Unexpected Inflection Points
High inflection points in life, like high inflection points in the stock market, are both humbling and instructive. One moment you think you’ve got the world by the tail. The next moment the rug’s yanked right out from under you.
The yanked rug… [PT]
The Recline and Flail of Western Civilization and Other 2019 Predictions
“I think it’s a tremendous opportunity to buy. Really a great opportunity to buy.” – President Donald Trump, Christmas Day 2018
Darts in a Blizzard
Today, as we prepare to close out the old, we offer a vast array of tidings. We bring words of doom and despair. We bring words of contemplation and reflection. And we also bring words of hope and sunshine.
Famous stock market investment adviser Field Marshal D. Trump [PT]
Offering Peace and Joy
Heading into the final weekend before Christmas we’ll take a brief hiatus from the economy and markets. We do so, however, with intent and purpose. Our principal objective is to offer peace and joy as you go about your merry way.
Unfortunately, Santa isn’t coming this year. Right after losing his behind in cryptos, he went all in with everything he had left on FANG stocks, margined up to his eyebrows. He trusted his well-worn ability to deliver the traditional “Santa Claus rally”, but was waylaid by the dollar-dissolving vampire bat Ptenochirus Iagori Powelli hiding in a snowdrift. He needs some time off to forget. [PT]
Stars in the Night Sky
The U.S. stock market’s recent zigs and zags have provoked much squawking and screeching. Wall Street pros, private money managers, and Millennial index fund enthusiasts all find themselves on the wrong side of the market’s swift movements. Even the best and brightest can’t escape President Trump’s tweet precipitated short squeezes.
The Donald mercilessly hits the shorts with a well-timed tweet. But as it turns out, this market is in a really bad mood at the moment. [PT]
Mud Volcanoes
There are numerous explanations for just what in the heck is going on with the economy. Some are good. Many are bad. Today we’ll do our part to bring clarity to disorder…
Two data series it is worth paying attention to at the moment: the unemployment rate (U3) and initial claims. As the chart at the top shows, when the former makes a low it is time to worry about the economy. Low points in the U3 UE rate slightly lead the beginning of recessions. Claims on the other hand are near coincident indicators of the stock market, this is to say, lows in initial claims tend to happen within a time period of four to six weeks surrounding major stock market peaks (in most cases they lead slightly, but small lags have occasionally occurred as well). Note: neither indicator confirms an imminent turning point as of yet – initial claims would e.g. have to rise to around 300k in order to do so. The same is true of other major recession indicators, their most recent readings do not yet confirm that the business cycle is about to turn down. However, there is a lot of circumstantial evidence that indicates such a downturn may soon be confirmed, including recent market moves (i.e., deteriorating stock prices and rising credit spreads). [PT]
How to Blow $9 Billion
The life cycle of capital follows a wide-ranging succession. It is imagined, produced, consumed, and destroyed. How exactly this all takes place involves varying and infinite undulations.
The Stroh Brewery in Detroit. The company provided an example of how wealth that has been accumulated over generations can be completely destroyed due to just a handful of really bad decisions. [PT]
Political Correctness Indoctrination
[ed note: we are posting this belatedly as it was originally supposed to be published on Thanksgiving Day. Unfortunately your editor was out of commission… but MN Gordon’s article is still worth reading. – PT]
Ordinary ideals of Americana range as far and wide as the North American continent. The valued conviction of one American vastly differs from that of another. For example, someone from the Mid-Atlantic may have little connection with someone from the Midwest. Their connection with Cascadia may be even less.
Socrates thinking at students and tourists in front of the Academy of Athens [PT]
Investment Grade Junk
All is now bustle and hubbub in the late months of the year. This goes for the stock market too. If you recall, on September 22nd the S&P 500 hit an all-time high of 2,940. This was nearly 100 points above the prior high of 2,847, which was notched on January 26th. For a brief moment, it appeared the stock market had resumed its near decade long upward trend.
We actually did not believe in the validity of the September breakout attempt: the extremely large divergence between the broad market and the narrow big cap leadership was one of many signs that an internal breakdown in the stock market was well underway. It is probably legitimate to refer to the January 2018 high as the “orthodox” stock market peak – the point at which most stocks topped out. [PT]
Remaining Focused
A rousing display of diversions this week assured the American populace was looking every which way but right under its collective nose. Midterm elections. White House spats with purveyors of fake news. The forced resignation of Attorney General Sessions…
Old drug warrior (otherwise recused) on his way home to Alabama…
Schemes and Shams
Man’s willful determination to resist the natural order are in vain. Still, he pushes onward, always grasping for the big breakthrough. The allure of something for nothing is too enticing to pass up.
From the “displays of disbelief, revealing touching old-fashioned notions” file… [PT]
Going All In
All people, of both good and questionable character, share a singular talent. They excel at taking something that’s tolerable in moderation, and then pushing it to the outer limits of absurdity. Why live with restraint when you can get radical?
A fairly famous stretch of LA riverbed graffiti… [PT]
Photo credit: saber
End of the Road
The confluence of factors that influence market prices are vast and variable. One moment patterns and relationships are so pronounced you can set a cornerstone by them. The next moment they vanish like smoke in the wind. One thing that makes trading stocks so confounding is that the buy and sell points appear so obvious in hindsight. When examining a stock’s price chart over a multi-year duration the wave movements appear to be almost predictable.
The fascinating obviousness of hindsight – it is now perfectly clear when one should have bought AMZN. Unfortunately it wasn’t quite as clear in real time. [PT]
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Workers of the World, Unite!
A Jolly Little War The dawn of war is a time of simple clarity and purpose. Good guys vs. bad guys. Cowboys vs. Indians. Confederates vs. Yankees. Coppers vs. robbers. It’s a time when lines are drawn, songs are sung, and drums are beaten with gaiety and confidence. A jolly little trade war – easy to win, according to the CiC [PT] Indeed, calls for ‘a jolly little war’ are always greeted with merriment and optimism. This also goes for the...
Austrian Theory and Investment
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