48%!

And Bitcoin a year-ago was around $800 bucks, so a 10-times return.

Friends (and Andy) the world has taken leave of it’s senses.

There is no way stocks could pay a return overall of 2 percent – which would keep up with inflation.

There’s no way they could pay 1.5% – which would be dividend plus some prospects for growth.

Know how much Amazon pays as a dividend?  I looked on the Yahoo Finance stock screener:

Maybe I should have picked Facebook?  Oh-oh…

Don’t get me wrong:  These companies have a franchise and sure, they have gobs of earnings.  But those earnings just make the franchise wealthier.

I always look at stocks like railroads.  Pretend it’s the 1800’s and we are railroad builders.

Would you invest in a railroad that didn’t pay you any money, but it made the owners fabulously wealthy and it became the greatest railroad profit story of all-time?

Yes, the stock prices of the railroad would go up – make no mistake.  But AT THE TOP who would buy?  What would be their rationale?  They aren’t going to make a penny of dividends.

Maybe they could have twice as many shares to unload AT THE TOP WITH A SPLITBut, where’s the beef?  Where’s the interest paid to shareholders for running up the stock price and for taking a flyer?

No in this world.

So, no, we’re not quite at the economic long wave bottom.  In fact, this is looking, once again, like another replay of 1928 – the loudest roar of the Roaring Twenties.

In place of flappers we have the LBGT and in place of Prohibition we have marijuana reform, and in place of Hoover we have Trump (both rich guys), and no one is looking down the road.

Sure is tempting to jump right it…but realize if you do that no one is going to take out a flag and wave it at the top and collapse the swindle.  Everyone has skin in the game to keep it going, the government in particular.

So paint the tape and pass the gravy.

This turkey is still flying and I’ll be damned.

Meantime, in Real News

Just out from the Chicago Fed:

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.65 in October from +0.36 in September. One of the four broad categories of indicators that make up the index increased from September, but three of the four categories made positive contributions to the index in October. The index’s three-month moving average, CFNAI-MA3, increased to +0.28 in October from +0.01 in September….

Red capes before the bulls!  Run ’em up some more!

Up a hundred for the open!  Bitcoin’s up to $8,250!

Where is Dorothy Provine when we need her?  (Starred in the TV series The Roaring Twenties!” (and looked a bit like Elaine…hmmm…)

Some day we’ll all be in rehab with Harvey and Kevin, but not today.

Well, unless you’re John Conyers, or Charlie Rose, maybe.

Gawd, this is entertaining.  Popcorn?

Run  ’em up at the open anyway – Short Turkey!

Paint and gravy, brothers and sisters.  Gimme an Amen!

Big Pharma Loves You

Which is why they don’t like stories like this one: Hormonal Birth Control Is Linked to a Higher Risk of Suicide, Study Says.

Yeowch!

Fast Talkers But Slow Doers?

Wait:  How long we been seeing tweets about the NorK’s?  And just now we read Trump administration announces sanctions against North Korea?

LV Shooting Case

Las Vegas shooting: Attorneys file lawsuits on behalf of more than 450 victims.

You know, if this ever (as some claim) had something to do with an assassination attempt involving one of the Saudi princes who was in LV at the time of the shooting, could there be a cause of action upstream and we could own the Middle East at the end of the litigation?  (Lots of discussion and vids on YT) Just wondering…

Off to work on Peoplenomics for tomorrow…Back Turkey Morning… see you them.

Comments

Markets are the Turkey; Pass the Paint — 22 Comments

  1. Well, it’s a proven fact that trickle down economics works better than socialism. Ask any former Soviet bread line attendee..

    Thanks Goerge for the mention. I will take what I can get.

    I don’t make a zillion dollars. But i love my job, love what I do, my boss loves me and I work with a great bunch of fellas. And it is challenging.. And adores me many hours to think about things.

    I’m certainly rich in many ways…. I just could always use an extra $20k lol

    Going to run for the shop steward for my union at work. Yes, I know that paints a target on my ass. And you gotta listen to a bunch of whining. But! It bypasses the seniority list and I will always work. And I’m used to having a target on me. ;)

    Thanks again for the mention.

    Off to grab 18 gears.

    Andy

    • As you said, most of being a steward is just sympathetic listening and trying to course-correct to solve whatever the perceived problem is. (“I know he keeps looking at you cross-eyed, but since we have nothing about that in the contract, it’s not a grievable offense.”) I also read my contract nearly every day and handed out as many copies as I could get into my member’s hands and encouraged them to do the same. You have to be willing to put your ass on the line when you believe in your position and think creatively, often on the fly, when the administration is doing their best to screw someone over. (One of my members was accused of making inappropriate long distance phone calls. The supervisor didn’t know all long distance calls were logged by Telephone Services but I did, so we were able to prove the calls hadn’t come from the extension they were alleged to have come from. The supervisor was later fired for her own inappropriate behavior.)

      Steward is not the kind of job you can study for, you can only learn as you go. There will be little in the way of thanks and much in the way of unpaid overtime. I salute you for standing up to the challenge.

    • Yes and no.. History is just repeating itself.
      Historically in a society of pomp and greed forcing the laboring class to foot the bill has almost always ended with some sort of revolt Napoleon,Hitler,etc. The list is pretty long. In Hitler’s second secret book his plan was to get the people accustomed to having to depend on social programs for existence. Then take it away from them and give it to the wealthy by doing that it would allow a leader to gain support of the masses so that the 29 percent could be imprisoned propelling the one percent through the stratosphere in gains. Like you pointed out it doesn’t end up working at first it seems like a relief similar to giving tax breaks.
      The answer in my opinion is simple. Give tax breaks to companies producing raw materials and those manufacturers that manufacture in America. Tariff all incoming goods and tax any services from overseas. If a corporate office moves outside the us then tax them at a higher rate or deny them from selling in the country. If someone makes a dollar in the us he pays a tax. Do a flat tax on anything over poverty level.
      Unfortunately that will never happen to many people being controlled.
      The old businessmen i’ve met that built their companies took a lower profit and made sure their employees were taken care of. One company I know supplied busing and daycare for the employees not to mention if he made money at the end of the year made sure everyone got a cut. Today those year end bonuses and benefits are usually for management only.
      Today what is it 74 percent of married with children rely on the eic tax credit. One in three are reliant on food stamps and heating assistance..
      A slippery slope..
      Unfortunately we get to watch it all play out.

    • Theoretically trickle down will work. The reason it didn’t in the eighties is the same reason the bailouts didn’t fix Detroit and Pittsburg steel mills.
      It is also why they had to bribe drivers to deliver pizzas to the wealth neighborhoods.. It didn’t trickle down.
      A few years ago they had a show on the tv. It was thirty days. They would have millionaires and business leaders go out with nothing more than what a laborer would have. Without using any of their connections finances etc. Go into an area where there wasn’t any connection and survive for thirty days. Find employment get housing and food. Those that actually did it said it was an eye opener . unfortunately it only lasted one season.

  2. another wonderful thought provoking article..
    with the question Will the tax cuts create new jobs…I am thinking.. (NO) https://socialsciences.mcmaster.ca/econ/ugcm/3ll3/ricardo/Principles.pdf

    giving bailout money to auto industries… the idea was to rebuild Detroit.. instead that never happened or if it did it isn’t obvious.. the same thing with the steel mills.. so I am thinking that giving huge tax cuts will end up quite a bit similar to that of the trickle down theory.. ask any waitress.. it doesn’t trickle down in tips from the wealthy they expect more and give less..
    industry is the same way more profit smaller costs means bigger bonuses..
    a wealthy person earns so much money that he doesn’t or can’t spend it all each year, when his taxes go down his income after taxes goes up. Somebody living on $1 million per year but earning $5 million after taxes can sock away $4 million in a bank account. If his taxes go up enough to only $3 million per year, he’s still living on $1 million per year and socks away $2 million in the bank. and his lifestyle doesn’t change at all.
    for the working man he believes that his taxes and income work primarily the same way of course this is what the supporters of the tax cuts wants the average laborer to believe to get the laborers to support tax cuts because they think they’ll have more money in the bank as a result, but if their taxes go up, they’ll have less money in the bank. for the initial short time that is somewhat true.
    unfortunately it doesn’t play out that way.
    most people spend pretty much everything they earn their play money is sometimes and mostly zero or close to zero.. ( I live way in the future since I am planning what I will need next year already) if they have any that they save it usually runs five percent or lower since most large companies have done away with retirement funds they have the 401k and will sometimes donate up to 2.5 percent.. most don’t even offer that anymore.
    what isn’t discussed openly is that nasty word wage inflation.. and after time their pay ends up the exact same as it was.. around here the average increase in income averages out to 2 percent per year.. funny how that is since inflation has been sitting at 4 plus..
    Consider all the “tax cuts” working people have gotten over the past 30 years, from Reagan, Clinton, and Bush Jr. In each case, within a year or two working people’s wages were the same or lower.
    the other thing is layoffs.. we called it the yearly witch hunt.. the longer you worked for a company the more worried you get for the yearly witch hunt.. one corporation that had an office close by theirs was the Christmas cheer witch hunt.. every year just at christmas time the layoffs or firing would happen.. now this company is a fortune five and sure enough everyone knows their name a common name.. but for the working class in their ranks they fear. usually a better than average income but chances of staying with them is low to nil. the only ones the benefit are the executives.
    the corporate leaders are not the corporate leaders of years gone by that took smaller incomes still made a huge profit and kept their employee’s we live in the age of pomp and greed.
    similar ages have happened in the past. each ended badly

    • You hit the nail on the head. The real job creators are those who spend it. That means wage earners.

      It’s no different than saving someone from drowning. If you want to rescue them you jump in the water and pull them out. You don’t give tax cuts to boat makers hoping that they’ll make a boat that someone will then buy and then hope the buyer will rescue the drowning man.

      If you want to help the middle class do it directly by cutting taxes on wages and expand deductions for health insurance, student loans, state & local taxes and even consumer interest. Give a FICA holiday for companies with under 20 employees.

      • Wavecrave – FICA holiday is a great idea. Obama gave business a FICA holiday during the recession during his term. At that time, I was a small business owner and during the stock market crash, my business was down 37%. The Obama FICA holiday was a big help.

  3. I (lowly me) would know how to fix all of these issues. ;-) However, it can’t be done by voting, because the voting mob never knows what is at stake. Ask your neighbor about their candidate they voted for what the 10 most important issues are and how their representative would fix them, and you would get some very stupid answers.

  4. We need a revised tax code. We just don’t need the one Trump is pushing. You seem to be excusing any blame on the GOP tax plan away from Trump though. He just wants a win, so any version is ok with him. And if that tax plan stinks to high heaven, then Trump has to shoulder all the blame right? In the end, he has to sign it into action. Once he does that, he owns it. If the tax plan is as bad as you say it is George, and Trump is so indispensable as a President in your opinion, then he can also veto the tax plan right?

  5. The Bollinger Bands Channels for UDOW & SDOW are shrinking in & getting closer, indicating a possible DOW reversal. Problem is TQQQ is still showing up. It is a coin toss with a long bias.

  6. Obama made money from ‘it’? Well, then Trump most certainly does!

    ‘Big Government’ has been around for thousands of years – think of the ‘smucks’ who built the pyramids, the city of Rome, the great cathedrals or ‘Interstate 5’ . . .

    Life promotes Life, whether that of rose or ant or human!

  7. Welcome to the Trump era where his tax plan gives to the rich & takes away from the poor & has the middle class pay for it. Also, by doing away with Estate Taxes, he insures his family will remain billions of dollars richer in the future on your dime. Trump is just another Hillary in a suit & Trump shirt & tie made in China.

    • Sorry ECS; we might agree on the tax overall and the RINO’s inability to do better but, the estate tax is immoral and has nothing to do with “your dime”. Estate tax is taxing the money that has been taxed and it makes sure that the next generation doesn’t get what their parents made; for them. I heard Little Dick Durbin relate it to winning at a casino! There is no comparison between the two. This is earnings people have worked and earned and some died for(workaholics) Then when they die, the government swoops in and taxes the crap out of what they left? It is the worst of the worst in this tax scheme. It certainly has absolutely nothing to do with your “Dime”. It should be iliminated not reduced!!

      • If you are against Estate Taxes, either you are very rich, or have misinterpretated the “American Dream” long version.

      • I’m kind of thinking it’d be nice to give each of our children (combined #=9) a new car, but 9 cars is a fair bit of dough. Elaine and I are planning to spend and adventure more in 2018. Anything over $100,000 per child? Tell ’em to go make their own way in life – that’s where the learning is…

      • What’s immoral is allowing an ever larger slice of the pie to accumulate into even fewer hands.

        I have no issue with it. It’s the first time the money goes to someone so it should be taxed.

    • @ECS

      the Estate Tax shows many that the politicians that regard you as a ‘tax slave’ while you are ‘living’..have even less respect for you when you ‘pass’….and I would wager that most of the scumbags have ‘foundations’ to shield them from their Estate Tax Law…..(foundations are a good thing..if used properly……UNLESS it is the Clinton Foundation….imho

      • d – Don’t forget that in addition to the tax revenue Estate Taxes bring in, there is a hoard of Lawyers, Accountants, Insurance Companies, Bankers, etc. that make a ton of money doing Estate Tax Planning for the rich, & they have to pay Income Taxes on their earnings just like you and me. If the Swamp loses this revenue, that leave us to pay more to respect the deaths of the wealthy. Remember, even Bill Clinton in his Tax Cut never changed Estate Taxes. If Bill can realize Estate Taxes are a necessary tax generator, then we should be able to also.

      • In order to end where you leave something you either die very young.. Or be very rich and hope there isn’t a severe deflation of the dollar in a hyper inflated society where a one pound loaf of bread is ten million dollars.