As usual, I will begin with disavowing making financial recommendations. It is not what we do around here!
On the other hand, we are very inclined, and in fact anxious, to talk about longwave economic theory.
The idea that there are long waves (greater than 50 years) in the global economy is not new. It has been around since it was first observed by Russian Nikolai Kondratiev during the Stalin era in the Soviet Union. The economic longwave consists of a low point in long cycle interest rates. The last one of these bottomed here in the United States in the 1930s. This was the Great Depression. We are just now – and it is arguable that we are done – coming through the modern longwave bottoming of interest rates. By the way, this is historically when major wars breakout. Called trough wars, some of the larger ones have included the US Civil War and World War II.
There are also peak wars. The Vietnam War, for example occurred proximate to the 1980’s spike of US bond rates to double-digit levels. The matchup is not precise but it is useful.
The existence of the long wave in economics is really a boon to knowledgeable investors. Fundamentally however, most investors are not patient enough to ride the longwave successfully.
Had I a better grip on how the longwave operated, I would have invested everything I could in bonds in 1980. That is because bond value increases as bond rates come down. So there was approximately a 35 year period when you almost could not go wrong buying bonds.
If you are familiar with Elliott wave theory, you will appreciate that major moves in the economy happened, typically in three or five wave formations.
The conundrum for today’s investor comes from realizing that the United States may be finishing up what looks like a five wave formation, but there are those who argue we have only completed three waves and after this fourth wave is completed we will have a screaming blow-off fifth wave to the upside..
now here is the catch: When the same investor looks at the global economy, it is undeniable that the global economy seems to have completed five waves up since 2009 and if we are in fourth wave, this could take us down to similar-size lows.
All the while, we have this March 22 drop-dead date for the market to rally and hit new all-time highs or the odds of a major crash this spring increased dramatically. That is because the calendar math reveals that from an all-time high to a market crash is typically in the vicinity of 55 calendar days. Think September 3, 1929 to the market collapse in that era..
Once again, going into a long weekend, I am asking myself “Are you feeling lucky, punk?”
In the overnight trading, both Asia and Europe were looking pretty good. Both showed substantial bounces. The difficulty falling out of running the numbers early this morning (which is what I do at 5 AM) is that our global aggregate index is still reading a sell indicator.
The United States markets seem to be anxious to rally and some of our readers are already looking at the chart work we do on the Peoplenomics side of the house and believing a breakout is underway. I remain skeptical.
I like to make moves that are as sure as possible because with my 69th birthday this month, I statistically do not have the luxury of “time left” to recover from a stupid wrong move in the markets.
This is why somebody who is 40 years old can be much more That in their investment choices than someone knocking on 70. In the former case, if the 40-year-old gets it wrong, there is 30 years to recover. A lot of money can be made in 30 years. Not so much for 70-year-olds!
When I checked earlier, the futures were indicating a minor uptick at the open.
Given that there has been a major psychological event striking the United States this week (another school shooting, which is a little suspect given the cycle timing if you don’t mind me saying). I expect the market to sell-off later before the close rather than leave traders locked-in positions over the weekend.
Speaking of Monday: Our publishing schedule here for the holiday Monday will involve a single column of this, that and the other thing. We appreciate that foreign markets will be open and we are anxiously watching our long-term global buy/sell indicator to see what it will say in coming weeks. For now it’s saying forgetaboutit.
I remain personally suspicious that despite a short-term bounce, there is still a lot more downside ahead in coming weeks and months.
Notice though that I do not have enough conviction in that remark to actually make major allocations short the market. For now, we are sitting in cash.
One of the difficulties inherent in our aggregated approach to markets is that indicators tend to be most accurate on weekends. That’s when hot money has to land somewhere. Where it lands can be usefully observed.
Two Economic Data Points:
A busy morning at the Census Bureau with housing starts, just released:
And we also have fresh data on import and export prices.
“U.S. import prices increased 1.0 percent in January, the U.S. Bureau of Labor Statistics reported today, after
rising 0.2 percent in December. Higher prices for both nonfuel imports and fuel imports contributed to the
January advance. Prices for U.S. exports rose 0.8 percent in January following a 0.1-percent increase the
All Imports: The price index for U.S. imports rose 1.0 percent in January, after increases of 0.2 percent in
December and 1.0 percent in November. The 1.0-percent advances were the largest 1-month rises since the
index increased 1.2 percent in May 2016. Import prices advanced 3.6 percent between January 2017 and
Fuel Imports: Fuel prices increased 4.7 percent in January following a 2.9-percent advance in December
and a 9.8-percent rise in November. Higher prices for petroleum and natural gas contributed to the increases
in all 3 months. Prices for petroleum advanced 4.3 percent in January, after rising 2.3 percent the previous
month and 9.5 percent in November. The price index for natural gas increased 20.7 percent in January
following advances of 20.0 percent in December and 25.7 percent in November. Prices for fuel imports rose
19.7 percent over the past 12 months. Petroleum prices increased 20.9 percent for the year ended in January
and prices for natural gas advanced 16.2 percent over the same period.
If I had to throw a dart this morning, it would land on the target saying market sells off today opens relatively unchanged on Tuesday, but that will be driven by events over the three day weekend. During that time, we will watch for events in Korea as well as Syria. Then there is the matter of bitcoin. Here is how the chart looks this morning; and I would point out that although bitcoin has made a solid in advance in the past week, we are still in that downward trending channel.
Another Curious “Shooting” Data Point
Well, two, actually: One is that the state of Florida is planning to pay for the funerals. Conspiracy theorists are likely to claim it’s really “news control.” Do any parents opt out?
On the conspiracy side of the Internet, this is already being seen as a way to avoid involvement of funeral homes. Act of state compassion or another Sandy Hook-like event?
Other than the statistical regularity of mass shootings as we noted in the column Thursday, there is also the matter of the well-orchestrated media attack on the Second Amendment now underway.
Take for examples this New York Times editorial: “The Florida Massacre: ‘End This Uniquely American Tragedy’” Then there’s the Detroit Free Press with “Florida high school shooting shows voters must take charge of gun-control debate | Reader feedback.” Gun grab narrative.
I have news for CNN, the NYT, and other mass media: The Second Amendment was decided by voters with a very good reason. It’s what the Revolutionary War was about, among many other things, silly.
Another oddity was how the shooter was immediately tied to “white nationalist” groups. THAT sounds like one faction waging war on another to us. However, not only has this been completely debunked (here) but the alleged perp was also of latino decent.
But do you see “no ties” in the verbose code of that last link? Read this carefully: http://www.tallahassee.com/story/news/2018/02/15/florida-school-shooting-suspect-nikolas-cruz-member-white-nationalist-militia-tallahassee-leader-say/341751002/
In other words, while the headline reads “Local law enforcement: No ties between militia and Florida high school shooter” the source code/link to the story makes it sound like he WAS tied to “white nationalists.”
See how carefully (or damn coincidentally) this is all being played? Most people won’t see it but white nationalists is being poured into millions of unsuspecting minds by little “slips” like this. Sure sounds like agenda driven planting to us.
Go look how search engines get played in all this. Search doesn’t get to walk back the initial headlines – and what a path to mind control, huh? The walk-back won’t get a 10-th the coverage, see?
Just because there’s a war within the Swamp (and arguably between intel agencies) doesn’t justify giving up self-defense rights.
It’s a sucker play at best and a dark conspiracy to take down America at worst.
Scrubbing the Web
A bit going on there, too. For example, we have a copy of the video (scrubbed now from the video streamers) of a young woman who says she walked out of the school while talking with the alleged perp while there was shooting going on elsewhere in the building.
That video has been scrubbed from everywhere, seems.
But, as strange as the school case (going to the idea of a war within the intel agencies idea) is the follow-up to this week’s NSA shooting.
Buried by the Florida event, the first headlines read “NSA shooting: Officer injured at Fort Meade security gate, three in custody.”
Gently being moved aside as it becomes “NSA gate incident: 2 Fort Meade suspects released, third turned over to Howard County Sheriff’s Office” and in DC? “Wrong turn? Authorities try to narrow causes of NSA security scare at Fort Meade.”
Marginalization, anyone? Oddly coincident, to our way of tracking.
Futures have gone a tiny-bit down since that inflation is coming report. We may wade in at the end of the day if there’s enough sense of panic. Or, not.
Make section Sunday and Peoplenomics tomorrow…