One Week to Market Crash?

I will make it really, really simple for you in case you haven’t paid attention:  I’ve been mentioning the possibility of a stock market crash on (or around) March 22 for about a month, now.

It’s not all that had to figure.

It was 55- calendar days from the market highs in early September 1929 until the brown stuff that smells bad hit the rotator back when.  We may be set to replay that pattern – in spades.

(continues below)

 

If you are skeptical, let me line up some of the data for you.  Take it nice & easy, though, because when you see it, you might become afraid.  Very, very afraid.  Cocktail napkin and some colored pencils, please?

In economic research, based on historical change work of people like Marchetti and Odlyzko, I’ve come to the simple but dangerously non-Keynesian view that periodic booms and busts are the result of progress.

When an old technology is bubbling along – and and a new technology comes along – there is the period of time when things overlap.  A great boom ensues.  We’re there now, but it will end.

This isn’t the first time.  It happened before in 1929 when mechanization of agriculture and mass media caused high demand for workers in the midst of the Roaring Twenties.  When the process unwound, Herbert Hoover was stuck “holding the bag” and what we called the Great Depression followed.

The ONLY issue in my research is whether our present-day “echo” of the stock market collapse of 1929 is presently replaying the “left shoulder” area of the following chart.  If we’re on the left shoulder, there’s a case for one more year of Roaring Twenties analog for Trump plays Hoover.  OR, we’re at the cusp of the “right shoulder” collapse now, in which case, it will become apparent in a month, or so.  Perhaps starting next Thursday.

Here’s one of the most telling charts from the Peoplenomics side of the house – updated with the closing data from Wednesday trading:

Of course there’s a third outcome possible; that we are not going to gracefully replay either case but will do some kluge of past events.  Which would be fine.  Keeps the game interesting.

Meantime, however, we need to talk about “investor confidence.”

Trump’s Poor Kudlow Pick

Markets are still pondering the departure of Gary Cohn from the White House on the economics side.  His replacement is Larry Kudlow – and frankly, it’s perhaps the worst hire Trump has made so far.  Looking at Kudlow’s resume from Wikipedia?

“Kudlow graduated from University of Rochester in Rochester, New York with a degree in history in 1969.[4] Known as “Kuddles” to friends, he was a star on the tennis team and a member of the left-wing Students for a Democratic Society at Rochester.

In 1971, Kudlow attended Princeton University‘s Woodrow Wilson School of Public and International Affairs, where he studied politics and economics. He left before completing his master’s degree.”

So a Clinton protégé and a lefty in school?  Other than media presence, I’m not seeing a ham sandwich here.

Gad zooks! You can’t be a freakin’ moderate/left dilatant and “get it.”  For openers, go read Andrew Odlyzko’s ENTIRE financial bubble page here – and all the papers.  Then, maybe, you’ll WTFU and see it.  Ure is not alone – at least entirely.

Now let’s talk consumption.  Nothing happens until people buy things.

The Federal Reserve’s latest on Consumer Debt (G.19 data) rolled this way:

“In January, consumer credit increased at a seasonally adjusted annual rate of 4-1/4 percent. Revolving credit increased at an annual rate of 3/4 percent, while nonrevolving credit increased at an annual rate of 5-1/2 percent. “

(Revolving debt is credit cards.  Nonrevolving is basically mobile homes and school loans.)

But that was only the bleeding edge of the bad news:  Retail Sales out Wednesday flat-out sucked wind:

And then, if this wasn’t big enough disaster waiting to happen (a consequence of under-spending on R&D resulting in no new “gotta-have-it” products), we have the “darling of the Digital Tulip Sellers” (Bitcoin) in mid-collapse:

IF one were to take Bitcoin as a coincident indicator of consumer sentiment, it may be time to find a high window or bridge to push this economy out (or off)  of.

A couple of Fed Reports:  NY Fed Empire State survey and the Philly Fed Business Outlook.  NY Fed report was upbeat:

“Business activity grew robustly in New York State, according to firms responding to the March 2018 Empire State Manufacturing Survey. The headline general business conditions index climbed nine points to 22.5. The new orders index rose to 16.8 and the shipments index advanced to 27.0—readings that pointed to strong growth in orders and shipments. Unfilled orders increased, delivery times lengthened, and inventories edged higher.”

And as for the Philly Fed?

“The diffusion index for current general activity remained positive but declined, from 25.8 in February to 22.3 this month (see Chart 1). Nearly 37 percent of the manufacturers reported increases in overall activity this month, while 14 percent reported decreases. The indexes for current new orders and shipments recorded notable improvements this month. The current new orders index increased 11 points, with 52 percent of the firms reporting an increase in new orders. The shipments index increased 17 points. The indexes for unfilled orders and delivery times were positive and increased 6 points and 10 points, respectively. Inventories were higher this month: The current inventories index increased from -0.9 to 16.5.”

Also just out:   Import and Export prices:

“U.S. import prices increased 0.4 percent in February, the U.S. Bureau of Labor Statistics reported today,
after rising 0.8 percent in January. In February, higher nonfuel prices more than offset declining prices for
imported fuel. Prices for U.S. exports rose 0.2 percent in February following a 0.8-percent advance the
previous month.

Imports

All Imports: The price index for U.S. imports rose 0.4 percent in February, the seventh consecutive
monthly increase, after advancing 0.8 percent in January. The last time the index declined on a monthly basis was a 0.2-percent drop in July 2017. Import prices advanced 3.5 percent for the 12-month period ended in February, matching the 12-month rise in November. Those were the largest annual increases since the index rose 3.6 percent for the 12-month period ended April 2017.

On the Export side:

“All Exports: U.S. export prices increased 0.2 percent in February after rising 0.8 percent in January. The last time the index declined on a monthly basis was a 0.1-percent decrease in June 2017. In February, higher prices for both nonagricultural and agricultural exports contributed to the increase in overall export prices. The price index for U.S. exports increased 3.3 percent over the past 12 months.  “

So, let me see:  Import prices up twice as much as the export prices?  Terrible – and not a recipe for “making great” as we read it.

Market’s aren’t impressed either – with almost no change in futures pricing.

Cigars and brandy on the Poop Deck today and tomorrow as we await the High Jump finals next week.

In the meantime, though, keep a close eye on interest rates, especially the 10-year.  Because the Bonds will drive.

Right now, they are in the 2.817% range.  But while there have been rumors that the Fed will raise rates four times this year, the collapse in consumer spending (with no new goodies on the must-have list) will cause the four-hike nonsense to, well, take a hike.

When that happens, bonds will begin to gain in price and drop in rates.  And suddenly, the stock market will be wildly over-priced.

The only question is what day next week will all of this come to pass?

My best present guess is still Thursday.  No, that’s not a doctoral project math outcome.  It’s just being able to count to 55.

Maybe no one in Washington can manage even that.

Sheesh.  What’s the point?

Department of Useful

Toys ‘R’ Us goes out of business, 30,000 jobs at stake.

Health Officials Issue Measles Warning After 2 Cases Identified in Travelers to the U.S.

CoreLogic Reports Homeowner Equity Increased by $908 Billion in 2017.  It only matters if you sold, though.

Citigroup CEO earns 369 times average employee.

Another Nor’Easter next week?  Look for the Climate Charlatans –  now arguing both sides of warming.

Department of Useless

Not sure what this means: North Carolina veteran inaccurately declared dead.  Name wasn’t Lazarus, by chance, was it?

Cat owner spends $19G on surgery for 17-year-old pet.

And A Missing Nobel Prize Winner Has Been Found Wandering a Rural Road in a Daze.  Alien abduction’s our guess..  No?

Moron ‘the ‘morrow, then.  TTFN.

author avatar
George Ure
Amazon Author Page: https://www.amazon.com/George-Ure/e/B0098M3VY8%3Fref=dbs_a_mng_rwt_scns_share UrbanSurvival Bio: https://urbansurvival.com/about-george-ure/

37 thoughts on “One Week to Market Crash?”

  1. Of course the economy is in the crapper,Trump gave the cake to the 1% and the crumbs to the working/middle class,some way to move the economy,but then again he’s following the directives of those that bankrolled him and that’s the problem with this type of government…

    • Crumbs? Ha. You mean $60 million more for him (AMT) compared to $2000 for the rest of the middle class? Aren’t you being a bit of an coastal elitist looking down your nose at the good, hardworking folks? Mike.

      • Really? That’s$2,000.00 a year per child now which is easily a $10 billion dollar give a way to illegals via the IRS. That’s why you don’t see the demon craps complaining too loudly!

      • That is why Oprah & the other liberal wealthy elite don’t have to run for president. Trump already passed tax reform for the wealthy.

  2. Bought another $50 of Litecoin after midnight last night.

    May all beings be lovingly fulfill .so be it

    • Currently, junk silver is the lightest coin I want to own. I can hold it whether the power is on or off, or drive over to the Pawn Shop if I want to sell it.

  3. I totally agree with you in regards to Kudlow being picked. At this point in time, my take is that Trump is really treating the US economy like he would make a scrambled egg.

  4. Nope. Ure wrong. Dow goes to 32,000 and some change. Won’t collapse until between march and may of 2019. You can chart all you want. Your argument is very convincing.

    Gentleman’s wager.

    Dontcha know? March is in like a lion and out like a lamb.

    Coincidently March 22 is my mother’s birthday. She’s a tad bit younger than you. I will tell ya one thing, no matter what life throws at that woman, she always has a good attitude and nothing gets her down. And if she prays for ya, watch out! Lets just say, She is well connected with the big guy up stairs.

    April 1, I have a date for. Since it is 2 people close to me birthdays as well.

    Try to get a laptop this weekend and get busy playing in the tulips. Lol

    May trade my pick up for a mustang gt this weekend.

    Rich me!

    • Great attitude! My best wishes for your mother – perhaps she could put a word in for me with the guy upstairs.

      I’ve been Spring cleaning, by the ton – literally. There’s something to be said for having empty space. Spring is the best time to start new projects, social and physical. Winter is to plan and prep for that. I have no idea whether or not George is right, but it’s a perspective worth keeping in mind, along with the alternative.

  5. RE: Dead Vet – I’ve been accused of that affliction when the spouse has interior painting or similar home improvement designs. My logic is that if it really that important, she’ll buy the paint, brushes, whatever. At that point, I’m enthusiastically ‘all in.’ Alas, my tactic is not as successful as I would like.

  6. Been off the grid for a bit. . . not surprised about ‘Toys’. I went to one of their stores looking for a specific gift about fifteen years ago and found my local store chaotic and they didn’t have it.

    They wanted people to linger and I didn’t have the time.

  7. Like your overlap graphic George.
    Makes sense to me. How do you see the electric car revolution effecting this?

    • Circle left would be ICE powered, circle 2 is “other” (solar, hydrogen, electric, fool sells etc)
      Overlap is where we are now

  8. Re Kuddles

    Per “The True Believer”, it’s relatively easy to flip a rabid lefty to a rabid righty.

    73s

  9. The more we “expect” a market crash, the more we start to want one. Then we start to position for it. Then group-think and herd mentality makes it happen.

    The theory that “we create the future we want to live in” could be in play where with enough people in the bear camp create contagious thinking and this makes bulls worried and run away. The bears have been this way for the past few years, calling equities over-bought to “bubble” territory.

    Those who want a market crash should be pitied. Those who help cull other people’s gains into tax payments (LTCG/STCG) could be governments looking for revenue they say they deserve. However, in the long run, markets are buoyant.

    A good 5-10% correction would be healthy. A market crash would come from war-like conditions. If a trade war causes a real war, the market crash will come. But I don’t want to sell my countrymen short and hope that a market crash happens to better my position if I were betting against this country. I’d rather hope that we are on even an “ok” track and trade-sideways.

    If the jobs reports are collusion and lies, if the economic conditions are also lies and if GDP growth only happens on price-increases, maybe we deserve a market crash. But if we are healthy enough, let’s just press on.

    • Good lord knows.. I don’t want to see a correction happen. It literally scares the hell out of me. I’ve been in the gutters more times than I care to think of. Most of the people running around has never seen the affects it has..
      Unfortunately I see it racing towards us like an avalanche..kind of slow when it starts but once the momentum takes over.. Look out.

      • It’s hard to bet “for” a crash, but those who can time it well can actually double their money through leverage as George shows occasionally. Now, as far as wanting a crash so a short-holding grows? That’s something I would call dastardly. Perma-bear stock traders always bet against every market rise and usually have limited returns compared to those who hold long for many years.

        If you see something coming, get others’ opinions who have been through it before. Is it really the same? Do we really mirror 1929 or is it some new cycle based on natural market trends and population actions? As our population grows, markets and money continues to grow. Governments are not yet prepared, at all, to face any sort of down-turn in population or economy. 0% GDP growth would be devastation as everyone wants growth, always. Let the next generation or political cycle fix the waste and problems.

  10. Having heard Kudlow interviewed numerous times on DC conservative talk radio, I think he’ll be a fine choice. Not by qualifications, necessarily – but merely by gut instinct that he seems to understand the world around him. Time will tell.

    • He was the economist at Bear Stearns during the collapse – the more things are different the more they are the same – he’s an idiot.

      • I think Bear-Stearns collapse was a payback that Larry K. didn’t have anything to do with.
        When Long Term Capital Management (LTCM) went belly-up in 1998 high level phone calls went out to dozens of ‘Movers & Shakers’ to get immediate assistance to keep the world’s financial system from crashing. The only one that didn’t play ball was Bear-Stearns (B-S). The ones that were stiffed have very long memories so the first one to go down in 1998 was Bear-Stearns.
        The experience with LTCM and B-S showed the ‘Big Boys’ that they couldn’t on their own kind for bail-outs so they used this crash to set up a different bail-out system whereby they took all the profits and the public is stuck with the losses.
        Did Larry the K. have anything to do with this? I don’t think so.

      • AI B,

        “I think Bear-Stearns collapse was a payback ”

        Payback to who – the only person who went to jail was Martha Stewart. Everyone else in banking got a government check.

  11. Crash will come from the bottom of the trend line, not the top. I agree with you in general George, but I think we have a lot of “wall of worry” yet to climb to get to further incredible heights 30,000 to 35,000. Dollar has softened significantly in the last 4-5 months which would impact the Import/Export price level as you highlighted them. Crash is coming, just not yet I think, but JMHO

      • I couldn’t agree with you more George you need to be at the bottom and that the stock market or I should say her market be on top for a while she’s Dustin feel like she’s in control because of your over riding superiority and the relationship I hope you don’t publish this but if you do that’s the problem you need to give her more control at this particular time and her life sign a out Blvd.
        Another words take turns in the mounting weather it sex financial decisions or who has the redress.!!

        And thinking about this if you would have died right away accidentally or however what would she do with your money or your together money what would she do differently.
        But has you probably already know this female species needs to be led by your desires and manly hidden this but at the same time with just the stroke of an eyelash ,she can change your mind

      • And the other thing that we can talk about if you would like this the synchronicity tween a man and a woman when they have sex and the orgasms at least before they have them having intention just like to do with the dream with you haven’t intention the dream will reveal it same thing with sex if you haven’t intention with you and your women the two of you are together on your thoughts so after that great orgasmic pleasure that the two of you have what happens that thought that you both wanted is far as weather is financially whatever it is will be released and it’ll come back and that’s how your able to timesheet if you will and to your own zone.

        So this is for anybody I don’t care who you are its work for me a bunch of times if you’re going to have sex with your wife find you both have a goal you have to agree upon that goal and then you have to pronounce it while you’re having sex it may seem odd and weird but the after affects of that really work you have now put into the universe the vibrations to people who love and care about each other and all the sudden doesn’t take too long and what you want has just happened and now you have it in its up to you too to become the mechanic and you’ll make it happen universe what’s it for you because you put your emotional vibrations out and now you mechanically it just happens you say spiritually but I’ll say mechanically so what else do we want to talk about this evening

      • BLPG:

        Sounds like you don’t have enough sex, such that you have to ‘inform’ others on how to do it….George ain’t no spring chicken, and you sound like a Rooster with no hens, crowing till you make sure your readers lose their mind….

  12. Measles Warning Useful? Oh come on, George. The only thing useful is knowing the vaccination-lovers will be hyping the importance of getting this vaccine. I remember the good old days when measles wasn’t a big deal and getting them meant we were REALLY immunized, instead of polluted.

    • Oh yeah, getting measles just loads of ‘fun’ . . . I got them when I was six and still remember the headache and the need to be in the dark so as to not hurt my eyes.

      One of my sisters, coming home from the hospital, developed them that night – she exposed many ill children.

      But the worst was my youngest sister who got them at age ONE – very, very ill – would only stop crying when pushed in her stroller. Mom and us, older kids pushed her around 24 hours a day (we were pulled from school). I still wonder if she wasn’t mentally affected.

      It would have been wonderful to have had a vaccine.

  13. I have more of a question than a comment. Does a crash look different today than in 1929? With all the high frequency trading and algo’s working, does it happen in slow motion as huge swings play out over “time”? I’m assuming the crash is relative to the stock market. What other data points and\or numbers would show as a valid indicator our food wastes get distributed by turbine action?

  14. Dead Vet….happens more than you could imagine..
    I’ve had to resurrect people before..people worked careers where a lot of moving is required doesn’t take the time to fill out a dimple change of address card either by mistake or just to damn busy. Federal programs send several forms only to get them back. A limit is reached and their case goes into the deceased file. One I helped to get redirected had two files..one where he was dead one where he was alive.his family didn’t want to take on the job .it took months to fix and literally had to go back to the day he was born and put change of addresses in. Contact old employers etc. It was a mess. ..

  15. Instead of using Old Tech & New Tech overlapping circles, how about Old Crazy & New Crazy Washington, DC political mess.

    To borrow from your post: When an old crazy is bubbling along – and and a new crazy comes along – there is the period of time when things overlap (the Trump rally).  A great boom ensues.  We’re there now, but it will end.

    This mess makes me want to sell everything & go into hiding.

  16. I know this up coming crash has me worried.. I had to think hard before I took the plunge and bought a new car. But it was six grand cheaper than last year and my hopes and prayers are that its not as bad as the k-wave predicts.
    Lol what was tempting though was a couple year old Bentley for the same money and all the bells and whistles lol lol but then common sense prevailed.. There is a reason that used luxury cars are the cheapest on the lot..lol lol lol
    Around here something green or orange with real artificial leather single seat am/fm radio and a fan sells new for as much as a couple of Bentleys..of course that’s a working man’s vehicle.

  17. Another overlapping circles comparison is the roaring 90’s with the buildup of tech, & The 2000 market crash when we asked, “What do we do now with all this tech” now that the world hasn’t ended.

  18. From my hypothetical point of view if coinbase has 10 million people and they’re all making one deal a week from their banks at a dollar 99 or $2 that’s 20 million bucks a week that coinbase is making of course this is just hypothetical thinking if people were actually using it as such.

    Now we know why the NWO is heading in that direction because people are paying their houses off earlier or not buying and there’s just too much money to be made for a $2 Visa or Mastercard fee for transferring money from 10 million users and it’s expanding it goes up to a hundred million users and a year wow imagine that that’s 200 million dollars a week they’re making.

    So this is where the competition comes in there’s a big margin there four to challenge the status quo of the banking Banker system

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