Turn-down Thursday or Friday?

Finance is part statistics, part floating craps game, part mafiosa, part leap of faith and so on.  When I wrap all of these things up into a spreadsheet (and call ity Golem II, it suggests that the market going forward may work out something like this…

As always, this is not financial advice

What we see, however, is for another couple of months to the downside being possible into as late as spring 2019.  Today, in our modeling – Monday at the latest – we should see something in the way of “surprising news” that will receive “the blame” when the markets go down.  The S&P turning down before the Friday close would be least surprising.  Early futures were +10…but the Dow has been up and down.  And back up./

A few months back, however, we took notice of something described for our Peoplenomics.com subscribers called “heartbeat of the market” and it shows that there may be a semi-regular trading cycle (regimen) being played out in world markets right now.

Nothing would surprise us less to for future financial historians to reveal that a new “global AI trading system” went live around the first of August this year.  In our Heartbeat of the Market work, we could argue that the first two-months of operation of the global financial AI were devoted to “learning” exercises.    Then, concurrent with the nominal market highs around October 3 in our Aggregate work, the new system went on line and started working us down. In a regular way.

Without giving it all away, there is a kind of symmetry to how this postulated AI at work in financial markets would operate.  And based on this (wildly delusional, incredibly speculative, and obvious whack-job) line of thinking, we anticipate the S&P 500 could trade down to 2,473.98 and (again this is whack-job forecasting)  by the end of next week.

Which only leaves us with one major ponder of the morning to deal with.

IF (and this a dart toss) this wild speculation about market AI is right, the S&P action today MAY gives us an idea as to timing.

Here’s why…no, on second thought we’ll save that for subscribers.  Let’s just watch and see if the S&P has headed lower by the close today or Monday at the latest.  If we do find ourselves down 100 points (or more) from the present S&P levels by a week from tomorrow.  W’ed press the Scrooge McDuck suit and be dancing in the streets.

Otherwise, this will land where a lot of our wild financial speculations have in the past – on the scrap heap but with some good thinking that might be deployed in other research.

We shall see.  But, it is for sure the kind of thing that results in Brain on Fire and getting up at 3 AM to start filling in spreadsheets on global markets to see how this (hypothetical) AI would play things.  What makes AI so interesting is that while it’s good and fast – and can infer – it is also pattern-bound and that’s what makes financial detective work so enjoyable.

Bonds go up a bit today, stocks notice, bonds go up more, Fed raises, down go stocks… Fed meeting results next Wednesday.

I sure wish the highly regarded professor of forensic economics would drop me a line – I could lay it all out for him and he could turn it into a class project.  Might be fun.

OK, slogging back to Reality (or what passes for it):

Import Costs

Are just out…repeat after me (in hushed tones)  DEFLATION:

U.S. import prices declined 1.6 percent in November, the U.S. Bureau of Labor Statistics reported today, following a 0.5-percent rise the previous month. The November drop was primarily led by lower fuel prices. The price index for U.S. exports fell 0.9 percent in November, after advancing 0.5 percent in October.

Imports Prices for U.S. imports decreased 1.6 percent in November, the largest monthly decline since a 1.8-percent drop in August 2015. Despite the November drop, import prices increased 0.7 percent over the past 12 months, the smallest over-the-year advance since the index increased 0.2 percent from November 2015 to November 2016.

Fuel Imports: Import fuel prices decreased 11.0 percent in November following a 3.2-percent rise the previous month. The November drop was the largest 1-month decline since the index fell 15.6 percent in January 2016. A 12.1-percent decrease in petroleum prices led the November decline in fuel prices and was the largest monthly drop since petroleum prices fell 17.2 percent in January 2016. The November decline in petroleum prices more than offset a 12.8-percent advance in natural gas prices that followed a 22.3-percent increase for that index in October. Despite the decrease in November, fuel prices rose 4.6 percent over the past year. The price index for petroleum increased 4.4 percent for the year ended in November, and natural
gas prices advanced 11.6 percent over the same period.

All Imports Excluding Fuel: Prices for nonfuel imports fell 0.3 percent in November, after ticking up 0.1 percent in October. Lower foods, feeds, and beverages prices were the largest factor for the November
decline in nonfuel prices, although prices for nonfuel industrial supplies and materials and capital goods also decreased. The price index for nonfuel imports increased 0.3 percent over the past 12 months, driven by higher prices for nonfuel industrial supplies and materials; consumer goods; and automotive vehicles.

Nonfuel Industrial Supplies and Materials: Nonfuel industrial supplies and materials prices fell 0.4 percent in November, after recording no change the previous month. The decline was led by a 0.7-percent drop in unfinished metals prices and a 1.4-percent drop in prices for selected building materials.”

Tomorrow, the data flows will be more interesting as the Fed’s Industrial Capacity and Utilization figures come out.  And just before those we’ll have Retail Sales.  This one will be gobs and oodles of fun to watch since the Trumpster has tied his name to the markets so tightly.  We see the market decline as a nifty way for the PTB to attempt to leave DJT holding the bag and at the same time pocket a lot of money from the Peeps.

Retirement Insanity

I was talking to my buddy out in Arizona yesterday and was shocked to here that in their upscale retirement community most homes sold to seniors have a mortgage on ’em.  About 70 percent of them.  The money that could have paid off the homes?  In highly leveraged stock funds.  I shuddered at the report.

Can you imagine?  Work a whole lifetime and STILL have a monthly house note to worry about? OMG, we’re becoming as stupid as the kids.

This conversation led into an elongated discourse asking “Why do the Millennials have such a sense of [financial] entitlement?”  Sadly, the answer (and fault) lies with us oldsters and grays because we didn’t make them work for things when they were young.  Which is how they got to be a whole generation only loosely attached to economic reality.

The whole world’s now in “gimme mode.”  No chance of taxes coming down or deficits being reduced until that spending fever and excess consumption disease – the primary symptom of which is living above your real income – breaks.  Until then?  The American Middle needs to check into rehab.  Need to turn off political audio and sample some financial podcasts.

Market declines (and Greater Depressions) eventually iron out these social shortcomings of our failed parenthoods, though.  Sorry for the pain, but if we’d been more savings and ownership-oriented when younger – and IF we made the kids work their asses off like we did (or the grand parents) then it would be a saner world today.

No point crying over spilt sativa, though, huh?  On to the morning collection of?

Sanity Checks

We have a few cheerleaders for The Republik of Greater Kalifornia who read the site and offer intelligent comments (despite their residency).  To them we offer two ideas: 1) Apple to build new $1 billion campus in Austin.  2)  And oh, yeah, we moved to Texas 15-years before ’em.  We label this thought leading not following.  Go to where the deals are and be there first.

Remember the Peoplenomics discussion about Social Credit versus Credit Scores?  Here’s a data point: China’s auto sales in 2019 to roughly match 2018: industry association.

Fleecing the peeps is a growth business.  You can’t hide from Britain’s ‘Long Ranger’ traffic camera…but we can unplug them…. (ahem…)  Does get to an interesting question:  Is it illegal to unplug an entrapment machine?

The political fog hasn’t lifted.  Tucker Carlson: Democrats say border walls are immoral, don’t work. What about Israel?.  to which, we’d suggest “Ask the Palestinians?”  Still, with a black tar death in our (extended) family that came in through Obama’s “open borders” we were appalled at the ass-covering and “take it behind closed doors” crap spewed by the Peloser this week.  Death in a family due to coyotes and illegals does modify your thinking on “free-for-all” border BS.

Meantime, we see Obama’s ex COS – who was pushing open borders back when NOW has a solution to their policy disaster which has come home to roost.  Chicago Mayor Rahm Emanuel: Legalize pot, open casino to pay down city’s $28B pension debt.  Dandy. Toss in legalized sex workers and swindler licenses while we’re at it?

Reminds me of the old political joke:  A “liberal” is someone who’s never been burglarized or spent a night in jail.  Experience is like the atomic core moderator of Life.  If you don’t have experiences on both sides of an issue – and had to pick one or the other, please just STFU until you can offer experience-based views.  At least Rahm is trying….disfortunately, how-some-ever, random policy application misses the point of holistic governance.

That’s the difference between mee-mee’ing and informed discussion.  Maybe Rahm’s mayoral stretch is his mea culpa….fix the blowback from past policy errors?  Where were we?  Ahhh,…

Goosing someone’s balance sheet, perhaps? Japan Post to invest $2.6 billion in U.S. insurer Aflac.

More foreign investment notes 0- this from our Deutschland uber alles files: Top German court rules Uber limousine service illegal.

Whenever I read a story like “UN-sponsored Yemen talks wrap up in Sweden” I ask myself:  “Why can’t they all save money on travel and do their talks nearer home?”   Spend, spend, spend.  If I were Yemeni I’d be pissed.  Use the money at home, jerks.  Sweden’s got a solid economy and this kind of behavior doesn’t support the local economy and that’s how crooked politics works.  Following the logic?.

Time to count the chickens before they hatch and scramble three…

Moron the ‘morrow…

35 thoughts on “Turn-down Thursday or Friday?”

  1. Markets are ultimately all about psychology-how the players are feeling. As ADHD, OCD, and short attention spans become more prevalent, and people with those conditions write the trading algorithms, I’m afraid the markets will only get more erratic.

    73s

  2. No wonder the seniors have so many mortgages. Why not? Reverse mortgages allow them to have their cake and eat it too. Voila! No messy inheritances to worry about — as long as they don’t outlive their equity.

      • Mortgage exemption and homestead credit, and it’s impossible to forget to pay the taxes and insurance. If they’re doing it right, the cost is near-zero and the benefit should be several thousand per year, in the (overpriced and overpopulated) Valley. That said, leveraging residential equity into the Stock (or any other) Market is riding on the cusp of insanity, especially for a retiree. [Were I] in their place, I’d be buying local utilities or AA (or better) munis. Yeah, they’d probably not quite keep up with inflation, but IMO retirees should be geared toward preservation, not 1929-esque speculation…

      • As usual, a great point Ray. However, some of the homes in this area are in that over the mortgage cap zone – and those sales may falter..impacting upper middle and lower upper digs

  3. I see the market in a short term uptrend based on crossovers of the 10 & 20 day MA’s and the Stochastics, plus location in the Bollinger bands.

    • Ask me around the close…a few notes since you’re a PN subscriber further along that AI line on Saturday morning… watch the close…should be battle royale!

      I’m not thinking of this as a rally – more like a distribution to weak hands by an all-knowing AI…but again, time will all

      • We have about 2-hours to the release of the latest Federal budget update. Some news item gets blamed whenever the market moves – so will the budget be “it?”

  4. DJT as POTUS might have a better go with the media if he put on a “useless contraption!” on his nose that may make him look erudite and elitist (like a certain senator). Perhaps donning a dress, or color his hair rainbow, anything that that fits into the New America. And please quitt talking about a useless wall, because there are more efficient methods to do this particular job, IMHO.

    • Exactly..go for the companies and people that hire them. Or rent to them. Don’t allow them benefits their illegal imagrants and not a us citizen.
      Just saying a person that makes in the upper six figure range will think twice if he could loose it all.
      My old boss would tell us he wished he could take a bus down to hire them..it would be cheaper than hiring a us citizen and he would get a larger bonus..
      No free college.. No free housing and medical..a child born here well they can be a citizen but has to be split from its parents and parents sent back..no benefits till it or its parents work and pay taxes for the customary quafter a..

  5. I don’t need to experience everything to have a valid opinion. Smart people can learn from the mistakes, or successes of others. As a matter of fact. I’d rather not experience the other side of most issues. I’ll live longer that way, keep my teeth, have money, stay married.

    • Unfortunately Kim…all of us are just a one two punch from living on the other side with the luxuries we all take for granted gone..
      I have a spare bedroom.. Take in people from time to time..had one amazing gent didn’t have the abilities to take advantage of opportunities and was beat down.. Lived in a dumpster.. Right now a person several pieces of paper to his name extremely intelligent at one time he was quite the man..engineering some pretty amazing things..he was dealt a series of one two punches he lost his upper six figure income position his home and because he doesn’t fit in that success image is even shunned by those that should be standing beside him.. It can hit any of us at any time..and none of it is because he did something wrong.. Flukes of nature and opportunities

  6. God help us !! How people can support this bunch of Fascist Federales is mind boggling ! We enter a phase that will require another “Great Generation” to bail us out.

  7. The notorious, world renowned and usually deadly – 50DMA vs. 200DMA ‘deathcross’ has occurred in the SPY. There is a very good reason why a 50 DMA crossing over and down thru the 200 DMA can be harbinger of “the fat man in the bathtub..with the blues..I hear ya moan”
    FEATS don’t fail me now!
    or perhaps Elvis – Blue Christmas…’I’ll have a bluuuuueee Christmas without you (profits), I’ll be so blue just thinking about you (bullmarket 2018)
    Might have to change moniker to ‘crash bandicoot’

  8. You did…“Why do the Millennials have such a sense of [financial] entitlement?” Sadly, the answer (and fault) lies with us oldsters and grays because we didn’t make them work for things when they were young.”

    I think that statement is a generalization. Most of the millenials I know personally…since they are the bulk of the Technocracy our here, is that while they didn’t mow the yard, paint the deck clean the gutters and do crazy things my grandpa made me do like dig ditches in his back yard for no reason…other than to keep me busy… Todays millennials worked hard in a much more productive way…IN SCHOOL…much, much harder in school than I did.

    I wish I had their work ethic when it comes To their studies. They aren’t making $300K a year for being slackers…These young genius’s graduated with honors from Harvard, Stanford, Cal, CalTech, and more. Oh yeah, they look like slackers…George, go on my FB page and look at what one of my agents posted. The couple that just bought a $1.75 million home looks like a couple grunge rockers, but they both are typical, successful Silicon Valley engineers making boatloads of money.

    Their average work day is 12 hours minimum. And once they get home, they are working more in some cases…wrapping up,the day or planning for tomorrow. Do you know how many meetings or FaceTime calls I make after 9;00pm to work with them? A lot. And that’s OK. I respect their schedules and doing so helps make me a lot more money.

    My own kids fall into that category, except they were exceptional collegiate athletes on scholarships that also got excellent grades and great jobs after they graduated. That’s a dedication most of my generation did not have in my opinion.

    Most millennials I know and it’s in the thousands, are driven and focused. While they may seem entitled…by the very definition, they are the opposite. They work hard and are rewarded accordingly. Entitled people want hand-outs for no work. Millenials just expect good pay for hard play. Maybe it’s a regional thing, but you will find that same talent in New York, DC, Chicago, Seattle, Austin and L.A.

    And about Apple building a huge campus in Austin. That is a smart thing for them to do. Most huge companies should have a nationwide footprint. That dates back to mid last century when Detroit built satellite factories in dozens of states. Amazon is doing that now with HQ 2 and 2.5. Banks and large retailers have East and west coast HQ’s. Creating local jobs results in local pride and loyalty to the brand.

    • Just one question to Mark: How are we all going to engage with the multitude of lower I.Q citizen, who cannot hope to land a 300k job, no matter how hard they may try to work. Don’t you see a large problem with the future of your rosy outlook?

      I’m glad, though, that you laid off DJT ;-). You may not presently realize that he, DJT is one of the few in power standing for individualism vs. that kind of conformity otherwise known as democracy (which it is NOT).

      • exactly Bruno… I use to belong to a group that thought the vast majority of the people were drooling idiots.. they filled themselves up with all the horse puckies and would frustrate the shotz out of me.. and I quit.. the reason was in my mind they were the drooling idiots that didn’t have a clue.. it isn’t the fact that you can spot a logical pattern in an abstract but what opportunities that are offered to you and your ability to take advantage of them.
        Each person with their own life experiences is a genius in their own way and with their own life.. their experience..as an example an engineer may have the book learning but rarely does he have the experience or skill to tool into reality what he can imagine.
        A person that lives in a dumpster has the skill to survive in a world where there are no benefits. I think that is what I liked about the failed show thirty days.. the sad part was those participating in that show didn’t see or learn the reality of it..

      • Bruno…You are right about one thing Trump does stand for individualism…as long as that the only individual in the equation is him.

    • Hmmm…

      Successful millenials???? ..

      Granted people judge people by a sheet of paper that basically says they had the finances and the tenacity to go to school for x years.

      But in reality it’s opportunity and being offered the opportunities that give a few the ability to excel and be the few that outpace the others.

      For every successful millineal that’s outpaced the average there’s a hundred or more that haven’t had those opportunities available to them.
      Many spend a lifetime paying back student loans..
      That’s also why you’ll find so many working multiple jobs I’ve worked side by side with graduates from many of the top ten colleges and even in your neck of the woods there are thousands of top tier school graduates that are making wages that aren’t heard of in other areas living living in vans and shelters.

      That is the real reason why there’s so many millenials still paying mortgages and many that want their children to have the opportunities that wasn’t ever offered to them that go out on a limb and finance their child’s education..

      I think that’s how the old saying came to popularity..

      “Its not what you know but who you know”

      Just say in.. I think your wearing rose colored glasses there and have just overlooked the obvious.. Not everyone with a great education is at the top of the heap..when playing king of the mountain there’s many at the bottom.

    • Most everyone knows I find someone that falls through the cracks.. That is in a position of desperation and make sure they have a Christmas miracle.. Its my gift to me as much as it is for them..
      The one that I am doing that for this year is a Millennial that has been a downsized professional that had an upper level income. Filled with debt from school graduated from one of the colleges you listed with honors. In an age bracket that is basically unemployable. Has a mortgage no insurance and a wife suffering bone cancer.
      They don’t qualify for any assistance because of past wages.. And.. No opportunities being offered..
      His kids moved in and work as clerks to help with the expenses even though they to have college degrees from top ten colleges..

  9. Its a shame what happened to Gen Flynn, not whether he was right or wrong but how the FBI did it. Remember what they did can also happen to you at your local cop shop. Dont talk to law enforcement without an attorney present.

  10. Just got news of the coroner’s report for good friend Tim,who died in October.Fentanyl and morphine in his system.What was once just a story in the paper has now really hit home.I just want to go back to my cave and get the red dust off my shoes.

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