SSDY: Same Stuff, Different Year

A short course in how to be an international banker is on tap today.  Although it would be wonderful to announce that science has experienced a breakthrough and we’re all immediately destined for a world without want, instant gratification and fulfillment, where calories don’t count, and such. Regrettably, that’s not on the breakfast menu.  Try back at lunch.

Instead, we have nearly the same spreads as going into the Santa Week, except the Santa Rally is possibly over and we will get back into the swing of hard numbers tomorrow.  From there the week moves to the ADP and Challenger foreplay job numbers ahead of Friday’s big deal, the “offishul” government employment report.

For now, the futures are up modestly in US markets, but we wouldn’t be surprised to see a weak ending to the day.  It’s a foregone conclusion the Big Traders may try this month to drive down prices in order to buy on the cheap for bonus calculations for the year.

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The dollar is on the move, though, and it’s worth a mention:  When the dollar weakens, it takes move weak dollars to “buy the Dow.”

Naturally, to the Great Unwashed it looks like a rally.  But, alas, it’s a simple change of inter-market arbitrage sorely missed by average investors.

The tip-off as to whether a move in the futures is driven by FOREX changes may be found in the price of metals.  They go UP (generally) as the purchasing power of the buck craters.

Think of it this way:  If you were going to buy an ounce of gold for $100, but suddenly the purchasing power of the dollar were halved, the seller of the gold would demand twice as much paper – $200 – to do the deal.

By the way, if you find someone who will sell gold coins for $100, I’d like to talk to them…

Same thing happens with other hard commodities: Oil was up a few cents, too.  Notice, though, that this is noisy business.  Nothing goes straight up, down, or sideways.

The long-term USD move is still underway against the Euro.  As of this morning, a buck only buys about 0.83 Euro.  Last fall, when readers were asking me to comment on the “strengthening dollar” (and I was pretty quiet) it was because what we’re really seeing is a game between Central Banks.

Although you have to look around for the numbers, the US is still in deflation.  This is why gold is not somewhere north of $2,500 an ounce and why silver languishes around $17.  Last year, the stronger dollar would buy almost a whole Euro (or at least 0.95 Euro) so percentage-wise, it could be said that the dollar is down 14% relative to the Euro.

But it’s likely not to last too long.  Perhaps a few more months.  At the longer timeline, if you click over to Xe and click the 10-year, you will see that once upon a time it took $1.40 to buy a Euro.  Now, it’s on the order of $1.20.

As a RICH American tourist (which you aspire to be, anyway) the most ‘bang for you buck’ would have been visiting Europe early in 2015, or late in 2016 when the dollar was strongest against the Euro.  Compared to those windows, the costs are likely up (denominated in dollars) by 10-15%.

Point is?  If you like things made in Europe, start thinking of items from elsewhere – at least for now.  And if you think the study of comparative exchange rates is for dorks and nerds, you’d be sadly mistaken.

A lot of people don’t understand how to make pretty good money by simply saving in a foreign bank.

Take Canada, for example.  Say you invested $10,000 in Canada when a Dollar would by $1.45 CA in 2015.  A Canadian passbook would show $14,500 at that point.

Fast-forward to this morning at the Looney is about $1.26.  If you were to move the money out of Canada and back to the US today, you would get about $11,507 in US dollars.

Now think about this:  A (very roughly) 15% gain in what, 2-1/2 years?  And with fairly small risk.  Oh, and that’s just using a foreign bank – we’re not talking interest.  Royal Bank of Canada pays about what Bank of America pays (as of this morning): 0.75% which doesn’t even keep up with inflation.

But, like I said, people don’t ask the easy questions much these days, like “WIIFM?”  (What’s in it for me?”

If you do use a foreign bank this way, don’t forget to check the little box on your IRS returns if you have $10,000 (*usd) overseas.  Consider thing quadruple-important if you have anything other than an Anglo surname.

Sometimes, you can make pretty good money putting up a “spec house” in a hot market.  I mention this because CoreLogic Reports Fourth Consecutive Month with More Than 6 Percent Year-Over-Year Home Price Growth in November.  With housing kicking-it in some markets, there’s another way to play.  All depends on how muchg confidence you have in your ability to organize and put up a home in 120 days, doesn’t it?

Didn’t mean to roll out the white board and start our usual scheming to make a buck this early in the new year, but we have to get to it sometime.  Getting ahead, where your savings keep ahead of inflation, is as much a problem now as it was last week.

Some things never change.

Damn it.

One New Year housekeeping issue:  If you don’t have it yet, quickly flip overs to Amazon for your copy of the Stock Trader’s Almanac 2018.  There are key dates all overs the place. We prefer the spiral-bound to the e-version.

Things like the FOMC minutes tomorrow afternoon – that might move things along. But for now, as a variant of SSDD (same sh*t, different day) we are in SSDY this morning, though you’d be hard-pressed to tell.

Macro Trend Warning

This sure caught out eye: Autonomous Vehicle Sales to Surpass 33 Million Annually in 2040, Enabling New Autonomous Mobility in More Than 26 Percent of New Car Sales, IHS Markit…..

I wouldn’t be planning a roll-up of truck driving schools any time soon….

Also have a gander at Enterprise Virtual Digital Assistant Users to Surpass 1 Billion by 2025, According to Tractica.  (“You mean those ‘chat now people’ aren’t  people?”  D’uh….)

Revolutions are Good for Prices?

You might draw that conclusion after reading Oil trades near strongest levels since mid-2015 on Iranian unrest.

Someone should put together a daily “death index” which would include arms makers and the defense sector.  Oh, wait…guess that would be irreverent, huh?

Meantime, Ayatollah Khamenei Blames Protests on ‘Enemies of Iran’ as 9 Are Killed in Latest Unrest… Care to guess who that might include?

Real-Life Flying Adventure

F-16s intercept small plane that violated Trump’s airspace.  How’d you like that for an experience…out for a holiday sight-seeing and suddenly there’s F-16’s on you.

About the only thing scarier will be the FAA fines…after alll, preflight checks are supposed to include checks for TFR’s (temporary flight restrictions).  Big oopy….

Climate Change to End Chocolate?

Chocolate could run out within 30 years because of climate change… at least so claims the story.

As we’ve long held, climate change is from desertification and that’s from killing off large wild herds and animals and have you any frigging idea how stupid most people are on this point?  Go watch this TED-Talk video.  Or, better, go get the book Holistic Management, Third Edition: A Commonsense Revolution to Restore Our Environment.

These are the real-deal answers, not the socio-political SJW globalist-scrambled thinking.  But to each their own, I ‘spose…

2017: The Last “Civilized year?”

A “point and to the short” report this weekend since most of our subscribers will be too busy counting up the gains for the year and engaged in tax planning and such.

Nevertheless, an intriguing question has arisen from this week’s trading and we need to consider some of its implications.

So only a few headlines, but a lot of chart commentary this morning as we try to sort through the messy relationship between headlines and bottom lines…

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2017: The Myth of the “Trump Bump”

Almost a Peoplenomics report this morning – which you can thank our subscribers for.  The detailed charts will be up for them tomorrow.

While it is a major talking-point amongst believers in conservative economics, the notion that this year has been marked by a huge “Trump Bump” in the markets, a more even-handed appraisal of facts suggests it not a good idea to “get on that bandwagon” just yet.  To be sure, the Trump administration has changed a lot of status quo operations back in “Swamp Land” and much of it is for the better.

However, we still hold to a lot of “old-fashioned” values; one of which is that your “money” should be worth something.  So should your savings.

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The nation is not presently “looking out for your purchasing power.”  Indeed, the so-called “dual mandate” of the Federal Reserve articulates congressional guidance (or a miserably weak form) that the Fed should maximize employment and moderate long-term interest rates.  The notion is that if these two things happen, America will enjoy something approaching stability.

Where voters get “wrapped around the axle” of the double-speaking political class, is when they don’t understand data analytics and take “the data” at face value, not thinking about it clearly.  While it’s a grand idea to “Make American Great Again” (MAGA), the task is terribly more complex than the 7th-grade US Media portrays.

In addition to old-time conundrums of capital formation, skilled labor, and innovative design, the unaddressed challenges ahead will include “Human Replacement.”  As we have argued, mainly on our Peoplenomics.com subscriber side, there is a compelling reason to tax the work product of robotic system imputing an income tax analog on the output of machines because for ever machine that displaces humans, the burden of social support on government grows.

Your Chart Declares Your “Party”

To illustrate the public’s bias, I’m going to show you two charts this morning.  They will compare stock market performance of the S&P during the first  year of three presidential terms.  The first chart looks at the raw point gain during each of those first years:

Naturally, the Conservatives will point out (correctly so) that Obama was inheriting a collapsing mess that bottomed in the spring of 2009.  From this heavily over-sold condition, it is only natural that the market would “bounce-back” more in this period.  From the political perspective, the easier “sell” would be the comparison of Obama Term 2, Year 1 with Trump Term 1, Year 1.

While the partisans line up to duke-it-out on this point, we continue our inquiry:  What about the percentages gained by the S&P in these periods?  A vastly different picture emerges:

This analysis demonstrates that Obama had a wildly more successful first year in Term 1 than was his follow-on performance.  Here, the Conservatives will quickly point out the 2009 low is the culprit.

There’s one other aspect of all this:  The impact of inflation.  If we decrement the December S&P for the years in question?  Would that ‘even the playing field?’

NO; While the 2.72% inflation in 2009 would indeed knock the Obama percentage down 5 points, it also knocks Trump down 2-1/2 points.

What’s Ure point? Are you saying Trump’s bad?”

The point I’m making is that like climate, political figures tend to look for ways to “market the results of natural forces” that operate largely outside of the politi-sphere.   Populism is fine, and Making America Great Again is a dandy concept.

What’s still missing, however, is the break-through new technology that will “kick it up a notch” and set the world ablaze with new hope and ambition.

People forget about long-term economic cycles.  They also forget the S-curve of growth some marvelously articulated in the works of the extremely bright like Andrew Odlyzko and Cesare Marchetti.

By the way, with Bitcoins trading down in the $14,250 region this morning, you owe it to yourself to read Odlyzko Recent Papers on Technology and Financial Manias.  Pay particular attention to the Odlyzko paper on Sir Isaac Newton losing a pile in the South Sea Bubble.  Not for the detail, so much as the new directions in Bubble research implied.

Around here, we’ll hold to our simple view – articulated more clearly by larger brains than ours – that the Shakespearian “tide in the affairs of men” could easily be the popularization of the economic long wave.

You just don’t get to see it while you’re stuck in either the partisan or dolt roles so carefully marketed by systemic oppression of innovative thinking.

As long as you’re made a partisan in BS politics, and so long as you don’t see fiscal decisions in their longer-term contexts in concert with technology S-curves, you’re stuck in the cheap seat in the outfield.

The reality is presidential “success” is as much luck of history, timing in the larger economic, technology, population, war, and religious cycles, as specious claims and jingoism of populist promoters.

While I haven’t gone back and done a longitudinal study of the matter, an intriguing question comes about:  Is America in a slow, inevitable decline, based on constraints on resources, limited innovation, and global dependencies?

In other words, when one looks through the lens of history, weren’t our greatest percentage gains in times of either war or exploitation of natural resources?  If you think the answer is yes, then it implies that “years to come” could be ugly.  Absent some non-radioactive power source breakthrough (thorium, cold fusion, zero-point?) we are definitely seeing signs of the “oil glut” coming to an end.

So, as it does, and as rampant partisanship supplants data, research, and longer-term logical thinking, does America simply become an “unmanageable country?”

Self-Balkanizan is our greatest enemy and its largest “weapon in the inventory” is social media.  Warring “organizations” are already engaged in the virtual warfare.  Start to make notes because there are constant efforts to suck you in and your money with you.

Although it has taken much longer than I would have ever guessed, I think the existence of Social Media is the #1 problem facing the world right now.  Just as Radio had to be regulated in the last Depression to moderate radicalism, when we get to our next big financial blow-down, remember the Internet is just radio for your screens.  And the armies of opinion are there playing convert or kill and you’re in their sights.

There: Feel better now?

Bonds Close Early

The Dow looks to open up 80.  As Stocks cheer $9 trillion year, downer for the dollar.  I figure the dollar decline is mostly because our National Debt keeps going up.

Gold’s making a minor move up – coming back toward the $1300 per ounce level.  Doesn’t mean gold just saw a change in its intrinsic value, so much as it just takes more of the ever-more watered-down scrip to buy it.

Remember, your dollar buys four-cents on the dollar compared with purchasing power in 1913.  And we’re heading for three-cents…

Meanwhile, the crypto mania continues: South Korea students dive into virtual coins, even as regulators crack down.

Eyes on the NorKs

North Korea: South seizes ship amid row over illegal oil transfer.

You should be carefully tracking the rapid advances the NorKs have made in sea-launched missile systems.  As one of our sources noted:

“.   What is scariest is the ICBM missile designed by the Soviets which can just be dropped off of a ship and then fire itself out of the ocean.  NO submarine with a launch tube required … just any old freighter with a crane to pull it out of the ship’s hold, drop it in the ocean … and it is ready to fire about 60 seconds later!!  It can also be fired from  sunken barge, etc.. Apparently the NK’s are building the barge type needed for firing the weapon from a barge.”

And that should scare most Americans much more than the pacifistic MSM are letting on.

Climate Change

Forecasters Warn of Hypothermia and Frostbite For Swathes of the U.S. as Deep Freeze Sets in.

We’re not the only ones to call it: President Trump Said the Freezing East Coast Could Use Some ‘Good Old Global Warming.’

Fair to Mostly Useless

Tracing of S. Carolina killer’s hands advertised online.

Why Solange canceled her New Year’s Eve show. *(Who?)

And the Biggliest Story of the morning?  Why is gin and tonic getting pricier?

We are planning a grassroots campaign in 2018 to make it a federal crime to drink G&T’s when the temperature outside is lower than 75.

We now return to mixing up our sourdough pancakes.

Winding Down ’17: Data & a Bitcoin Rap

Data first.  It’s easy to explain the market weakness over the past few days:  People may have done a bit of selling in order to put some cash in the bank for 2018.  Today, though, unless you’re trading options, the settlement in three days won’t be in this year…so we half-expect a minor rally.

About the only fresh data out is the International Trade in Goods and Services.  If this turns your crank…

“The international trade deficit was $69.7 billion in November, up $1.6 billion from $68.1 billion in October. Exports of goods for November were $133.7 billion, $3.8 billion more than October exports. Imports of goods for November were $203.4 billion, $5.4 billion more than October imports.

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A couple of other points:

Advance Wholesale Inventories Wholesale inventories for November, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $610.2 billion, up 0.7 percent (±0.4 percent) from October 2017, and were up 3.8 percent (±0.7 percent) from November 2016. The September 2017 to October 2017 percentage change was revised from down 0.5 percent (±0.4 percent) to down 0.4 percent (±0.4 percent)*.

Advance Retail Inventories Retail inventories for November, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $619.1 billion, up 0.1 percent (±0.2 percent)* from October 2017, and were up 1.9 percent (±0.5 percent) from November 2016. The September 2017 to October 2017 percentage change was unrevised at virtually unchanged (±0.2 percent)*.

God, is this exciting, or what?

The Bitcoin Rap

We continue to observe Bitcoin with a mixture of scientific curiosity and horror.  An hour before press time, it was trading around $14,000 each.

To be sure, there are still plenty of “True Believers” who are saying it will go to the Moon, or a million, but we aren’t so confident.

Take a look at this comparison of the pricing of Bitcoin with prices by the Dow in the run-up in the 1929 collapse and you’ll see why we’re concerned:

This is not to claim a direct correspondence.  You will see that the Dow run-up took place over a number of years while the Bitcoin run-up has taken place over a number of months.  Which gets us to an interesting line of thinking.

If the old University of Colorado Long Wave Econ group were still active, I’d ask the “old hands” this very important question:  “How much of the time-scale of such an obvious bubble is related to transaction speed?”

You have to remember that when stocks were running up in the 1920’s, the price of a stock would close at X and the news of that closing would be either in the evening papers, or the morning newspapers.  Out west, the afternoon papers might have the report of prices, but it would be the next morning before orders could be placed.

Upon rising, the 1920’s speculator would take coffee and the newspaper and study the market closely.  Then, if warranted, a telephone call to the brokerage.  But here’s another time-lag.  Brokers didn’t have instant to-the-trading-floor coms.  It was a telegraphed order, manually sent around by “runners” and then the traders would (or not) strike a price.  A good estimate under ideal conditions was about a one-day turnaround on transactions.

With Bitcoin, it’s a different thing:  One click and you’re in, or out, and then whatever the time is to update the blockchain (distributed ledger).

If things are going well, as was noted in an article this past summer, a transaction can clear in about 30-minutes.

What’s interesting “mental floss” is to estimate the “time compression” and wonder if that’s why the ramp in Bitcoin has been so fast compared to the 1920’s market.

I try to refrain from “talking my book” because even though we do exceptionally well when following our trading model, it was never designed to call tops, or bottoms, but rather it’s designed to capture the big moves in the market and it does that marvelously.

Still, one way to look at Bitcoin is to run a subscriber tool I built called the openbrain.xlsx spreadsheet.  It makes a SWAG at where prices should go in a “normal market” that seems to be following conventional Elliott Wave rules.

In this case, it’s not pretty, at all.  Remember, just a couple of weeks back Bitcoin was in the $19,500 range, and then collapses to the $11,060 range for a moment.  When we plug that in to the spreadsheet, it looks like Bitcoin MAY be about to enter a third wave down and that could end…well, you look for the Wave 3 targets here:

I won’t label this a “prediction” (yet), but in the event that Bitcoin takes out the previous low (the $11,060 momentary low) then the odds might be shifting toward a Wave III down wash-out.

There is still the bullish case, however.  So don’t let me rain on your empty digits backed by nothing but other digits…

The way THAT “much higher and to the moon” wave count could still play out goes like this:  We start from some nominal Bitcoin floor (no one holds up a flag at incept points) so I tossed a dart at $1,000 each, and then things rally like hell.  From whatever the floor is ($1,000?) up to $19,500…as a large Wave I up.

That would make the recent correction a Wave II down which in turn foreshadows the mega-upside wet dream of Coinsters:

You can argue that the recent pullback was to right around where the Wave II SHOULD have gone…and I won’t argue the point.

Typically, the “great arbiter” discussion in this column.  Instead, it’s the breakout or breakdown.  Unless you just have to spend it today, waiting a while may be the smartest thing to do.

In order for the BitBulls to hit their $35,817 minimum up-side expectation for Wave III, we first need to sail above $19,500.

BUT, if instead, we break through to the downside, and see prices like $$10,900 and lower arriving, then it’d maybe be time to find the next bigger fool than you. That’d be a good level to become a BitBear.

As always, we just watch with horror and amusement. World events are likely to drive.

The GOP: Winemaker’s Party?

Not following?  Wine is all about sour grapes and we saw this in the NY Times that got us thinking that way:  “Roy Moore Sues to Block Certification of Alabama Senate Election Results.”

Earlier, the Alabama secretary of state dismissed the Moore petition to delay…so the Courts are the only recourse.  Just for the sake of absurdity, maybe we will see an Obama-appointee hear this one.  Popcorn ready?

In Fairness to Trump

You did see where Pew: Trump media coverage three times more negative than for Obama?

When I tell you of crooked media, it ain’t all smoke.

Not Enough SJW’s, Already?

Oh, spewers of guilt, organizer for activism, loonies of the left, here’s the big story of the day:  Physicists are trying to create the perfect snowflake.

We don’t have enough?

At the deep, spiritual level, I thought it clear to students of zennly-news that like-attracts-like has been demonstrated this week in the Northeast:  So many perfect snowflakes and so much perfect snow.  (Auummm…)

Sorry if I’m drifting.  Let’s plow forward.  Chill.

We Are Not Alone!

Forecasters warn Britain may face coldest night of the year.

And with the coldest cold EVER being reported, where are the global warming pimps when we need ’em?

Seems to me, a little hot air would be welcome about now.

Climate change?  No.  IQ drops?  Hell yeah.  Look up the word average.

The Tripwires of 2018

We have again seen a spectacularly correct year in our outlooks for the market.  Importantly, we have also grown our ability to ‘get it right’ this year on several fronts.

But we won’t make a foolish forecast of optimism overall, although that was an easy call last year.  The reason?  We have a large (and growing) number of tripwires to be wary of in 2018.  Any one of them could provide the critical prick to blow-out the stock bubble.  And no question, but that Wall Street has its full complement of pricks….

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The End of Santa’s Rally

Looks like the market will open to the downside this morning – about 50 points worth on the Dow and even more – percentage-wise – on the NASDAQ.

There are plenty of explanations for why this might happen, not the least of which is people selling a bit now to pay some of the taxes that will be due on gains booked this year.  Or, it could just be that the fragile state of the economy is becoming apparent to a few people besides us.

That said, Richmond and Dallas Feds will be out with forecast reports as the morning wears on.  Plus, the usual last-Tuesday Housing data will come out tomorrow, presumably so Santa’s helpers can find their way back to less seasonal work…

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On the macro picture, Bitcoin has continued to hang out in the $15,000 region.  An early check showed it $15,400, but no telling where it will go from here.

There have been some stories about how a possible Bitcoin implosion could “spill over” into Wall Street, but time will tell (or not) on that score.

Still, Politics as Usual

With the economy posting pretty good gains, and with a tax cut due to show itself on pay checks shortly, you might be tempted to believe the Trump presidency was making it’s way out of the woods.

But, while there are stories around going into the possible problems for the Mueller/DoJ handling of the Clinton email story, the rest of the media coverage of Trump has been lukewarm at best.

To be sure, there are even some media outlet promoting the idea that Democrats are sure to stage a comeback in the 2018 House elections.

Here I thought the turkey was served yesterday.  Turns out, we will see flocks of them again next fall – all (and both parties) promising more than they can (or will) deliver.

The more things change, the more they…

Brother Alexei’s Footwork

While the US is trying to figure out the (democrat) allegations of Russian political influence efforts, we see a marvelous opportunity for “Turn-about’s fair play” in what’s going on in Russia’s upcoming election cycle.

The Russians have barred Alexei Navalny from running against Vlad Putin.  So we are reading how the European Union (no fan of Putin’s) is saying they don’t trust Russian elections as a result.

The difficulty, trying to sort all this out, is that the EU already has laid unequivocal claim that Russia should be part of the EU.  Putin, naturally, has other plans and believes in Russian autonomy.  Russian memories of The Great War still run deep and so is the resulting mistrust of things from Europe.

Meantime, one could be seeing some political refocus efforts in Russian military moves like this one:  Russian warships pass close to British waters over Christmas holiday, UK navy says.

Boys will be boys, eh?

Meanwhile, Russia is talking up a 13% income tax rate as one way to lure new business, a move driven by US sanctions biting hard…

When you sit back in the “soft focus” mode, you can see the problem for the do-nothing congress here:  On the one hand, they are easily led to “sanction Russia” so it could be seen as a reason why they have been so retarded on the Clinton-Russia relationship.  Don’t want to be seen, perhaps, as wanting it “both ways.”

Computers Never Lie

Tell it to this woman: “Woman gets $284 billion electric bill because the world is a cruel, cruel place.

OK, quiet morning till the open…’back for 40-winks before the workweek begins…

Coping: With the Holiday

Environment/Health:  We don’t have a lot to say this morning, other than have a great Christmas.

If you are looking for good reads, we have a number of suggestions.

These will ease the passing of time…

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For openers, our friend Chris Tyreman has finally given-in and set up a page of his artwork over on Facebook here.

Chris did the logo design for Urban and Peoplenomics…

Next, if you don’t have a ham radio license, there is a free online study guide over here  which can get you started

If you’re looking at a mound of leftover turkey, see our post-Thanksgiving report on how to solve that problem.

A very good (holistic) approach to stopping the onslaught of deserts is available here – and the best news is?  You don’t have to stop eating meat…

For a spot of Christmas music, might we suggest this (after the ad). Or this blend of groups (Mannheim Steamroller and the Trans-Siberia Orchestra…).

Warren Miller’s Higher Ground is a great ski & board pastime for days like this.

For us?  Well, we still have a lot of non-destructive pillow-testing to complete…but we plan to be back on the stick tomorrow.

Write when you wake up, and who was clattering on the damn roof all night?

George@ure.net