Necklines and Slashers for Halloween breakfast. Not normally the kind of article we’d put out on the non-subscriber site, but since we won’t be doing a subscriber column until Saturday, we need to talk. Now.
Wednesday, the market did the expected (though we wished they’d been more foresightful) and lowered their rate a quarter point.
I studiously watched the chair’s press conference following and there was only a few passing references to why I think are the two major risks to the “world falling apart” right now.
The first is this: The Depression Mindset is being locked in right now. As I’ve explained before, in a recession, people continue to spend, but they do so expecting what? Higher Prices in the future.
In a Depression, this mindset changes. Consumers slow their spending, and when they do, it’s often with a throttle on purchases because they expect what? Lower Prices in the future.
Although the market popped nicely yesterday, it was within only a couple of points of the previous peak in our Aggregated markets view of the world. Based on early futures prices today, here’s how it looks ahead of the open:
The drop-off there on the right shoulder has us looking at what might turn into a failed head and shoulders formation. There’s a dandy short course over at Financial Spreadsheet Betting, here, that’s a good summary of the “art of seeing” when trying to use charts in a predictive way.
The question – to be answered in nominal world soon enough – is whether we are seeing a “failed head and shoulders” and whether this might not result in some horrific downside action yet before the end of the year and maybe “pre turkey” as we’ve been pondering.
Problem is that there are so many indicators that are effectively masking what’s ahead. Trying to mentally “line up present with history” is so difficult as to generate migraines.
Just one example: President Trump is making a lot of noise on the campaign circuit (and twitter) about how good the economy is. It’s doing OK, but is there a chance for a successful “new economy?” One that will end (normal) business cycles and move us toward president Coolidges “permanent prosperity” predicted in the 1920’s?
That all depends on your assessment of whether there really is a “new economy.” Former fed boss Alan Greenspan addressed that in a 1998 speech, and while he admitted we may think of ourselves as technologically advanced, so have others right before things caved-in:
“When the future becomes sufficiently clouded, people eschew actions and disengage from previous commitments. To be sure, the degree of risk aversion differs from person to person, but judging the way prices behave in today’s markets compared with those of a century or more ago, one is hard pressed to find significant differences. The way we evaluate assets, and the way changes in those values affect our economy, do not appear to be coming out of a set of rules that is different from the one that governed the actions of our forebears.”
Two years after Greenspan made those remarks (Sep. 1998) the implosion of the Internet Bubble was in full swing.
Fast forward to present day and we are at the end of a massive expansion that has grown out of the Housing Bubble Collapse. And despite the horendous damage there were only a scattered “wrist slaps” by government. Because, understand, government is complicit.
The reason has to do with the symbiosis of interests. While there is nothing in the Constitution about “providing welfare for all.” That was one of the assumptions sold in the Johnsonian “Great Society” which – to date – has failed to close our borders, end poverty, or get us all much brighter futures, for example. There is just too much money to be made monetizing human misbehavior. Prisons, illegals, tax dodgers, victims…Everything is a Business Model. We’ll leaving judgments arising from that to your own scoring.
Looks to us like America has transitioned to a nation of fools and “free lunchers” who will believe the most appealing lies. Historically, this are unprecedented times. Social media has given root to a Global Digital Uprising.
Let me offer you, therefore, two quotes that while not useful in watercooler chit-chat, get down to the reality of where we’re going.
The first is from president Hoover. It’s useful because the Fed is presently engaged in what we call MUM – making up money – as Central Banks are pursing a variant of Modern Monetary Theory. The same way at Mugabe did in Zimbabwe, but with an eye toward the dangers of hyperinflation on the one hand the the effective zero lower bound on the other.
The raids are not apparent until you look at the nonstop escalation of debt we, the tax-chattel, are being saddled with. What’s more, when you read about how America has a National Debt
We’re only $33-billio from rolling up to $23-TRILLION dollars of debt. Which, if you count only wage earners (158.269-million) each of us working is “on the hook” for how much each? $145.322.20.
Except, of course, that’s not the real number. Which, in itself, is part of The Big Lie about American solvency.
The National Debt is like looking at the payoff on a loan with a 100% prepayment penalty. All interest must be paid. So, $23-trillion dollars landing on us from space would pay off the UNDERLYING debt and leave $33-billion for a cheeseburger at lunch. A $208 cheeseburger, so a bottle of champagne with that.
Here’s the problem: In the REAL WORLD there’s another $50-trillion in accumulated interest as ACCRUED INTEREST DUE not included in the National Debt calculations. That means, we’re each on the hook for more like $387,500. Each.
Well, enough. A quote from Hemingway because it is such a great expectation-setter for how the future’s likely to evolve in the next few years:
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.“
Our bottom line? Watching the precious metals is equally important to watch the flow of funds into and out of markets.
We now return you to the harder side of reality…
Job Cut Data
Hot off the press release:
“Job cuts announced by U.S.-based employers jumped to 50,275 in October, 20.97% higher than the 41,557 announced in September, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
Last month’s total is 33.5% lower than the 75,644 cuts announced in the same month last year. October was the second consecutive month during which cuts were lower in 2019 than in the corresponding month one year earlier.
Employers have announced plans to cut 515,441 jobs from their payrolls, 16.6% higher than the 441,702 cuts announced through October last year. It is the highest January-October total since 2015, when 543,935 cuts were announced.
“For the most part, job cut announcements are holding steady as we enter the final quarter of the year. We’ve seen increases in certain industries, particularly those experiencing disruptions from new technologies, uncertainty from government regulation or issues with trade, or slumping from demand shifts,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.
The BTC’s drifted down to the $9.120 range when eyed earlier and the Dow futures down about 80. Personal Incomes? You want that? Well, OK
We also found the continued weakness in the underlying cargo data from the Association of American Railroads this week disconcerting:
“Total carloads for the week ending October 26 were 243,321 carloads, down 9.4 percent compared with the same week in 2018, while U.S. weekly intermodal volume was 269,826 containers and trailers, down 8.3 percent compared to 2018.
None of the 10 carload commodity groups posted an increase compared with the same week in 2018. Commodity groups that posted decreases compared with the same week in 2018 included coal, down 14,797 carloads, to 73,184; grain, down 2,152 carloads, to 21,135; and metallic ores and metals, down 2,064 carloads, to 21,291.
For the first 43 weeks of 2019, U.S. railroads reported cumulative volume of 10,843,404 carloads, down 4.2 percent from the same point last year; and 11,457,177 intermodal units, down 4.4 percent from last year. Total combined U.S. traffic for the first 43 weeks of 2019 was 22,300,581 carloads and intermodal units, a decrease of 4.3 percent compared to last year.”
Our ongoing advice to anyone with half a brain left (that’s you and about 17 other readers) is to take all the emotional hot button click-bait out of your life by turning off social. Go actually make a difference, instead…
Away from the Hype
Power is starting to come back on in PG&E’s service areas cut earlier due to high winds and dry conditions: Currently, 53,000 Total PSPS Impacted Customers Remain Without Power; Safety Inspections and Restoration Work to Continue at First Light; Weather “All Clear” Declared in Northern Portion of Kern County; 83 Damage/Hazard Incidents Identified.
Trade’s back into the headlines. Remember some days back when I said “Don’t trust a Chinese trade deal until the ink is dried? Because they will “suddenly renegotiate” everything? Try not to look surprised when you read Futures drop as U.S.-China trade worries resurface. Gee, golly, gosh…move over Carnac, huh?
We’ve had this pun sticky-noted to the screen for several years and it’s high time we use it: “Here’s a company playing ketchup: Kraft Heinz stock jumps on earnings beat.”
Not what most think: While the CBS story White House lawyer reportedly moved Ukraine call summary to highly classified server might make you think that was bad, we think it was smart. Because some Deep Stater with a grudge could have done some doc-doctoring. And with the BIC-flickers at the witch trials….
We call (plug your ears) bullshit on the source of this, the Washington Post for implying that the decision was somehow improper. A genuine reporter would have asked the lawyer involved why. But I didn’t see where they did,. We do suspect what the answer would have been: “If you were a lawyer and got a whiff of controversy, you’d move to protect evidence, too.” Superficial reporting? Uh-huh. And with syndicated sycophant’s it’s close enough to “fake news” for us.
When the Post writes “..a step that other officials have said is at odds with long-standing White House protocol...” we think that they failed as journos because they didn’t name those “other officials” – so we gotta ask: Who the implants (“officials”) are in the White House? Current of PAST? (Anyone call from Obama’s place? We hear “other officials” from the past hang out there…) Which is why we read the Washington Examiner as often as the WaPo, anymore.
(We are sooo screwed!)
Goblin Up Data
This is Halloween. And, if you’re new around here, you may not be aware of our “science-based” view of the day (and night). So click over here to read Coping, the Science Behind Halloween that I posted last year.
We include our usual Halloween safety advice: No bobbing for French fries. No unpackaged candy (though I remember a certain Candi I unwrapped once, back in my single days…). And if someone wants to smear psycho-actives on your broom handle, call the cops.
We don’t allow trick or treaters here. Since we don’t believe in the institutionalizing of bad science. We also have two black cats.
Bad science is what happened to Halloween and it’s in process today with climate in the so-called “more Enlighted times.” Right. During the witch trials?
Frost on the pumpkins tonight in much of the country. No candy for climate changers. Get back to us when NYC’s underwater. A foot of non-storm surge on Battery Place in NYC and we’ll fall right in line. Water rise? Ha! That’s running 50-years late, isn’t it? Ironically, BTW, Battery Place in NYC is where Castle Clinton is…
I’ll be back in a spell… (Poof!) Hope that doesn’t give anyone ideas…
Write when you get rich,