With the exception of the Jobs Report, this is turning into a “Red Friday” early on.
A number of BTFD coiners were screaming overnight how people should be “buying the freakin dips” on Bitcoin when they were in the $7,540 range. Back up to the $8,400 level on the bounce, but as a reader of this site for a while, you’ll either remember our warning about trend channels turned down from a few weeks back (January 18th, remember?) or more recently our Thursday report. Scroll down to “Bitcoin Shenanigans” here, if you missed it.
This aspect of investing – that technical analysis is useful and often predictive in nature – is something a lot of coiners have been talking themselves into denying. But, as we will discuss in Peoplenomics tomorrow, while technical analysis isn’t perfect, it’s better than trading blind based on street-corner hype.
Although we have never traded a crypto – having called it a scam from the get-go – we are not taking any joy in the losses of people who have been suckered (for now) into “buy the dips.” Sorry for your losses, and all that. You were warned.
The good news is that we expect Bitcoin may rise from the dead down the road, just not now; the charts are telling us it’s on life support.
Stocks are another area where technical analysis and running parallels to past bubbles LIKE 1929 is marvelously useful. While I never make financial recommendations here or on our Peoplenomics subscriber side, I do discuss my personal thoughts on the market and what my own trading plans are.
The current decline is something I’ve seen coming. My last trade was out of a triple-levered ETF and into cash (and this is the trading slip timestamp) 01/31/18 | 09:30 AM ET.
Not familiar looking? That was right at the manic bounce high at Wednesday morning’s open. Here we are two mornings later and we look to open down a little more than 200 points.
Collapses of markets are interesting to watch. They fall like dominos. First, there’s a rollover in the tick-chart. Then the 3 and 5-minute charts follow. Then the daily goes. After that? The weekly.
We’re seldom influenced in our thinking much by the Dow Jones, although that’s a number showing up in a lot of news media reports. That’s only 30-stock and in our odd way of looking at markets as a huge aggregated floating craps game, it’s the broader market that matters.
Thus, since the S&P closed last Friday at 2,872.87 (source: Yahoo Finance, here), we can look at the close on Thursday (2,821.98) and then read the futures (FinViz, here) and see they will likely fall 20-something points at the open this morning.
As explained, when I saw where things might go, I booked my slice and rolled out.
The good news is that this could just be the start of a big, bigger, and maybe HUGE decline in the markets. The kind that take years to unwind. That sport is called Long Wave Economics and we’ve been writing about it here since 1997. Along the way, we’ve done some good forecasting pieces, like “Death via Dot Coms” which we provided to readers in September 1999. It explained now in the longer waves that drive cyclical economics, the Internet bubble would burst and there’d be one hell of a mess.
There’s a case to be made that the Deep State knew that it was bound to happen. And, in conspiracy circles, there are those who still think it more than coincidental that as soon as Wall Street was about to have it’s pants dropped in front of the public, we suddenly spun on a dime. The Twin Towers attack was too perfect, the response too great, and the “pull it” from Building 7 remains to this day a hint at controlled demolition.
That said, the “attack” generated instant blame so the Wall Streeters wouldn’t be held to account for the between $5 and $8-trillion in losses booked when the stock market fell over as the DotCom bubble burst.
And warring worked for a while. 9/11 gave the military an open checkbook and a road into the Middle East hot spots.
In time, though, even the massive hiring by the newly emergent Security State wasn’t enough. So the era of the “no-doc loan” was born. I hold people like Alan Greenspan to account for that. You knew something rotten lay ahead when St. Greenspan buried the weekly report of M3 Money stocks report from public view.
The reason? Systematically over-supplying money was on the horizon as the only way to prevent an American Meltdown. So, under Greenspan (and sucessors) the game of “Modern Monetary Theory” [MMT] was born.
I wrote of this in the 2000-2003 period. Suggesting that the Fed’s only course as the long wave bottom arrived, would be to step on the gas *at the printing press* so hard that even though massive deflation was and is still going on that the slosh of money would prevent people from noticing.
Robert Mugabe did a similar thing in Zimbabwe, you’ll recall. But, absent complete mastery of the economic system enjoyed by our Fed, Mugabe ended up with a country of “trillionaires.” Think of the analog in driving a car as standing on the brakes (deflation) while stomping on the gas like crazy (printing money).
In the auto scenario, you’re not going anywhere, but there will be squealing tires and a boatload of sounds and excitement – which is what the US economy has been for the past decade.
The good news (going back to Greenspan’s end of term in late 2005) is that the Banksters had a “good bench” and Ben Bernanke took office in 2006 and did what needed to be done.
I doubt many people have taken the time – even now – to read Bernanke’s excellent study of the Great Depression in “Essays on the Great Depression.”
There is a reason that I burned out the garden last weekend, why my fascination with weed-reduced gardening, and all the prepping we’ve done is still front-burner around here: We see where this could go, while most people still don’t. Denial runs deep.
If I can offer one insight into long wave Depressions, for you: The US has been headed for one ever since bonds peaked in 1980. We have been papering over our woes by just making up money (stepping on the gas, eh?) and to some extent is works. (Jobs data in a second.)
But the main feature of Depressions is the destruction of debt. We got a small taste of that during the 2008-2010 house bubble collapse. For a lot of people, it was really good news, painful though it was: Their debt was written down.
The BAD NEWS – that doesn’t get equal play – is that for every dollar of debt destroyed, there was also the simultaneous destruction of savings. It is, understand, because banks loan and then reloan money. At some level, no matter how levered (or geared if you’re European) the economic system is, most debt is funded by savings. Personal, pensions, whatever, but all savings.
We have only to look at data like this week’s H.6 Money Stocks report from the Fed and when we look at the reconstructed M3 from John Williams of ShadowStats, we observe that the economy tends to get dicey when ever M3 rises above M2. This seems to be when standing aside or being in cash makes some sense.
Here it is:
“Total nonfarm payroll employment increased by 200,000 in January, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing.
In January, the unemployment rate was 4.1 percent for the fourth consecutive month. The number of unemployed persons, at 6.7 million, changed little over the month.”
And there goes a Trump tout as…
“Among the major worker groups, the unemployment rate for Blacks increased to 7.7 percent in January, and the rate for Whites edged down to 3.5 percent. The jobless rates for adult men (3.9 percent), adult women (3.6 percent), teenagers (13.9 percent), Asians (3.0 percent), and Hispanics (5.0 percent) showed little change.”
Labor participation rate stable at 62.7%. Long term unemployment up a 10th to 8.2%. And the CES birth death model dropped 62-thousand jobs for the month while the annual correction of data in January whacked 3-million jobs that had been estimated into existence in 2017 reports.
Comey: Foot in Mouth?
As we await the release of #releasethememo which has the Letfy’s all riled-up, we were astounded to read what a poor student of history James Comey (former FBI boss) seems to be.
Overnight he was tweeting “All should appreciate the FBI speaking up. I wish more of our leaders would. But take heart: American history shows that, in the long run, weasels and liars never hold the field, so long as good people stand up. Not a lot of schools or streets named for Joe McCarthy.”
Joe? Well, hold the phone there, Jim. Like the handling of the Clinton skate party, looks to us like Comey has botched Joe McCarthy, too.
While I agree that McCarthy was something of a whack job, He was not 100 percent wrong. Far from it. Go read the Nicholas von Hoffman Washington Post piece from 2014:
“The materials that first made their way to the surface in the early 1990s — records from Moscow’s Russian Center for the Preservation and Study of Documents of Recent History — provided proof past peradventure that the Communist Party of the United States was subsidized by the Soviet government and used as a base for extensive espionage….”
Did McCarthy go overboard? Sure! But, here’s what a Newsday piece reported in 2014:
“Based on documents made available after the collapse of the Soviet Union, U.S. Library of Congress historian John Earl Haynes concluded that of the 159 people identified as subversives on lists cited by McCarthy, nine had almost definitely aided in Soviet espionage (and many others could be considered security risks for various reasons).
McCarthy was partly wrong BUT largely right. Because despite protests and in-school brainwashing by the left, there was a genuine communist conspirary in play, right here in the USA.
The left denies it to this day, and invokes “Crazy Joe” McCarthy as a slur. To repeat, though: the historical data is clear. Remember who said “Moderation in defence of Liberty is no virtue“?
We modestly propose that Comey stick to his skill set and leave history alone. If he needs something to do, rather than bullshit tweets, how about explaining to those of us in flyover country how his agency was writing the Clinton exoneration before Clinton was even interviewed? And why wasn’t that on the record, under oath, and recorded, transcripts and such?
Because that’s surely what his underlings would have demanded that in a fair and impartial investigation into similar activities if alleged against any other citizen of these United States.
God save us from Washington’s self-righteous of both parties. And while not many streets are named after McCarthy, I’m thinking a similar number will be named after Comey.
Life at the MMI
That’s the Man-Machine-Interface if you haven’t written a robotics paper lately. On point: How to control a machine using your mind.
North Korea Smolders
From our .mil contributor (warhammer):
To many of Ure readers, former Secretary of State Henry Kissinger is an artifact of history, an administrative associate of the forever evil Richard Nixon. But Henry has some timely and wise words (here) regarding U.S. action against the Norks and Rocket Man.
The man who once said “It is not a matter of what is true that counts, but a matter of what is perceived to be true” is still a mentally sharp as a razor, arguably the best diplomatic realist on the face of the planet.
Preemption against the Norks carries a deep set of problems, the main one being the risk of igniting a Pacific or World War. Chinese Lieutenant General In-Bum Chun (yes, his real translated name) states that Kim Jong Un is not afraid of making China angry over its nuclear program because “the Chinese know that it’s better to have a nuclear North Korea than Americans at their borders.”
BOTTOM LINE: If the U.S. or the UN alliance it leads in S. Korea takes preemptive action against N. Korea, one should expect China to come to the military aid of its problematic communist neighbor, just as it did during the Korean war. The exception would be if the Norks attack S. Korea, Japan, Guam or Alaska first. Then China’s enthusiastic support for their southern neighbor would likely end, but the Dragon state still would disapprove of an American ally at their southern border, complicating any post-strike governmental arrangement.
All of this is interesting talk as the Olympics are about to begin in S. Korea. Also, considering General In-Bum Chun’s comments, America must proceed extremely cautiously with its tenuous Taiwan relationship. China considers Taiwan a wayward province. Any U.S. military aid or presence in or around Taiwan would be seen as a threat by the Chinese leadership in the same way that an attack on the Norks would be viewed with a jaundiced eye.
Reminds me of an old Will Rogers quote: “Diplomacy is the art of saying ‘nice doggie’ until you can find a rock.”
Speaking of Animals
Mostly cloudy in Punxatawney, PA when we checked. With that in mind, go study Groundhog Day festivities and a look at Punxsutawney Phil’s accuracy.
Care to guess which movie we will watch again, and again, and again, and again, and….
Here at the ranch, Zeus the Cat got up this morning to look for his shadow. Being a cat, he is stupid and can’t tell time. Thus, he failed to realize it was the middle of the night.
Nevertheless, when Zeus doesn’t see his shadow, we go out on a limb and predict 52-more weeks of utter insanity. Our accuracy rate is right at 100%.