Before Launch: Let’s do the Only Chart That Matters
2019 sure looks like a peach, don’t it?
Although the market futures are showing a decline this morning, that latest crackpot theory we’ve been kicking around over on our Peoplenomics.com subscriber side (“Trading Box Theory”) offers a very short-term outlook that the market could turn turn up here and then rally into mid-to-late next week. More for subscribers on point Saturday.
Let’s start with a discussion of “Tax Loss Selling.” As you know, or should, when you pay income taxes on gains in the stock market, you can offset gains in one stock with losses in another. If you made a gain of $1,000 on Company A, but lost $750 on shares of Company B, your taxable gain would be $250. There are other rules – like the max of $3,000 in losses (after which it’s tax-loss carry-forward land), or wash-sales, but that’s the gist of it.
That’s one of the dynamics going on this week – and it’s why we don’t get too worked up over the present market decline: In order to be consider a “tax loss” those turkeys in the portfolio have to be sold off AND SETTLE before the end of the year.
BUT…there is (on equities but not options) the Three Day Settlement Rules, in order to “count” for tax purposes, the settlement date matters, not the transaction date.
We look at the calendar and see if a certain turkey (stock) was sold yesterday, today counts as Day 1 toward settlement. Monday is Day 2, and because of Christmas, we could not see the money land in our account until next Wednesday – 3 day settlement, capisce? .
If something is sold today, then it would settle next Thursday so although Monday is a holiday-abbreviated session, it will be the end of this tax-selling window for the year.
There’s another angle to this that could fuel a bounce next week: A lot of hedge funds will do portfolio “window-dressing” which means (even if they don’t own the year’s best performers TODAY) they still have time to add them to the portfolio before the end of the year. That’s because while they didn’t make any money in these hottest of stocks, they will still be able to report to their stakeholders that “As of December 31st, we held X, Y, and Z in the following hot stocks...” and not be lying. In other words, they can claim ownership (and quite legally & correctly) but they can’t use last-minute window-dressing for Tax Purposes. (Options, one day settlements are not something hedgies brag about – because that’s like asking investors to put their money into a nitroglycerin lab run by ADHD monkeys…)
With such dynamics, it is POSSIBLE that a good deal of the market action is both delayed Fed reaction AND Tax Loss Selling. You can pencil it out…but no one really knows the ratios.
Unfortunately, that gets us to the other driver of this decline…
We need to walk through these one-at-a-time because there are so many of them – and each is terribly complicated.
Let’s revisit his Human Resources Disaster. Evidence of this is the resignation of Defense Secretary James Mattis. You can read his resignation letter here.
For a moment, I thought I heard the sound of popping champagne corks coming from the direction of the Kremlin. Nothing could be better news to Vlad Putin who is likely (not this weekend, but next) may move to retain southern Ukraine and thus land-lock the Kiev government.
As we have been reporting for some weeks now, the Ukraine situation has the potential to become a kind of Archduke Ferdinand battleground for the West. About year end would fit, judging by “Ukraine plans another incursion into Kerch Strait, hopes NATO ships will join in – top official...”
To suggest that Secretary of Defense Mattis’ departure could “light the fuse of WW III” is possibly not an exaggeration. Vlad Putin would like to retake southern Ukraine but with a super-strong (Mad Dog) Mattis extraordinarily capable and able to direct an effective counter to Russian moves, Mattis was a check on Russian adventurism.
The further Russian benefit of mattis’ departure is that plans to draw-down and disengage from Syria and Afghanistan are problematic as well. Mainly because Syria is a gateway country to the Med as well as a logical routing for the upcoming development of the Leviathan oil and gas resource off Lebanon. Trust you caught where “With One Tweet, Trump May Have Given Assad a Path to Victory in Syria“?
Donald Trump is not the only one worried about Russian hacking, either: “Hacking risk rises ‘exponentially’ for troops using personal devices, experts warn,” Shaping the battlespace, dear reader, it’s all shaping operations.
Strategically, the Mattis departure, as you can see, will fuel the Russian’s next moves. And it’s only ONE Trump HR problem.
Then There’s the Shutdown & Fence
While the Russians are planning their next adventures, the matter of the southern (porous and barely a ) border continue to unfold. In the latest moves, The House Approves Funding for President Trump’s Border Wall as Shutdown Looms. But, unless Trump likes “the deal” (and if it gets to him in time) a government shutdown is coming. As you can see in “Government careens toward shutdown after Trump’s wall demand.”
That, too, wears on markets. I think less than the rate hike this week, less than tax-loss selling, and less that our foreign policy blowing up, but this is hardly a precise science. My consigliere figures I’m under-weighting the potential shutdown impacts. But,. last time we had a shutdown, the world didn’t end, nor did markets.
Even Melania is in Play
As we read over on Fox “Melania Trump haters attacked first lady throughout 2018, from mocking accent to slamming Christmas décor” not only does America face the relatively “clean problems” of managing the country, but also the social media spew that has led to the foundations of Digital Mob Rule (the DMR/Internet Uprising), that continues to propagate.
The mainstream media has it “out for Trump” because he dared to step outside the conventional media hierarchy when he went largely “consumer-direct” with his Twitter Account.
Remember the “old model” of media power? A president would hold a press conference and the “major corporate media” would come in, get the press release and access for questions, and then the MSM would “sell” news of the country to people (selling ads in their papers which has semi-exclusive content). They made money, they had power, and they defended their business model against Trump’s new consumer-direct model.
You may not have considered this, but a “new kind of governance” is becoming possible with the Internet. A new kind of “online democracy” but you don’t see it yet. But try to follow this: Remember how we went from early HTML on the web to fully responsive websites?
Well, the same thing can happen to democracy if we’re smart-enough to see the migration path and get there. That’s because with the Web, we can do a much better (and deeper) assessment of what America needs to happen. The future of Congressional Research, for example, might look like this:
Since the government is already tied at the hipl to both Amazon (AWS/Amazon Web Services) and Google, we can see how feeds of RSS and FSB summaries by demographic have the potential to keep elected officials almost perfectly-informed.
From there, it’s only a short hop, skip, and jump with even near-A.I. to take existing laws and retool them in a manner that could make American Government 2.0 a responsive governance plan. Think of how the ERP models rolled out and how they made companies more responsive… Why we’re not working this (as a whole country) is beyond me. It’s as exciting and potentially beneficial as going to the moon.
yet, here we sit, waiting to get into the office to put in another 40 hours, so we can pay taxes with 10 of those hours, and sit in traffic.
THAT’s what so many people died defending? I don’t think so, but our Lack of National Purpose is a familiar whine around here. The Framers left us with a superb operating platform but we have “gee’d it up with politics” rather than rolling it into a Responsive ERP model that serves everyone with Excellence. (Somehow, I digressed)
Bottom line is yes, we have Trumplems and Tax Loss Selling. When I looked earlier, Futures were down “only” 60 on the Dow, so it seems that the “fever may break” before the next leg in our “Trading Boxes” reveals itself in mid=January. Another slide down earlier in the month, however, remains possible; we were serious about barf bags for the second week of January if things don’t straighten out.
The Collapse of Privacy
Thoughtful note from oakly-clustery warhammer to ponder – as it directly relates to the evolution of “digitized democracy: Privacy is turning into an historical artifact:
“Most westerners tend to think that there are certain ‘curtains of privacy’ that we can hide behind, an inherent privilege of living in democracies. In ‘Merica, the 4th Amendment to our Constitution emphatically states:
“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”
‘Mericans would be right to assume the 4th (Amendment) protects us from our local, state and federal government ‘unreasonably’ nosing through our private affairs. But they’d be wrong to assume they are protected from the marketing analysts of commerce.
All manner of human and social behavior are being surreptitiously monitored and modeled, but quite legally. How many of us, when we purchase a new desktop, laptop, tablet or smart phone, actually take the time to carefully parse through screen after screen of legalese before ‘accepting’ the manufacturer’s terms which allow us access to the devices full capabilities? Or Apps for that matter? Blindly agreeing to those mind numbing paragraphs results in our completely surrendering our private data to the seller and their partners, fueling their marketing engines.
The linked Guardian piece reveals how Alphabet (formerly known as Google) is now all knowing and all seeing through their deliberate and consistent data aggregation and analysis processes. For Example, Google Home, the parent company’s version of Amazon’s Alexa, amplifies the influence of an already pervasive global surveillance network by monitoring our conversations for marketable data, as does every other Google related App used on one’s smart device – Google Earth, Translate, Gmail, Search, News, Drive, Photos, Search, Shopping, etc.
Not to pick on just Google – Apple and Microsoft are complicit in this chicanery. Now the public is learning that for well over a decade Google partnered with ‘3-letter’ government spy agencies, sharing ‘aggregated’ data and ‘analyzed’ results but allegedly protecting each individual’s “personal info.”
With the help of social pattern analysis algorithms implemented on a massive scale, soon individual actions will be reliably predictive. Instead of the Precogs of ‘Minority Report,’ AI driven social pattern analysis, fed to law enforcement, will predict crimes before can be committed.
Then we Serfs can expect to reap for our Masters the fruits of those furtive seeds so comprehensively sown.
“Power is in tearing human minds to pieces and putting them together again in new shapes of your own choosing.” ~ George Orwell
On the other hand, since Elaine and I live in a totally voice-controlled home with Amazon devices, our view of “privacy” is evolving. We have certain things we go “out in the woods” to talk about, but mainly, if a “man is innocent, should he fear?”
The correct answer is yes – since the goals and motives of the listeners is never clear. But we view having the intercom, entertainment, and voice control of this a decent trade-off. At 70 something, recording our “personal moments” is something of a compliment, but no, we don’t have any video devices. (No video devices because Elaine’s pole dancing is something we wish to maintain copyright control over in the event we eventually decide to market a DVD of it…)
OK, the “correct answer” for the young? Any use of my voice, thoughts, likenesses, tastes, personal history, patterns of consumption, etc. must be compensated-for and provision of free listening to switch devices is NOT adequate compensation.
Except when you get old – WGAS?
Der Daily Data
Always something, isn’t it?
Next slide, please?
Which is scaring the poor bears. The world’s not ending. Futures are almost even at click-time. ( Or, it could be my crystal clear thinking is doing it…)
So: What Else Matters?
Yeah, I know…nattering-on about a future to aim for isn’t always possible if you’re stuck in the “Quicksand of Now.”
While we await next weeks release of the monthly S&P/Case-Shiller Housing data, here’s a report that sounds to us suspiciously like “whistling in the graveyard:” “Historical Data Shows House Prices Resilient to Rising Rates, According to First American Real House Price Index.”
Context-centricism: As “AP Explains: Nissan’s ex-chair spending Christmas in custody” UrbanSurvival Explains: Christmas ain’t no biggie in Japan. Japan is 1% Christian, but 63 percent party...so we conclude they’re pretty good at the partying part…)
Of particular interest to our Houston-area ex Pan-Am crew: “Most bizarre airline incidents of 2018.”
You’re Geeing Old When…
Don’t know why, but I was thinking just this morning how you can guess a person’s age pretty easily with one simple question:
If you’re a Millennial “PCP? Angel Dust, old dude.”:
If you’re a grown-up? “PCP? That’s my “Primary Care Physician” for Medicare, young man…”
And there is the generation gap in a nutshell, for you. That plus spelling, punctuation, manners, shined shoes, fashion, sense of entitlement, do-vers, an inclination to work, and…..(Whew! Longer list than I thought…it goes Energizer on me…)
Tomorrow, a discussion of The 5G Monkeys on Urban and no telling on Peoplenomics… Our schedule will be “mostly normal” (or what passes for that) except no column Christmas. Do be “present” all other days, though… I promise: Shorter columns in 2019!