Ahead of a major holiday, there are only two questions that really matter.
The first is “Do I cut the lawn before the Holiday, or after the Holiday?” Do it before and the place will look strack for guests. Do it after and you won’t spend valuable pre-holiday time when you could be shopping for steaks and brewskis. (I’ll be mounting up as soon as the column is posted. Not that we have friends, but that’s what obsessive-compulsive is all about….)
The other major question is how long can the market remain irrational? The correct answer is “Longer than any of us can remain solvent…” Still, I’m expecting down 50-70 for the day and it’s easy to see why:
The answer lies in our Aggregate Index way of looking at things.
This odd bit of Ure-science is based on the fact that there is only so much money in the world and a good bit of it comes off the table for weekends, depending on how much faith (or blind stupidity) there is flowing globally.
Even if you’re not a www.Peoplenomics.com subscriber, you can still get a sense of what we do around here by looking at how various global markets acted overnight. Let me run you through the list:
- Australia: Down 0.63%.
- The Nikkei 225? Down 0.64%
- The Hang Seng, though: Up 0.03% – which is essentially flat.
- Spinning the globe to France: Down 0.77%
- Germany is down 0.57%
- And the UK? Too early for a meaningful quote.
What to do with all this crap?
We might observe that when we add the five valid marks from overnight it comes to? -2.58%.
Since we have five markets the average is -0.516%
Now let’s say the S&P closed Thursday at 2,415.07. This times 0.00516 (our average, as a percentage, yah?) suggests the S&P might lose 12.76 points today.
Less, of course – can’t have Great Again doing too big a loss. So maybe half that…but we shall see.
Why Such a Strong Rally?
This is an equally trivial calculation. It’s just most people are too damn lazy to consider the facts even though they are staring in the face.
Simple look to the latest Federal Reserve H.6 Money Stocks report here.
There are two windows we can see the Money Supply jumping out of. The FIRST window (January, February, and March) the M1 was up 4.4% annualized. That’s cash and equivalents.
The SECOND window is more recent: This one slides from May 15 back 13 weeks. And it offers that the annual rate of printing up M1 weas screaming up a 9.1% rate.
I don’t care how slow you are in math: When the first three months of the year are up 4.4% on flowing cash and the most recent 13 weeks to mid-month was up 9.1%, the Fed can be seen behind the curtain turning on the nitrous oxide tank, renting avgas containers, mashing up C4, and looking for rusty steel wool to make thermite to get the market moving up.
Well, the Fed would love to be able to raise rates. But they can’t very well get ahead of the market and raise rates, so they’re inducing a kind of financial euphoria where something as trivial as a quarter-point hike of rates wouldn’t be noticed.
Except not only is the financial nut job in the woods noticing (and telling his lone reader, you) about it, but the whole Bond Market seems to be laughing at the Janet Posse. The 10-year Treasure chart here suggests rather than thermite, the Fed should open talks with Pakistan, North Korea, or Iran to get something even Bigger to goose the rates up.
Of course, when this much money is being huffed by the deep breathers of finance, there will be spillover. The semi-parabolic rise in Bitcoin was around $2,589 when I looked this morning. Pretty amazing for a few ones and zeroes, but I was shocked at tulip bulb prices circa 1634. Ecclesiastes teaches there is “no new thing under the Sun” and it works in finance as Ponzi and Madoff could both attest.
So the Fed will no doubt keep pouring avgas on the bonfire of the equities once we get past the end of May sell off (which might run into mid June at present rates). But they are fighting a terrible battle against incipient deflation as evidenced by the 10-year rate going exactly nowhere in response to the Johnstown Flood of cash.
I could have saved them all the aggravation and frustration. All they would have need was to read our April 1, 2017 Peoplenomics.com report in which we posed the question: “Are Federal Reserve Rate Hikes Over?”
But like the old Outback saying goes here in East Texas: “You can lead a horse to water, but you can’t make ’em think.”
We are arriving at the (predictable) backwardization of economic flight controls next. It’s the sort of thing usually followed by a fairly predictable Crash. And then we get War – and some yet-to-emerge centrist Democrat who will blame all our ills on Trump.
As it was in the Hoover, is now, and ever shall be: World full of greed. Amen.
Dose of Daily
GDP first, or durable goods? Here is our first press release du jour:
“New Orders New orders for manufactured durable goods in April decreased $1.6 billion or 0.7 percent to $231.2 billion, the U.S. Census Bureau announced today. This decrease, down following four consecutive monthly increases, followed a 2.3 percent March increase. Excluding transportation, new orders decreased 0.4 percent. Excluding defense, new orders decreased 0.8 percent. Transportation equipment, down following two consecutive monthly increases, led the decrease, $1.0 billion or 1.2 percent to $78.5 billion.
Shipments Shipments of manufactured durable goods in April, down three of the last four months, decreased $0.7 billion or 0.3 percent to $233.0 billion. This followed a 0.1 percent March decrease. Transportation equipment, down six of the last seven months, led the decrease, $0.4 billion or 0.5 percent to $77.2 billion.
Unfilled Orders Unfilled orders for manufactured durable goods in April, up two consecutive months, increased $2.4 billion or 0.2 percent to $1,122.9 billion. This followed a 0.3 percent March increase. Transportation equipment, also up two consecutive months, led the increase, $1.3 billion or 0.2 percent to $766.6 billion.
May I have Envelope #2, please?
“The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 0.7 percent. With this second estimate for the first quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in personal consumption expenditures (PCE) were larger and the decrease in state and local government spending was smaller than previously estimated. These revisions were partly offset by a larger decrease in private inventory investment (see “Updates to GDP” on page 2).
Or, don’t bother and just stare at the following picture:
And so the futures are soft (-20) as in a mild Viagra shortage. (ahem…)
Smoking is bad for you as UPS Fined $247M for Illegally Shipping Cigarettes.
But come on, how are they supposed to filter ’em out and be kool?
Gianforte Wins: Montana’s Answer to Hulk Hogan?
I just bet a real wrestler would laugh off the (left-leaning media hype) about a “reporter body slam” as a pant load…just a guess, mind you. But from a real body slam, the reporter wouldn’t have recovered so quickly.
Go watch the vid of Hulk Hogan slamming Andre the Giant on YT. Seems to me the hysteria over “body slam” is just a wee bit overdone, know what I mean? Oh, hysterical, then.
(More conspiratorially, just the (???) trying to “stage” an event on the GOP right before an election…but we don’t need to go there, so let’s take our meds and move on…)
Oh, did you see how before this “event” The Guardian was trying to link Gianforte to “Russian companies” in this April 18th story? =
But the republican’s scored a big win in Montana over the democrat singing in a nudist camp contender.
While it’s being reported that now-congressman Greg Gianforte apologized, there is still the matter of an assault charge.
Still, we think there is something to the comments of republican Trent Franks of Arizona who says the left in the press have gotten totally out of hand blocking the path for newsmakers and getting in their faces…. ambush journalism, anyone?
Bloomberg Rocks It
At least one news org seems to remember what journalism is about as they write in part here “…Maybe Flynn committed treason. But so far no one has presented any evidence, just innuendo. That’s not justice. ”
McCarthy was on the republican’s heads, the Obama/Clinstonista crap is on the democrats. Soft coup of the left, anyone?
Holiday Health Food
Sheesh: Surprising hot dog facts.
I was a little confused when I read how “Most of us will never get the chance to drive the Weinermobile….”
Didn’t Huma get that? I mean frankly speaking, and all…
Another TV Show to Miss
As late night host stogie-smoker “Letterman: Trump makes me sick.”
Ure: Smoking makes you sick.
Tough Choice of reading materials involving Jupiter.
Choice #1: Ted Simon’s classic book on riding a Triumph motorcycle around the world in the late 1970’s. Totally cool adventure story – I interviewed him when the book first came out in 1980. Still a damn fine read.
Choice #2: Latest from NASA wherein Jupiter reveals the “brand new” and “unexpectedcd” sayeth the gray lady report here.
I’d go with Simon’s book…back when the world was not quite so insane.