7/23/2018 – A mixed day with the Dow Jones down 14 points (-0.06%) and the Nasdaq up 21 points (+0.28%)

A fascinating read from Ron Paul today. Highlights are ours.

Spending Our Way to a Fiscal Crisis

According to financial writer Simon Black, the federal government is spending approximately 52,000 dollars per second. This, not last year’s tax cuts, is the reason why the national debt has reached a record 21 trillion dollars, which is more than America’s gross domestic product (GDP).

Another ominous sign is that this year both Social Security and Medicare will have to draw down on their reserve funds to be able to pay benefits. The Social Security and Medicare trust funds will both soon be bankrupt, putting additional strains on the federal budget and American taxpayers.

The excessive debt caused by excessive spending will inevitably cause a major economic crisis. Yet, with a few notable exceptions, there is little to no desire in Washington to cut spending. Instead, both parties are committed to increasing spending on warfare and welfare while ignoring the looming entitlements crisis.

Examples of fiscal irresponsibility on Capitol Hill are easy to find. For instance, even though the Untied Stares is currently spending more on its military than the combined budgets of the next seven highest spending countries, Congress recently increased military spending by 82 billion dollars. This brings the total the US spends on a futile effort to police and democratize the world to 716 billion dollars. The US House has also recently passed a farm bill that increases spending by more than 3 billion dollars over the next five years. This bill does not take a step toward ending subsidies to wealthy farmers and even continues providing farm subsidies to non-famers! Pressure on Congress to increase spending on farm subsidies is likely to increase as famers becomes collateral damage in President Trump’s trade war.

Many progressives are attacking the House farm bill because it makes some reforms to the “SNAP” (food stamp) program, even though the House version of bill increases the budget for food stamps by at least 1.7 billion dollars over the next five years!

When the economic crisis hits, there will be no choice but to cut spending and raise taxes. Of course, Congress is unlikely to raise taxes or cut benefits. Instead, it will rely on the Federal Reserve to do the dirty work via the inflation tax. The inflation tax is the worst type of tax because it is both hidden and regressive.

One of the worst features, if not the worst, of the tax reform plan is increasing the inflation tax by authorizing the use of “chained CPI.” Chained CPI hides inflation’s effects by claiming that rising prices do not harm Americans as long as they can still afford low-cost substitute goods to replace products they can no longer afford due to the Federal Reserve’s devaluation of the currency — as if people forced to buy hamburger instead of steak are not negatively impacted by inflation.

Increasing federal debt will also put pressure on the Federal Reserve to keep interest rates low to prevent federal interest payments on the debt from skyrocketing.  Eventually, the Fed’s monetization of the debt will lead to hyperinflation and a rejection of the dollar’s world reserve currency status. The question is when, not whether, the welfare-warfare state and the fiat currency system will end. Hopefully, those who know the truth will succeed in growing the liberty movement so we can convince Congress to gradually unwind the welfare-warfare state, restore a true free market in money, and stop trying to run the world, run the economy, and run our lives.

Crazy town, eh.

The devils is in the TIMING here. If you would like to find out when the stock market craters, based on our timing and mathematical work, in both price and time, please Click Here 

Just when you think Trump is doing an Okay job in certain respects (like meeting with Putin) he proceeds to jump off the deep end.

I ask, WTF does that mean Mr. Trump? 

Pentagon’s own reports suggest that a conventional war with Iran is unwinnable. So, are you threatening millions of innocent people in Iran who pose no threat to the US (and never will) with nuclear annihilation?

What kind of a leader uses such a language or are you simply trying to deflect attention from yet another Playboy hooker you fucked at the some rich folks party?

The issue with all of the above is as follows. Sooner rather than later a playground bully runs into someone who is more than willing to fight back. As is the case with China and Trump’s idiotic trade war there.

Now, Iran is actually looking forward to the latter while calling Trump out.

• Iran dismisses Trump threat, says he ‘won’t dare’ attack
• Iran’s Rouhani warns Trump about ‘mother of all wars’

Disgrace for all involved.

A mixed week with the Dow Jones up 39 points (+0.15%) and the Nasdaq down 5 points (-0.06%)

Despite remaining flat, this was an incredibly important week for the market. If you would like to find out why and what happens next, based on our timing and mathematical work, in both price and time, please Click Here. 

As we have discussed over the last few days in Trump Wants The FED To Juice The Stock Market, But No Juice Left and WTF Is Happening To The US Dollar? President Trump has launched an unprecedented attack on the FED and the US Dollar.

The nuts and bolts of this matter are very well summarized in the following article.

“It Was Only A Matter of Time”: Trump Sets His Sights on the Fed’s Tightening and the Strong Dollar

Trump’s comments yesterday towards the Fed and their rate-hikes shouldn’t be taken as a ‘one-off’ statement. For the U.S. to outlast China and Europe – and every country at that – the Fed will have to cheapen the dollar.

It’s like watching a slow-motion train wreck – we can see everything unfolding in due time. And as I’ve always maintained – the Fed is only tightening so that they can cut rates later to stimulate the economy during a recession.

Otherwise said – the Fed’s in a race between time and how much they can tighten before it triggers a recession. . .

Don’t be surprised when Trump eventually calls for a weaker dollar. Because foreign countries – especially China – won’t hesitate to cheapen their currencies so they get a trade advantage.

Trump will eventually realize that the dollar is the key to world trade – and he will weaponize it.

Then it’s a race to the bottom for everyone.

So, can Trump’s attack on “Free Markets” keep this market afloat?

Let us step away from the fundamental analysis for a second, something we have beaten to death here over the last few months, and answer the question from our TIMING and MATHEMATICAL perspective.

The short answer is NO. 

A slightly longer answer based on the cyclical composition of various markets suggests the following.

The FED will continue to hike interest rates until the yield curve inverts (nearly there) and causes a recession. The simple truth is, they have no choice as they need to reload for the next recession.  The US Dollar will continue to much higher levels. Not immediately, but don’t be surprised to see the DXY at $99 or above within a year.

Further, inflation will vanish into thin air, only to be replaced by deflation. Trump’s ill timed trade war will be disastrous for all involved and the stock market will crater. Once again, the above is based on the cyclical composition of various market.

If you would like to find out exactly when all of the above happens, based on our timing and mathematical work, please Click Here. 

According to most market participants, just a few short months ago, the US Dollar was supposed to crash. Leading to some sort of a inflationary spiral and subsequent stock market boom.

Yesterday and today, President Trump in no uncertain terms had said that he is concerned about advancing Greenback. More or less blaming the FED for the rally. We talked about it here. Trump Wants The FED To Juice The Stock Market, But No Juice Left

Fair enough, but according to our work Mr. Trump will be shocked by how far this Dollar rally/bounce will go. After all, it did bottom right where it was supposed to and the structure thus far looks anything but bearish.

This will also come as a shock to most Dollar bears, such as Peter Schiff, who are now in disbelief of what is happening to the currency. According to them, the US Dollar should be getting destroyed or inflated away into oblivion just about now. Yet, the opposite is true. Since April the Dollar has staged a rip your face off rally.

The Dollar missed our bottom calculations that was projecting a bottom at $88 by a few pennies and we went long at around $91. Just as was outlined here Why Peter Schiff Is Dead Wrong About Inflation & The USD

Once again, I believe quite a few people will be surprised by how far this dollar rally goes long-term. Yet, there is a much bigger reason to worry about today’s Dollar rally. The S&P earnings going forward.

Stocks Are at Risk of A SERIOUS Drop Unless the US Dollar Rolls Over Soon

The financial media are euphoric that stocks are up today. However, they’re all ignoring the fact that the issue that triggered the recent sell-off (the Fed’s colossal policy error regarding the $USD) has not been resolved.

Put another way, until the $USD rolls over, stocks are in serious danger. We need to get out of that red rectangle area ASAP and back down to the green rectangle.

That is to say, recent S&P earnings bounce from $88 in 2016 to just shy of $110 today (2014 level – what growth?) was largely driven by weaker dollar. Should this catalyst be taken away, well, the stock market will go from crazy valuations levels we see today to “are you fu*#ing kidding me” valuations levels literally overnight.

Our timing and mathematical work clears up all of the confusion associated with all of the above. If you would like to find out what happens next to the US Dollar and the stock market, please Click Here

A negative day with the Dow Jones down 135 points (-0.73%) and the Nasdaq down 29 points (-0.37%)

The stock market continues to perform, more or less, as anticipated. If you would like to find out what happens next, in both price and time, please Click Here. 

Hey, remember when, during his Presidential campaign Mr. Trump blamed the FED for keeping interest rates too low for too long and as a result sparking the massive “Everything Bubble” we are seeing today?

No?

Well, neither does he.

Trump says he’s ‘not happy’ with Fed raising interest rates

“Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.” He added, “But I don’t like all of this work that goes into doing what we’re doing.” “I don’t like all of this work that we’re putting into this economy and then I see rates going up,” Trump said.

Mish has a very good read on the subject matter as well…..

Trump Criticizes Fed Rate Hikes and Blasts the Strong Dollar

In addition to not understanding trade, Trump just proved he does not know anything about currencies either.

President Trump meeting Mr. Putin to avoid further deterioration with Russia is wonderful. I give credit where it is due.

President Trump taking credit for today’s highly speculative boom while attempting to control interest rates, oil prices and the price of import/exports is idiotic. No, borderline criminal.

I didn’t know if I should laugh or pull my hair out when I read his statement……..

 “I don’t like all of this work that we’re putting into this economy and then I see rates going up,”

What f***ing work? 

The stock market is selling at its highest valuation level in history (aka massive speculative bubble). Trump’s tax cut was the last ditch effort heroin infusion to a dying patient about to have a heart attack. Works for a bit, but the ensuing cardiac arrest will be twice as worst.

Unemployment at a historic lows? Perhaps. Yet, lack of wage pressure suggests cooked numbers and ridding co tails of Obama driven FED is not really honest. And who could forget Trump’s idiotic trade war that we have beaten here to death. Open your history books and take a look at what happened in 1928-1932.

This is proof, once again, that Mr. Trump has no idea of what he is talking about when it comes to financial markets and how the US Economy works in its now highly distorted form.

The stock market hasn’t figured that out yet, but it will. If you would like to find out exactly when the stock market will tank, in both price and time, please Click Here.