by John Galt August 4, 2019 19:00 ET
Ugh, not this garbage once again.
The truth is that Bill Maher sadly may get his wish only because President Trump is not playing this game of political-economy very well. One can not treat this as a one on one negotiation nor an “Art of the Deal” type winner take all scenario.
The economy is made up of billions of individuals who make billions of decisions along with now, computer algorithms which make billions of decisions per second.
First however, let me be fair to President Trump. I consistently said that the economic data under Presidents Clinton, George W. Bush, and Obama was a corrupted series of bureaucratic “feel good” information sabotaged by political hacks who wanted to make their man look good. I shall remain consistent.
This fact has not changed.
While the data coming from the various government departments may look good, bad, or indifferent to the average American, overall a lot of crap is being painted over with Sherwin Williams household latex cheap garbage white to keep this battleship from taking on the appearance of sinking.
Economically the numbers are strong; on Main Street the deterioration is weak and accelerating to the down side despite numerous surveys claiming that out nation is going to never experience a downturn in the business cycle ever again.
David Rosenberg of Gluskin Sheff + Associates conducted this interview with Bloomberg-BNN of Canada in July. Is he correct? I’m not going to peg it to this time, but my money is on the BEA officially declaring a recession, as they did in 2009, starting in Q4 probably December 2019.
What will cause this crash?
First and foremost, as I hinted in April with a deliberately vague post, the truth would scare many beyond belief. So here it is: The super or uber-rich have quit spending money on frivolous or luxury items. Oh sure, the mega-yacht they commissioned in 2017 for delivery now will happen, the private jet ordered in 2017 also. But the real spending, investing in stocks, companies, or venture capital is not happening. I’ve seen it first hand and to be honest I’m terrified as with this withdrawal of liquidity from the economy, not by all, but by the experienced, it means that a crash is not only imminent but probable.
Add in this little gem from Friday’s news flow buried under Trumpomania (via Investors Business Daily):
From the article linked above is this gem also:
Buffett was a net seller of stocks in the quarter and even slowed down purchases of Berkshire’s own shares. The company bought back about $400 million, down from $1.7 billion in the first three months of the year. Berkshire’s board changed its buyback policy last year as another way to deploy the mammoth cash pile.
Excuse me? Mr. “I’ve never met a #FakeNewsCNBC recommendation I never liked” was a net seller in what the pump and dump phonies have been calling the greatest bull market in history?
That should be a red flag, but for the Trump imbibed and used car salesmen on FBNCNBCBBG, no, it’s time to buy-buy-buy on the dip!
A lot of us have seen this movie before. The proverbial “this time it’s different” crowd will preach that nothing ever ever can go wrong as along as the data supports economic growth. This from the same people that could not understand why the economic data was so wrong in 2000 and 2007.
Then there is the “technology has conquered the business cycle” crowd. These are the folks who thought the NASDAQ would go to 20,000 in 1999 and that “portfolio insurance” would protect investors from currency and trade instability in 1987.
How did that work out? Ummmm, yeah.
The biggest red flag I see to the market currently is obviously first and foremost the bond market. The bond traders know when TSHTF before everyone else and they are moving away from every electric fan as fast as they can.
The other major red flag is in the small caps. There is no rally. Hell, we just had a death cross and the market hasn’t really put a good move to the upside in almost a year, despite the bounce off the major December 2018 correction:
That is not a good chart for the future. Thus what I see, especially with the flight to safety in bonds, precious metals, European Government Bonds, and Bitcoin, yes, Bitcoin, is a choppy market for the next 60 days or so barring a major geopolitical escalation.
If things go according to my personal charts, look for at least a 5-8% correction this week on top of last week’s decline. After the pull back is over, a rally in the S&P 500 to the 2975ish level which fails, more volatility in the 2920 to 2950 level through mid-September, the a crash of 10% plus in one or a few day period. This crash will have the massive volume which has been missing along the the Fake News Media panic and dramatic stories and interviews of elderly people on camera worried about their retirement.
This however will just be the beginning. The other fork in the road will be in process also and the dangers from that are far worse than what I have outlined above.