Short Version: Market drops today.
My consigliere called Sunday to remind me that we are still on target for World War III or IV in the 2019 to 2024 time frame. Like that’s something I’d forget?
“Seven year cycles, George. Don’t forget that: Seven years…”
Which, as a student of our Cheerionomics 501 class you will remember as Clement Juglar’s ideas.
If you dozed off during our last discussion, the class notes are here in Wikipedia. Pay particular attention to:
“In 1860 French economist Clement Juglar first identified economic cycles 7 to 11 years long, although he cautiously did not claim any rigid regularity. Later[when?], economist Joseph Schumpeter (1883–1950) argued that a Juglar Cycle has four stages:
1.expansion (increase in production and prices, low interest-rates)
2.crisis (stock exchanges crash and multiple bankruptcies of firms occur)
3.recession (drops in prices and in output, high interest-rates)
4.recovery (stocks recover because of the fall in prices and incomes)”
So this has what to do with BREXIT, exactly?
Hmmm…let me see if I can keep this under a full day of lecture.
We begin with the understanding that there are plenty of cycles to choose from. At the longer end of things, we have a cycle of 83-93 years that it takes to burn through any value in fiat (paper) currencies. (Ure and Mazurok, 2000).
At shorter periods, we have the cyclical long-term interest rates of 48-74 years. (Kondratieff, 1927).
Then we get into the shorter cycles. There is a war cycle, the Schumpeter, the presently discussed Juglar, plus we have the Presidential, the inventory cycle, and the 11-year California Housing cycle to consider.
My consigliere and I have an unfair advantage over most conventional economists. We’re both ham radio operators with Extra Class tickets. Our uncanny ability to think in high-speed Morse, or belch wise antenna calculations (complete with Smith charts and –j factors) doesn’t help so much as does a good understanding of the old hybrid phone patch.
It’s a little early to get into a discussion of how a hybrid transformer set set up. But it does underscore that signals may be either additive, or subtractive, depending on circuit.
Another analogy is in super heterodyne receivers where a local oscillator is injected into a mixer stage. What comes out of the mixer is actually two signals, one additive while the other is subtractive.
Let’s bring this around to economics, then, shall we?
If you have any two cycles of non-equal periods, at some point, their combined result will be either additive – which means you will have a SUPER EFFECT. Or, when the cycles are subtractive, you will have a NULL effect. Example of multiple additive cycles? The Great Depression, or course.
It’s not exactly this simple but you can envision this very easily when doing phasor adjustments of a directional AM radio station. There, whether current leads or lags voltage, you are able to “steer” a multi tower broadcast array antenna pattern.
Same thing, it turns out, works in economics.
Except, instead of TWO variables with adjustable amplitudes (voltage and current, remember?) you can get a good general idea of economic forecasting by integrating cycles over time.
Since we already know the cycle lengths involved, 18 months on up to the 90 year range, we can easily build a time-domain model and by assigning weights, predict, with some confidence (say >50%, lol) when the proverbial shit hits the fan.
When my consigliere did his original work (1979) that pointed to the 2019 to 2024 area, it was done by hand on ledger paper and engineering graph paper.
Since then, we have this thing called a spreadsheet that vastly simplifies the process, but now we come eventually to what passes for this morning’s POINTS.
The first is that in order to become an economist, there should be a requirement that any practitioner hold an Extra Class ham radio license. Not that Morse code helps – it doesn’t. But understanding the vagaries of of additive, subtractive, and vector relationships of complex wave forms has a huge payoff.
I occasionally refer to my retired DSP engineer friend “Jas.” Why was it fairly simple for him to pile up oodles of money and retire from Cisco? Because he understood signal processing algorithms and the numbers don’t lie. History comes along and to the more simple of our countrypersons appears to just happen (which is why quants are so much fun to watch).
But the real genius in economics is in understanding internal relationships between multiple wave forms and whether their aggregate is generally additive for markets (upsy-daisy) or subtractive, in which case the OMG we are sooo screwed posts proliferate.
Toss all the above (and my own work with the Peoplenomics Aggregate indices which are a simple waveform analysis applied to multiple markets) and we can sort of – very vaguely but >50% – see ahead to where the market is going.
If you remember Chris Carolon’s work on the Spiral Calendar, it is a very similar output, just arrived at differently and it’s easier to manipulate the time domain (diameter of the spiral) as data arrives.
(Whew. Damn that was a lot of coffee this morning!)
So this brings us to this morning.
The futures are suggesting the market will drop another hundred, or so on the Dow.
The decline should continue through tomorrow, by which time the “There, that wasn’t so bad, was it?” sighs of relief should be everywhere.
If you go read this article out today, you will see one of these early sighs evolving and that is how Ures truly will keep my real money on the sidelines until a sense the real bottom of (i) of 5 down is in.
Oh, look! Another BREXIT won’t happen story…
So then, when it feels right, I will buy a batch of just out-of-the-money call options for the July expiration and watch them retrace at least part of the decline and then unload those when the time is right.
Elaine and I are going on vacation in July and even though most of the trip is already paid for (a condo in Tacoma) there are still casinos to be fed along the way and tip-money to be made.
Then there’s the annual on the airplane…
This is a fine day to be alive…and our prospects for grand adventure have seldom been better.
Trump Nails Hillary, Google Nailing Trump
Once again for putting the “thumb on the scale” while at State. Has to do with fees pay to Bill and how Hil they arranged some $55 million of your tax dollars to go to a school but that is questioned by the
Washington/Amazon Post story today.
And if you look at Google News, you’ll find a news flow that weighs out anti Trump.
Say what you will about Trump University, there’s something to be said about the Clinton’s operations in higher ed as well…
The problem for discerning news readers is to ask “Is this because the Hil campaign has a bigger ad budget and the MSM is currying favor (and fall media buys)? Or is it really that Hillary has done anything new, lately?
I’m taking door #2, but I told you a year ago Hil had this thing wired despite my personal beliefs that a Constitutionally oriented Supreme Court outweighs any anti-Trump mud. But that’s just me, I ‘spose.
Hil has the larger number of headlines being churned and that dominates news algos (like Google News) so the Hiladigm becomes self-reinforcing.
Just remember as name familiarity will play large in this fall’s election, that name recall even if bad is good from a subliminal influences standpoint. Names like Capone and Dahmer have high recall and thanks to how Capone worked the press, he still isn’t generally thought of as “bad” – a kind of gangster lite.
I should see if our also ecuador expat has any thoughts on this because it’s there in pretty clear relief for me, but the ex NYC ad agency view would be instructive and perhaps corrective.
Marginal News Dept.
“George W. Bush Slams Kanye West’s Naked Version Of Him: I’m In Much Better Shape…” reports Hollywood Life. Sheesh.
Meantime, Google News shows 24+ MILLION Kardashian hits. Double sheesh.
I do want to ask you seriously: What would you expect the outcome of a country like this to be?
Seems kind of evident to me, but then I live in the woods out of the cybersmog.
Train Wreck Engineer Report
As we hurtle down the tracks of this week, our first press handout is the International Trade report just out. Read ‘em and sleep:
Trade Deficit was up to $60.594 billion tweaked and $63.283 billion unadjusted in May according to the report over here.
Which means we are on track to at least a 3.7% increase in national debt on trade losses alone if we annualize this.
Still, globalist rape and plunder of America can’t touch stories like “Hillary Clinton and Pulse nightclub owner join thousands for New York Pride parade amid increased security after Orlando club massacre…”
Economic and intellectual reality is not what matters, you see. It’s life at emoticons…that’s the facts of it. Own the emote, own the vote.
No surprise, I hope. We have been hollowed out by the corporatists slowly so as not to be able to stop their onslaught. You DO get that, I hope?
Eye doc trip Wednesday after Personal Income and outlays and that Unicorn-like Personal Savings rate.
Bunch of bond settlements on Thursday and Friday is busy with minor data ahead of liver damage weekend.
Out here in the Outback, we were awakened by what sounded like the Tet Offensive Saturday night as neighbors apparently mixed some Jack and Fireworks. Schools aren’t so good out here…calendar-challenged is endemic.
A week from Friday before we get the employment situation.
And maybe the week after that, we will get our first glimpse at how much BREXIT money the Fed tossed in, or more likely, week after that.
We pass our condolences to the Flood victims back east. With the sun in sun spot free-fall, the past couple of solar cycles have really increased global humidity and when it cools, well, let’s just say we have more flooding on the calendar over the next couple of year.
Sorry to be the bearer of how physics works.