Systemic Stability, ENSO and the Long Wave

We’ve been  thinking with an interesting data metrics idea for timing market moves up, or down.  Specifically it has to do with what I would describe as the global psychological analog  to out existing work in aggregated markets.

The simplest was to describe it is the notion that taken as a whole, the world some weeks looks like it’s heading right for the shredder.  Then, something happens, and while the news flow is not immediately apparent, there is a slight improvement in prospects, so markets rally.

With the break above a major overhead resistance level in the past week, the markets are now getting into position for a barn-burner rally that could last into late summer which could then morph into flash-goggles and disaster this fall.  But, the good news to kick off the week is futures are higher and, at least for the first hour of today’s open, disaster has been avoided.  Oh, and it underscores the point in Peoplenomics in the chart section this past weekend:  Trying to short over the weekend is a fools game.

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The idea – one to kick up to Nostracodeus whiz Grady, is are there “happy phrases” and “sad phrases” that we can isolate in our scans of the web, just as we do with predictive phrases in web data now?

As mentioned recently, although there is really nothing new to speak of going on with the Mueller Fishing and Hooker Expedition, it continues to suck the public attention along toward, well, whatever.

Even this morning there’s the shrill Washignton Post refry of old news in “‘Buckle up’: As Mueller probe enters second year, Trump and allies go on war footing.

Meantime, though, even the late-night shock-talkers like Jimmy Kimmel are coming to terms with the fact America’s sick and tired on the nothing-burger and we’d add presidential hate-mongering of the unfound “collusion.”  Even SNL is (finally) coming to our view that it’s old (refried) news.

Still, they have only recently come to their senses.  In the previous period (before going sane-again), the “comedy” types and activists have used every crude joke and slur in the book in Hate Trump.  It contributed to what we’d call a kind of systemic risk profile.

This morning, we see moderating risk and the odds of the UYS embassy in Jerusalem is not likely a big-enough deal to kick off global thermonuclear confrontation.

Which leads to our immediate reduction in stress, but that’s not to say peace breaks out, though TEOTWAWKI seems a bit more distant with the second cup of coffee.

As discussed in Coping, America’s main up-and-coming challenger (China) is kicking our ass the old-fashioned way:  Slowly.

While we are sanguine about the intermediate term (to September) period, there are some major problems still ahead.

ENSO and the Drought

We do have one huge fly in the ointment:  Global Food Stocks.  We are very unhappy about prospects here because of ENSO – the El Nino/Southern Oscillation.

A good starting point would be to read some basic research into the mechanics of things here.

When we look at recent El Nino (sea surface temperature) mapping, you can see the big “hot spot” in the Pacific south of Hawaii:

Which in turn ripples into the evolving drought in the middle of the country:

I don’t expect you’ll see the problem straight-away because most people haven’t studied climate maps from the Great Depression era.  Yet, on Wikipedia, you can find them and if you look at the Oklahoma, Texas, New Mexico, and southern Colorado area, you can see where The Dust Bowl called home.

When you look at the area involved, the Dust Bowl only covered a portion of northeast New Mexico, for example. but that is likely to expand – and quickly – as we review some data.

Here in the East Texas Outback, for example, our rainfall hasn’t put us into Severe Drought in the May 8 map, yet the data is quickly going bad on us.

I ran out local rainfall here (120 miles SE of Dallas) and found we are down 40-percent from last year.  A year ago, the year-to-date rain was 10.66 inches.  This year it’s 6.68 inches.  It won’t take long for that to start killing off millions of trees and wrecking grasslands – which will cause changes in how – and what – we eat.

At first, there may actually be a decline in meat prices.  It would likely be a short-term event as ranchers rethink their herd sizes for next year.  Then there are the row crops and such.  Again, all those big “crop circles” from irrigation you see when flying commercial over Dallas to the West Coast require water…and that’s getting scarce.

A few media are starting to talk about this, notably the Wall Street Journal in “Farmers Across High Plains Brace For Hard Times as Drought Bears Down.”

But, as usual, it’s not headline stuff for the left-leaning media moguls who rule from the Northeast.  They still want Trump gone and they’re still selling non-news as hard as they can.

The Southeast part of the Drought may evaporate this week (patience -poor pun police processing) as “Tropical disturbance brings heavy rain to Florida.”

As we see it, the big story has changed…months back, really.  You can have all the earnings you want, but if you can’t afford a “measure of oil and a measure of grain” what’s the point?

Except the sour-grapes party and the people who think you can write a check to move ocean temperatures around.  The real world doesn’t work like that.

Meantime, as the demands grow, the energy inputs for food will rise and we note that depletion never sleeps.  So when Conoco moves to sell North Sea oilfields: sources, pay attention.  They are probably running some calculus and models about remaining reserves and economics.

Trump’s Embassy Move

Has turned ugly: Gaza clashes: 18 dead in violence before US embassy opening.  As the Jerusalem Post comments, the “US embassy inauguration exposes core of Israeli-Palestinian conflict.” And that, sadly, is not likely to cool-down any time soon.

Sizing Up the Week

Other than the Middle East and refried Trump stories, there’s not much going on.  Hawaii volcano is still smoldering, of course.

On the economic menu, the market’s next major resistance in our work is about 2.2% higher (as an Aggregate) from Friday levels.

Despite some regional pullbacks (all small) overnight, the futures were up 60 on the Dow 90-minutes from the open.

China sending a vice premeir to DC for trade talks helps confidence, but meantime Trump is giving Chinese telecom giant ZTE a break.  Carrot and stick or slack and hack?

We’re holding off on buying a string of low-priced rentals houses in Detroit having read that “NAFTA math may not add up to more U.S. auto jobs.”

Usual Treasury auctions today.  Tomorrow we get into the useful outlook data with Retail Sales and the NY Fed’s Empire State Manufacturing number.  Housing Starts come Wednesday.  Toward the end of the week, things fizzle in terms of data, so we don’t see any “biggies” that could wreck things, but that’s subject to change at the whim of real news.

Useless News

It just never stops.

Vatican’s Inquisition, Index of Banned Books open for study.  We hope UrbanSurvival was not mentioned.

Pope Francis-blessed Lamborghini auctioned for $950,000…we wonder if the blessing covered oil changes and major service?

$30,000 Sneakers? As Demand Grows for Coveted Shoes, So Do Prices.  We’d bujy some, but we’d haver to withdraw our bid on the Lambo…

And of course we ALL need to know that “Khloé Kardashian Feels ‘So Loved’ on Mother’s Day After Source Says Family Hasn’t Visited in ‘Weeks’.

Shoot-damn, that’s the icing, huh?

Moron the ‘morrow…I’m going to find my ViseGrips and give myself a wake-up squeeze on the arm now.  I can’t take another headline…it’s all such  crap.

21 thoughts on “Systemic Stability, ENSO and the Long Wave”

    • Jerry: It seems like a lot of times with 3x ETF’s, if you do the opposite of what you are thinking, you will do better.

    • Or maybe I am just not supposed to comment about china. Hahah

      Well, I guess it doesn’t matter.

      Have a good day.

  1. I still don’t understand the benefit of moving the American embassy to Jerusalem. I’m sure many people see it as a provocation. As an American, I’d rather just have peace and quiet unless there’s a damn good reason for antagonizing someone.

    On balance, I’m OK with what the president has done, though I don’t agree with some of his moves. He should have vetoed that rule that makes websites liable for personal ads, since it provides no safe harbor and is an indirect infringement of free speech. I’m holding my breath on the Korean talks – I’d like that one settled if possible.

    • Simple answer if you’ve read “The Art of the Deal.” When there’s a deadlock, which you cannot break and neither side is willing to give, you simply change the strategy. By moving the US embassy to Jerusalem, it removes veto power from the PLO in regards to negotiations. Israel would never surrender Jerusalem, so go ahead and move your embassy. Either way the short-term outcome is the same – more violence. Sooner or later the Palestinians (sponsored largely by Iran) will want more American dollars, so they will be back with their hand out. Why reward your enemies when you can help bolster a friend, one of the few friends the US has in the part of the world?

      • I have read the Art of the Deal, more than once. I just haven’t understood all the factors in this particular situation.

        My only interest in this part of the world is in keeping it below a major war threshold and maintaining some sort of homeostasis. Stable peace would be ideal, yet I don’t yet see it.

    • It is their capital, which is where a foreign embassy belongs. The move is something every U.S. President since Ike has promised to do. Apparently, Mr. Trump is the first American CiC since Truman with the stones to actually keep such a promise…

  2. “Trying to short over the weekend is a fools game.” Lesson learned, though I knew what I was doing with TZA. But as “ECS” posted:

    “It seems like a lot of times with 3x ETF’s, if you do the opposite of what you are thinking, you will do better.” ;-)

    Point is, there ain’t no sure bets!

  3. You did not get to it directly in the El Nino mention but it has long been my belief that El Nino is caused by massive / numerous undersea volcanic vents. Also an assumption of mine is that vulcanisim, geomagnetic flux lines / polar shift, sun spots (or lack thereof)and “CLIMATE CHANGE” are all directly related. Now I don’t have the brains or contacts or funding to be able to prove something like this but you George certainly do have 2 of the 3 above, so I will differ proof of the hypothesis to you sir. (I also leave it to you to decide which 2 of the three needed qualities it is you have. )

    • You have figured it out except for one more item. Objects from outer space. Little ole mankind doesn’t even get honorable mention.

  4. Had a good rain around here a couple of weeks ago but it sure doesn’t look like there will be enough to have the grass hold out like it has over the past few years. Lots of cattle beginning to head to market around here and at $20/bag for minerals it gets really expensive to keep them from chewing on things they aren’t supposed to.

    On the up-side, if we get into another real drought around here and the wells for all the damned real estate developments start sputtering the population might get back to some sustainable levels. I get a kick out of telling them “Welcome to the Titanic!”.

  5. Re: the true true and unrelated economic and geo political data and events:
    No, Mr. Ure.
    As in the peak valuation area of 1929, this is merely a mathematical necessary peak of a
    simple asset-debt equity valuation saturation curve…
    The Third US Fractal 1932 to 2018 is different than 1929 but is still a precise mathematical saturation area: 32/80 months from March 2009: x/2.5x and
    EG Toyota 14/33/35 days: a final reflexic saturation area x/2.5x/2.5x

  6. OT, but I’ve been flipping through the U/S archives and came across the page where George was contemplating buying a new truck…

    Ram 2500 Longhorn $81,106
    Ford F-250 SD Limited $82,150
    GMC Sierra 2500HD $80,175

    These are 2018 MSRPs for top-line 4wd trucks, but at these prices, why would ANYONE buy a new truck…?

    • People are genuinely stupid. I can keep my 2001 on the road for another 20 years at the present run rate and for not much dough. and when done, it will be a COLLECTABLE and go for a premium!

      • Well back in the day mental illness was very rare and now days it seems the entire population is on some sorts meds. So why not sell them $80k trucks? Lol

    • The statement of these trucks are over $80,000 each isn’t what we should be looking at what we should be looking at is who in the hell is buying these things

      • Dave, the Ford F250 Platinum & King Ranch, and the Dodge Ram Longhorn 2500HD trucks I see on the road are all piloted by children, except one 50-something nouveau riche dude who told me he buys a new King Ranch every year.

  7. Seems like if you were screwed over by the nazis so badly you would be more sensitive to the stealing of land and killing of innocent people. The genocide of the Palestinians is not something i want to support with my tax dollars, and moving the embassy to Jerusalem,lets Israel know that we support this kind of behavior. Its Israel who gets the largess of our tax dollars ,millions on a yearly basis.

    • Sorry Jane it’s been there land for over three thousand years I don’t see how they’re screwing anybody over on property their Nations only 10 miles wide ever looked at a map. Arab’s could overrun them anytime they want to but they’re afraid of them.

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