With a fresh inch-and-a-half of rain in the gauge here at the ranch, the Labor Day weekend was marked mostly by an end to the drought that has nibbled at the edges of East Texas.
And, after a respite early this week, we will be into the tropical storm – hurricane remnants by next weekend. Fortunately, we’re off to the left of the high-impact rain from TS Gordon in today’s outlooks:
While we have been looking to the southeast for “weather-to-come” for several weeks, our focus this weekend on “prepping for all” around here included getting the chainsaw ready for whatever.
Compared to the reality of financial matters, the rain is either a minor nit or a massively Big Deal. Depending whether you’re a venture capitalist or a power company lineman, I suppose. We admire the one’s doing the honest work; the paper-hangers? Not so much.
We are not alone in our quest for bumbershoots:.
Markets Going Down?
As we’ve been “bellering” the past few weeks, the end of August is generally when the Average Annual High is posted. Although the futures are looking down 50, or so, at the open, there’s rooms for all bets as we look at the board.
Some of the things to think about?
1. The markets around the world matter very much right now. The European markets were down 1/2 to 1 percent in the early-going. This may result in some flight into US Dollar-denominated assets (stocks).
2. But, the simple indicators of the dollar’s strength are the metals and energy. If gold goes down a good bit, it’s often because the purchasing power of the dollar has gone up. Gold being down $9-bucks when I looked earlier suggests the markets are moving back into the US Dollar and that makes a tough investing climate.
The reason is even though a global decline in the markets would be a downward pressure on US market (as everything is inter-connected in today’s trading world), a flight into US Dollars would buoy the price of stocks here as “greater fool’s” line up overseas to “click in to the game.”:
On our Peoplenomics.com premium site, there’s an indicator I call “George’s Ugly Candle.” It’s a comparison of the more recent/widest spread between the Rest-of-World and the US. And it was increasing in the Saturday subscriber update.
Global discontinuity risks are rising. When one market is going up and a counter-market is going down, you get to a self-reinforcing points. If you went boating over the holiday, it’s like having everyone run to one side of the boat. Properly loaded, it’s OK, but if anything goes wrong (*when everyone’s hanging off one side) the boat capsizes.
3. Data can capsize markets. This week, we have a number of economic indicators but the Federal Employment Report Friday will be an important one to watch.
As we’re fond of saying: Major news disbursements tend to one of two alternatives: Buy the Rumor, Sell the News. Or, if the news is going to be good, it’s the other-way-round: Sell the Rumor, BUY the News.
Last month, the report showed 157,000 jobs added to the economy and with that, the unemployment rate dropped to 3.9 percent. That’ll be a tough act to follow.
4. PMI, ISM, and Housing out in a couple of hours shouldn’t move markets, too much. But tomorrow, international trade data and a parade of talking heads (of regional Fed chieftains) could give give some insights into “The Interest Rate Problem.”
The Fed would sure like to raise rates, since if we were to sink into a recession any time soon, the Fed doesn’t have much lowering they could announce. The higher rates go in the short-term, the more “economic gunpowder” they’d be able to set off to forestall a Depression.
The problem is, that in a similar part of long-wave economic history, the three discount rate hikes in 1928 led to NYC rates in the area of 6% when the market peaked in early September of 1929. The theory was raising rates would bring the market to its senses.
But, the reality seems to have been that wild-eyed speculators of the period just kept on paying the higher rates because it was more than offset by the paper gains being made in the market.
Just like last month in the present cycle: We have interest rates (over a YEAR) running in the 3% area.
The month of August (just done) ended about 24,777 in our Aggregate Index approach. This compares with the final day of July when the index was down at 23,863. That’s 3.8% in a month.
No question about it, with the prospect of making a whole year’s interest costs in a single month as the “dream of sugar-plum fairies” no reason for the market to come to its senses; at least just yet.
The dynamic (and this one”s the “money ball” to be looking for) is when the mood shifts. Say the Fed gets rates up to 3-1/2 percent on the 10-year Treasury Note. There’s some reason to push them up, not the least of which is wage-driven inflation prospects. (Look for the Democrats to really press for a $10-$15 an hour national minimum wage this fall.)
The Virtuous Cycle (effectively “free money” to invest with and humongous returns) turns into the Vicious Cycle when suddenly the once “free money” eats up all the disappearing gains. When that happens, especially if all the Greater Fools once in good supply have suddenly dried up, and now you have the potential to Crash.
Toss in the political wild-cards of the fall and the Mueller report that we reckon will be precisely timed (oh, and coincidentally, of course) to as to have maximum impact on democrat chances for gains this fall.
See how much fun this period will be?
One of the sideshows underway this week will be the Brett Kavanaugh Supreme Court hearings. As the Wall Street Journal figures it, the Roe v. Wade case will play a starring role.
This, as democrats try to trip him up.
The normal political punch to pull would be to ask an appointee to voice an opinion (one way or the other) and then seize on anything said in order to take it totally out of context and turn it into a political Lie. This, parroted by the me-too-media lefties will slow down the confirmation process and – if the ploy works, Kavanaugh’s vote won’t come before the election. God knows what happens thereafter.
Kavanaugh is a smart jurist (and pretty damn good) and he should know that in the Trump-bashing media frenzy, Jesus or Solomon could be nominated and would face the same fate: Obstruction for the sake of…(go ahead…take a guess…).
If he can stick to “That’s settled Law, sir…and I don’t try to out-guess previous Supreme Court rulings…” But, alas, the crooked media of today will take even that out of context. I can almost read the headline now: “Kavanaugh Unable to Decide Key Legal Issues!”
Sad, so sad. But, it’s the world we live in, I suppose.
Yes, the same country which now has a land-office-rush going on to buy children bulletproof school book bags.
Oh, the left may not be the pals of the Tech Giants they make out to be. See Sanders takes shots at Jeff Bezos amid Amazon feud for details.
Sexual Profiteering Note
Did you see where oh-so-liberal France has figured out that it’s time to get the kids off their phones?
Of course, that’s unlikely to ever happen here. There is just too damn much money to be made marketing sex to the under 12 crowd. Whether it’s porn, “gender-choice” curriculum, or gay sex promotion to middle-schoolers, it’s all a financial gold mine and who wants to miss that party, huh?
Besides, absent phone to cheat with, how are today’s spoiled brats going to get answers to anything? Why, you know what happens next, right? Everyone will get do-overs on everything as the emasculation of America moves into its final phase. ViseGrips, please!
Not everyone is stupid, though: Jennifer Garner says she’s ‘terrified’ of her children using social media: ‘I am probably overprotective’. No, around here, that sounds more sane than anything else.
And on the SM front: Can social media networks reduce political polarization on climate change? You kidding me?
When rates are low….all in!
Building jet parts WHERE?Tell me it ain’t so…
No more Nike’s here at the ranch: Colin Kaepernick: Quarterback is the face of new Nike campaign. We do have some construction projects coming up this fall. Nike gonna make knee-pads?
And…Your Tax Dollars at Work:
“On behalf of the government of the United States of America, I congratulate the Sammarinese people as you celebrate the Founding of the Republic of San Marino. As the world’s oldest surviving republic, San Marino has stood for more than a millennium as a beacon of democratic principles and self-governance. The United States values its partnership with San Marino and looks forward to continuing our strong relations.”
Still, we see some wisdom to maintaining good relations with San Marino. Most people don’t know they maintain an active Crossbow Corps. When globalism fails, that seems like it’ll be a dandy-fallback technology. Shades of the “Mouse that Roared“ huh?
We now return you to the Masters of Capitalism for another day in the digital salt mines….
Moron the ‘morrow…