We have several dates for a Market High we are tracking – and the differences in what drives the dates are absolutely fascinating to think about.
Why worry about a market high?
Even some of today’s youngest workers are in the market, whether they know it, or not, through their 401-K or retirement programs at work. Most people in such plans take very little active role in thinking about the economy. They wrongly think the Plan Administrator is smarter than they are. Often, this is not so, as evidenced by the lack of Plan Administrators bright enough to consider alternative views of the economy such as you find here, and elsewhere in the Economic Reality School of Financial Reporting.
In fact, the other day I was bemoaning the lack of public brainpower on the Economy and I made the assertion that most Business School types can do Math, but they can’t Connect Dots.
He reluctantly agreed: We have gone so far off into Quant-Land that we have missed many of the major economic truths laying about right in front of us.
Take the Fed meeting coming up. Odds are increasing that the December meeting will see a rate hike. We know this how?
What does this mean?
Bond money is looking for a new home – and that home will be (as we have been telling subscribers to our Peoplenomics.com newsletter for a year or longer) the stock market.
Since the bond market is about a third-larger (in dollars) than the stock market, we know that when the bond market gets a cold, the stock market can catch fire. Which it is doing – and this is where our Office Date of All-Time High pool comes from.
One school of thought, according to savvy economist K.W. down in the Austin area, is that we will have shot the load by about the third week of January.
This projection is interesting because of its proximity to the Jan 20 swearing-in of Donald Trump. What if, when the hand-over is done, there is a serious dose of “hard economic medicine” in the Inaugural Address? Might be.
There’s a second way to figure the coming all-time high – and that’s the one shown in the chart which I showed you the other day: That is based on the run-up from 1921 to 1929. It says the All-Time High will come in March 2017.
You can think of that date as being a very short, perhaps 45-day, hiatus from presidential criticism, although it used to run 100-days.
A further exercise we did recently projected the ATH would come around the beginning of August.
Herbert Hoover took the Inaugural in March of 1929 and his ATH hit on September 3, so back up two months for Trump on Jan 20 and see where that lands you.
So that’s the tactical problem for people.
Except my consigliere thinks there is more to this sharp rise in bond prices. He things there may be a bit player in trouble. And if someone is selling lots of bonds to raise capital, who do you think will demand more “dosh?”
While he holds this could be papered-over for a while by the central bank (we’re both suspicious of German and its biggest derivative player in the world bank) eventually the Truth will leak out.
Between today and the end of the year, expect the leak, particularly when there are year-end marks to market to come for those pseudo-bonds in real estate.
About the time the insiders hear about that (and start selling in early January) the chances of an all-time high there are thin to non-existent, except economist K.W. of Austin is genius-grade material with a fatter bank account than mine…and that’s what makes this all a horse-race.
Some things to ponder from the business end of the nail gun.
Press Release du Jour – Retail Sales
Just our from Census, these are always fun:
“The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $465.9 billion, an increase of 0.8 percent (±0.5%) from the previous month, and 4.3 percent (±0.9%) above October 2015. Total sales for the August 2016 through October 2016 period were up 3.3 percent (±0.7%) from the same period a year ago. The August 2016 to September 2016 percent change was revised from up 0.6 percent (±0.5%) to up 1.0 percent (±0.1%).
We actually expected the retail numbers to rise as people are starting to get around to the idea that America can be great again.
The graphics reveal more: Gen eral merchandise continues to be down over last year and we have been saved again (Hallelujah!( by the auto makers:
What’s the old saying from the Positive Mental Attitude crowd? “What the mind can believe, it can achieve…” The late Dr. Wayne Dyer, wasn’t it?
P.R. Numero Dos: NY Fed Empire State
Why, we’ve got more data this morning than a Ukrainian hacker team, I swear…
“Business activity stabilized in New York State, according to firms responding to the November 2016 Empire State Manufacturing Survey. The headline general business conditions index climbed out of negative territory for the first time in four months, rising eight points to 1.5. The new orders and shipments indexes also turned positive, rising to 3.1 and 8.5, respectively. Labor market conditions remained weak, with the number of employees and average workweek indexes both at -10.9. The inventories index fell eleven points to -23.6, pointing to a marked decline in inventory levels. Although price indexes were lower, they remained positive, suggesting a slower pace of growth in both input prices and selling prices. Indexes for the six-month outlook conveyed somewhat less optimism about future conditions than in October.
No surprise, but like golf, this is our “on club length” for this morning’s play.
Hold the umlauts, here’s is number three from the handouts: The Import Export Price data:
“U.S. import prices advanced 0.5 percent in October, the U.S. Bureau of Labor Statistics reported today, after a 0.2-percent increase in September. The October increase was driven by higher fuel prices which more than offset declining nonfuel prices. The price index for U.S. exports increased 0.2 percent in October following a 0.3-percent advance the previous month.
Imports All Imports: Prices for U.S. imports rose for the second consecutive month, advancing 0.5 percent in October following a 0.2-percent advance the previous month. Import prices fell 0.2 percent in August, the only monthly decline since February. Despite trending up over most of 2016, import prices edged down 0.2 percent for the year ended in October.
Exports All Exports: U.S. export prices increased 0.2 percent in October following a 0.3-percent advance in September. In October, higher agricultural and nonagricultural prices both contributed to the overall advance. Despite the recent increases, prices for U.S. exports fell over the past year, declining 1.1 percent. The over-the-year drop in export prices was the smallest 12-month decrease since the index fell 0.7 percent in October 2014.
Again, not anything out of bounds, except that we normally after a presidential contest would expect to see some “squaring of the books” as some of the “fluff” comes out as the Business Major in Chief takes over from the Street Corner Socialist in Chief.
A welcome, by God, change.
But only if he can successfully avoid the onset of the Greater Depression in 2017/2018 and the war in the early 2020’s.
Futures are flat on the Dow, up on the S&P and NASDAQ – so up again, eh?
Keeping the Streets Safe
I know we talk a lot about the Second Amendment, the right to carry, and how an “armed society is a police society” or it becomes a “much smaller society” shortly.
But there’s a dandy article in this morning’s NY Post that goes into the HUGE difference in Law Enforcement results in New York City – which is now very safe, versus the city of Chicago – which is going through its historical replay of the Prohibition mobsters and ganglanders reminiscent of Al Capone’s time.
I am guilty of telling you about how we are in the economic replay of the 1929 era, but there is a broader social context to it. In place of the covert brewing operations of the Roaring Twenties we have the dirt-weed importing S.A. gangs and brewmasters of Meth this time around. But it’s all the same you see.
Or, you don’t.
England Can’t Trust Its Government
Time Mag out with a blockbuster today. Essentially says the UK government has no BREXIT Plan.
Now, for those who are exceptionally dull of wit, there was an advisory ballot in the UK that people wanted the hell out of the “ram immigrants down your throat” European Union. BREXIT followed.
But now, we sit back and behold that the combination of crooked politicians on the take from their money-master Globalists, and their own bloodlust for power, are maneuvering to screw the people out of their right to self-determination.
Understandable, since the UK isn’t exactly a technology powerhouse. Those days passed with the invention of radar and steam powered mechanical looms in early times. That’s Watt’s what.
Governments (and faithless electors here if any should be so stupid or bought) ought be well-advised that Hell hath no fury like a lied-to population.
Old Line Media Won’t Change Quickly
Could help but notice that the highly pro-Clinton NY Times is drifting back to the middle with dueling op-eds here over whether HRC ought be pardoned.
Sorry. Crooks are crooks.
Indict if warranted, trial by jury, and if convicted, lock ‘er up.
This is either a country of Laws above men and women, or men and women above Laws.
The latter isn’t America. No idea WTF country it is, but it ain’t here.