Toppish?

by

We have an idea what to expect in coming years, thanks to the presidency of Herbert Hoover.  Oftentimes, we have drawn parallels between Donald Trump and Hoover – because both face transitions from runaway serial bubbles to “normalcy” – and the transitions include long wave economic cycle lows.

We are likely, in my view, just coming to the (delayed) Hooverian Transit.

The “transit” is the danger period when long-term interest rates begin to rise while the economy is too fragile to absorb any additional debt.  Like now.

(Continues below)

 

In fact, the Trump administration’s marketing of a “tax reduction” is completely wrong, as we read it, since whatever “breaks” will come at the higher price of future inflation.

Authoritatively, we read in the Library of Economics and Liberty here that Hoover was – in many ways – bent on promoting a strong economic continuance of expansion in the face of the Crash of 1929 and thereafter:

“Hoover did not stand idly by after the depression began. To fight the rapidly worsening depression, Hoover extended the size and scope of the federal government in six major areas: (1) federal spending, (2) agriculture, (3) wage policy, (4) immigration, (5) international trade, and (6) tax policy.”

Thus, we are already seeing what may be the modern analogs to Hoover’s policies.

Trump speaks of containing federal spending, supporting farmers, wants great wages to accompany his “Great Again” policies, it hard on immigration, he’s a fair trade, not free trader, and his tax policy – like Reagans – is based on the prospect of luck rather than the formulaic outcome of delayed but higher inflation to come based on the emerging pseudo-science of financial engineering.

I call it “pseudo” because financial engineering comes with an unnamed co-conspirator in the shadows:  Social Engineering.

Unlike the 1930’s, however, our coming Troubles will not have such easy outcomes as jumping in to World War II and pulling out a win for the “good guys.”

The key difference between then and now is resources.  In the Great Depression, capital could snap up whatever was needed or desired on the cheap.  In today’s world, however, resources are zealously owned by others who have used the past century to become rather skilled at playing high bidders against one-another.

Rare Earth metals, for example, have been one of China’s long-term plays.

A few headlines to make the point:

The Wall St. Journal reported in 2011 that “China Moves to Strengthen Grip Over Supply of Rare-Earth Metals.”

A few years later (2014), Reuters warned “China stockpiling strategic industrial metals – sources.”

Sadly, it took until March 2017 for House Resolution 1407 to be introduced:

SECTION 1. Short title.

This Act may be cited as the “Materials Essential To American Leadership and Security Act” or the “METALS Act”.

SEC. 2. Sense of Congress on domestic production of rare earth elements.”

Still, the bill (republican Duncan Hunter of CA’s effort) sits in committee while congress does what it does best:  Nothing.

Meantime, MIT offers the notion that recycling could improve the supply picture, but sadly, such efforts involve long lead times and lots of energy.

When the major downturn comes following the present blow-off, we may see major dips in strategic metals, but although it might seem like a buying opportunity, another problem is out there in the future:  Will the “holders of the commodities” stand good for delivery?

Way back when, the Russian grain deal of the 1970s was an interesting spin on the notion of stockpiling:

“This event was referred to in U.S. media of the time as “The Russian Wheat Deal” or “The Soviet Wheat Deal”.[4][5][6] The term Great Grain Robbery is a pun referring to the “Great Train Robbery“. Author Martha Hamilton introduced the term as the title of Chapter VII of her book The Great American Grain Robbery & Other Tales, as part of an allegation that the U.S. government was robbing American taxpayers in order to support grain trading companies.[1] The terms Russian wheat deal and Soviet wheat deal fell into disuse since the sales included corn, barley and oats as well as wheat.”

But there was another side to this story, told to me by a former grain trader (Swiss) who worked for one of the major American companies, when I was living in the Cayman Islands.

As he explained it to me, the untold side was that a lot of American grain in the period was old, bottom of the elevator stuff.  Had the grain sales to Russia not happened, the grain would have spoiled (it was already losing nutritional value) and so the Grain Robbery story wasn’t quite accurate.

In economic terms, it did reduce the US holdings going forward, a bit.  But at the same time, it allowed Russians to eat better and become more economically involved with the West.  Remember than we were, at the time, just 10-years after the global nuclear war near-miss (the Cuban Missile Crisis), this might not have been a bad thing.

Still, the critical difference is that metals, unlike perishables like wheat, will be a different “deal” when pushkin comes to shove.

And with global war still on the menu for the 2024 area (plus or minus NorKNukes and the gunpoint re-unification of Taiwan), stockpiling of strategic materials will be something to keep an eye on in the headlines and your awareness.

It’s sure to mean more than Hollywood losers or clumsy former secretaries of state.

Ure’s Three-Minute Bitcoin Chart School

One of our Peoplenomics.com subscribers asked if we could do a bit more explanation of charting techniques we use because it would help him to track things like our Bitcoin forecasts.

Going “one better” we’re writing a whole Peoplenomics User’s Manual.  But in the meantime, I thought you might find the world’s shortest charting course of interest.

So let’s look at Bitcoin using the chart from www.bitcoincharts.com which is an excellent source.

This chart is then imported into a reasonable graphics processor (we use Corel CorelDRAW Home & Student Suite X8 which runs about $100).

Look at the following chart while I run you through the steps

To the right of “a” I have drawn a circle.  This is our starting point.  Then I look up and to the right and see another spike down at “b.”  This is also circled.

Now a draw a solid line from the lowest point of “a” to the lowest part of “b” and extend each line a fair bit either direction.

This is what I think of as the “lower price channel.”  If the price of something (Bitcoins, an ETF, or whatever, drops below this, I blow out of any long-side position.

Next, I copy this line and place it at the very first high spike.  In this case, the line is copied to (just right of) 1.

Now you label 2 as where the line touches the lower trend channel.  3 is where the price goes up and touches the upper trend channel.  4  comes down to the bottom of the trend channel.

Oh…we’re in 5 right now.

There’s a ton more to it, but there are 5 waves (called Elliott waves) and the outcome is usually that when 5 completes the basic rule requirements for Elliott (where wave 5 must be larger than wave 1 – which it is now) then you can collapse in a heap any old time.

EXCEPT I don’t think it will be today.  There’s still options expiration to come Thursday and Friday…

Think of this as a “freebie” for subscribing to Peoplenomics.

To learn more, get your head out of your icons and read Trading the Regression Channel: Defining and Predicting Stock Price Trends by Gilbert Raff.

I’ve been amazed by the number of people who complain ab out being poor who then promptly sit on their ass and do nothing about it.  Golly….what a crock!

Import/Export Prices

Just out from the Labor Department:

U.S. import prices increased 0.7 percent in September, the U.S. Bureau of Labor Statistics reported today,
after advancing 0.6 percent in August. The price index for U.S. exports rose 0.8 percent in September, after
increasing 0.7 percent the previous month.

Hurricane Harvey and Irma: Hurricanes Harvey and Irma had a small impact on the collection of the
import and export price index data for September, but no change in the estimation procedures. For more
information on the impact, please see https://www.bls.gov/bls/hurricanes-harvey-irma-maria.htm.

Imports

All Imports: Import prices rose 0.7 percent in September, the largest monthly rise since an increase of 0.7
percent in June 2016. The last time import prices advanced by more than 0.7 percent was a 1.2-percent
increase in May 2016. Higher prices for both fuel and nonfuel imports contributed to the overall rise in
import prices for September. Prices for U.S. imports also increased on a 12-month basis, advancing 2.7
percent.

Exports

All Exports: U.S. export prices rose 0.8 percent in September following a 0.7-percent increase in August.
The September advance was the largest monthly rise since an increase of 0.8 percent in June 2016. The last
time the index increased by more than 0.8 percent was a 1.1-percent advance in May 2016. Prices for
exports rose 2.9 percent over the past year. The September advance was driven by rising prices for
nonagricultural commodities; agricultural export prices decreased in September.

Meanwhile, China factories grapple with soaring prices as pollution crackdown bites/

We also have the Fed Industrial Production and Utilization report coming up at 9:15 AM Eastern.  Click here, after that, and then check Futures for reaction.

Harvey Doesn’t Matter

Here’s a snip from Google Trends:  Search Results of Weinstein over the past 7-days:

Thanks to Google Trends (here), we can unabashedly say “People don’t give a shit about Harvey anymore so can we move on to real news now, please?”

Ah, but as usual, the agenda-driven media are selling history, not news.

This is News?

Jane Fonda says she’s not proud of America.

OK, leave!  I’ll chip in for part of the airfare…(must stay gone, shut up, and other restrictions apply)

Equally Rich

John McCain Slams ‘Half-Baked, Spurious Nationalism’ in Liberty Medal Acceptance Speech.

Handing McCain the award?  Dem Joe Biden.  Network meeting, perhaps.  Charades, anyone?

Embeds

No, we didn’t make it up: Federal government workers donating overwhelmingly to Democrats.

Market Rally?

Deal time? U.S. Not Ruling Out Direct Talks with North Korea, Officials Say.

If this get’s legs, market goes higher….

Still with gold, the IXIC and the S&P futures lower, this could be a Dow “paint the tape” day…

Corrections

Yes, we make errors.  And resorting to drag and drop editing may be one of them.  Here’s how Monday’s column should have read:

Oil rig explosion rocks Kenner, injures 7 people Sunday.

Death Toll From Somali Explosions Tops 300. Please note that The Network doesn’t seem to want the mainstream brain-washers to remind you that this is yet-another dirty deed of an Islamic terrorist organization.

Thanks to the sharp-eyed reader who dinged us on the error.  We make enough of them that it could be a full-time career, but the pay sucks.

Site Security

One other housekeeping note:  A new change in how browsers operate may result in a security warning about Urban.  That’s because of a full-court press to make all website content SSL based (secure socket layer).

Without going into the froo-frah detail, we will be rolling over to https:// for everything in due course.  It’s a fair bit of work, but we will get there.  Lots of site will be making the transition…

30 thoughts on “Toppish?”

  1. Growing up, we heard about strategic planning all the time. We’ve given it all away one way or another in the name of corporate profits. When we get the next war fired up, we may find that none of our stuff works because it’s being made by our potential enemies.

    • Ida, I’ve been saying the same thing for years. Apparently you and I care but not the folks who are making the laws and allowing this sorry state of affairs. For them, money beats the national interest.

  2. George,
    “like Reagans – is based on the prospect of luck rather than the formulaic outcome of delayed but higher inflation to come based on the emerging pseudo-science of financial engineering?”

    Im confused. Reagan overcame the worst economy with the highest interest rates I have seen in my lifetime. And started the biggest economic boom I have seen in my lifetime. Reagonomics worked extremely well for a very long time!

    Are you saying that lower taxes and reducing government spending doesn’t have econmic brainiacs developing some type of fomulaic outcome?

    Im thinking less government in my pocket is a very good thing.

    • No, step back a minute Wayne – see what else Reagan had going on that “made Reaganomics work?”

      I’ll write up a detailed explanation for Peoplenomics subscribers (like you!) tomorrow – because the answer is longer and requires more details than possible here.

    • Also don’t forget. The high interest rates have for decades been blamed on carter administration. In reality they were caused by congress passage of a couple of bills that tossed the middle class under the bus.today they are pushing legislation that will be tossing everyone under the bus. Carter’s true goal was to get the deficite under control and America back on a balanced budget instead in my opinion we did the opposite.

      • A president is only the suit in charge its the board of directors and management staff thats really in control.

  3. George – unlike stocks, crypto currencies are only known to about 1% of the population though the group is expanding rapidly. So how does once account for that in the charts?

    • That is how the 1929 bubble worked, it was when the shoe shine guy was asking about XYZ, that the end was near. My young help asked me about bit coin, and I forwarded an urban survival column on it.

  4. “The key difference between then and now is resources.”

    Or.. Manufacturing.. What was it five or ten years to retool America for manufacturing..
    The great industrial complexes are but a shell of what they were.
    Our dependence to other countries for resources manufacturing and money to continue.

    • The “manufacturing” issue isn’t just stocking or tooling factories now. People would have to be “tooled” or trained, to run the machinery as well, and oldsters who have the skills are not likely to be as patient with the iPhone crowd as the Ed-Establishment, since building stuff which actually works requires boring repetition of precise application, neither of which is a forte of the two-second-attention-span crowd…

    • I had a friend from a wealthy family that had plans of starting a company. We debated the issue of getting some top name backers. I explained the worst tippers are those of wealth.
      He learned the hard way.you gain wealth by not spending or spending considerably less than you make.
      OPM (other people’s money) that’s why trickle down didn’t work. I can still see Ronald on tv explaining why social security money would be safer in the hands of congress to bail out the to big to fail.
      Now.. I loved Reagan he was like having dad in office. He believed in what his plan and if his plans would have been followed I think it would have worked. What he didn’t anticipate was greed and the corruptability of congress by the lobbyists. Today social security isn’t seen as a program everyone paid into as a fund to retire but as a give away program that will destroy the working class.

  6. George, I appreciate your thoughts on switching to HTTPS or the secure layer. I did this a couple of years ago with my business website. My theory is “if they ever decide to pull the plug on certain segments of the internet, it won’t be the secure layer”. Shutting down the secure layer would be bad for business. Thus it will be protected, maintained and preserved at all costs.

    Have a great day George!

  7. Get rid of the State Department, the FED, PAC’s and The IRS….and maybe we could start to be a nation again…other wise we the people will just ‘shuffle along’ down the road to destitution and misery….as planned for us by the UN Agenda 21 and those that support the destruction of this once proud and prosperous country…imho

  9. I need to apologize to everyone..
    My wife read some of my comments and informed me I was being a condescending A–hole..This was never my intention.
    I am just opinionated..unfortunately to willing to share my opinions.

  11. A lot of ‘mountains and valleys’ in the gold, silver, and dollar charts . . . indicator of uncertainty, I think . . . definition of ‘risk’ is how much stress are you willing to put up with. I don’t see anything calming down for a very long time!

    • Re comments that the president has made: In order to get ‘honor’, you must give ‘honor’. Enough said!

  12. Good morning George, been a while since i have been to your site.

    Was having coffee this morning with a 25 year old stripper i know, who woke me up at 2am, because she missed me and we haven’t seen each other in a while.

    She said to me this morning and get this, she has never been to your site. “Everything is a business model”. Ha ha ha. I laughed so hard I spit my coffee out. She smiled.. and said, well its true!!!!! God I love you!

    So, I promptly returned to ure site to see what’s up? after we hugged and kisses and she got on her way home.

    She invited me to Portland this weekend, doing a big show, even offered to pay for the hotel and my food and I declined. I have pumpkins to carve.

    Futures are up! And you are still talking about that top.

    All is well.

    • Thanks Joe!
      Yeah – lots of people buy the “Perfect Reagan, bring on tax cuts.”
      But when you study 1981 and the following 7 years on the basis of Real (e.g. inflation-adjusted) GDP growth) what you find is an ugly nonpartisan fact: Reagan indeed tables a 28% growth rate of GDP for the period.
      but look at Clinton – 1993 to 2000: 31.9% growth. Yet the right tends to take things out of context.
      See the data here: https://www.thebalance.com/us-gdp-by-year-3305543
      As I think I correctly assert in today’s PN, the data support the notion that economic growth of the real sort is more attributable to the quality and breadth of life/business-changing technology presently in diffusion, not tax policies except to a minor extent.
      It makes the right – AND Left – uncomfortable because the real drivers of human progress are changes in technology, not some BS magic bullet economic policy crap, except at extremes.
      Give me tech and innovation over a worthless crowd of lying fools in Washington, any day.

  14. Several thoughts:

    1. Part of the problem is that those of us over 60 can’t really use our money for anything useful. If we need it, we probably already have it. If we want it, it’s probably not for sale(love and relationship, anyone). We can give it away, let the health and insurance establishment take it, or leave it for kids. We don’t have any reason to work hard and use our skills because we passionately want something that can be exchanged for money. Iphones don’t matter.

    2. Regarding rare earth metals: We have significant deposits in the Needles area of Ca. Possibly elsewhere. They tend to be mixed with thorium and EPA shut down what operations there were quite a while back. This is part of critical infrastructure that needs to be resurrected.

    3. As a nation, we have poor transportation, other than highway, and we have every disincentive to go anywhere. TSA is so bad that it’s easier to just stay home and work than travel to see friends. We need to make a kinder, gentler nation for those who belong here. We can start by making transportation endurable. Sleepers and decent service on all modes of passenger transportation will help. A service person should be on every bus – it could be a student or someone escaping welfare. Someone to maintain decorum.

    4. We need national pride. It’s what China leveraged over the last 20 years. We did it in the 50’s. We can do it again. Pride in small doses is good. In excess it becomes arrogance. If we don’t have it, we become third world really fast.

    • Nothing wrong with national pride and Trump’s MAGA mantra, but to listen to the left, anything with national in it is a glorification of Nazi’s or white people and the demonization of all others. Such BS.

      Most thoughtful people in the USA know that we are made up of a mix of people, but the left thinks to expect people to see themselves as American first, is a sin.

      I use to align with the left and even voted for Obama, twice… but the last two years of his presidency and the elevation of Hillary as the next POTUSA, saw great divisions created so the dems could get the minority vote by demonizing the police and white people for all the problems in the world. Trump countered that direction and many people liked that, including me. So much is discussed about the plight of unlawful immigrants with no discussion or respect for those who did it the legal way.

  15. Not that I am super-paranoid or anything,but I respect the dreams I have; ‘specially lately. The story lines tell me to be cautious and aware, wise in any investments and open minded. How is that for a conundrum?
    So I invested in a trezor in case of a NK missile or EMP- until anything resembling internet gets back up… right.
    I don’t hold my breath for Trump’s alleged economic stimulus since CONgress seems to be distracted and interested only in political theater rather than any serious business getting passed.
    Seems the ONLY bills that get passed in a day or so are ones that benefit THEM not the peeps; especially if it will tie up Trump’s hands. Congress seems to be playing executive branch AND legislative though they also seem above the laws they pass- look at the AWAN brothers/spy ring debacle.
    ADA is a joke. IRS is a joke- just ask Lois Lerner. I listened to Jeff Sessions hearing this morning and almost spit out my coffee a number of times- none of these committees want real answers-
    The show they put on parallels Harvey Weinstein productions.
    Who knows what caused the California fires as there are now videos taken by helicopter cameramen of laser beams blazing down into neighborhoods. It would explain why entire neighborhoods of houses are incinerated down to (including)the toilet bowls and granite counters but the plastic garbage cans, and mailboxes and OH yes the trees around the house are intact.Crazy stuff.
    Yet- follow the money- billion dollar wine industry in ashes literally, Hollywood down the tubes, literally, 5 yr drought ridden agriculture has taken California to its knees.
    Maybe Jerry Brown should think twice before encouraging his legislature to vote for succession from the union. They need those federal subsidies.
    Sorry for the rant George. I love your stuff.
    Sooooo, I take a breath and go meditate on open mind.

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