A positive week with the Dow Jones up 11 points (+0.04%) and the Nasdaq up 75 points (+0.96%) 

At the initial glance it is easy to dismiss today’s market conditions as nothing more than the continuation of a bull market. At the very least, a consolidation. Yet, the situation is not that simple. Despite the Nasdaq/Russell sitting near their all time highs, the Dow and other indices are not following through. With the Dow & NYA remaining well below their January highs.

That is exactly what we discuss in our weekly analysis and explain why. Most importantly, we discuss what happens next, why and most importantly WHEN. If you would like to find out what the stock market will do next, in both price and time, based on our mathematical and timing work, please Click Here

There are two very important things we have to consider this week.

First, The Fed Accelerates its QE Unwind

The FOMC, in its August 1 statement, mentioned “strong” five times in describing various aspects of the economy and the labor market – the most hawkish statement in a long time. Rate hikes will continue, and the pace might pick up. And the QE unwind will accelerate to final cruising speed and proceed as planned. The Fed stopped flip-flopping in the fall of 2016 and hasn’t looked back since.

When the economy eventually slows down enough to where the Fed feels like it needs to act, it will cut rates, but it will let the QE unwind proceed on automatic pilot toward “normalization,” whatever that will mean. That’s the stated plan. And the Fed will stick to it – unless something big breaks, such as credit freezing up again in the credit-dependent US economy, at which point all bets are off.

The above is incredibly important. This is the primary driver behind today’s “Everything Bubble” and what we see in the overall economy. Should QE and associated liquidity go away, so will exuberant prices. It is as simple as that.

On top of that not everything might be going as well as the establishment wants you to believe. Have you ever wondered why your wages are not going up if we are at full employment? If not, Paul Craig Roberts has done it for you.

Americans Live In A World Of Lies

The US government and the presstitutes that serve it continue to lie to us about everything. Today the Bureau of Labor Statistics told us that the unemployment rate was 3.9%. How can this be when the BLS also reports that the labor force participation rate has declined for a decade throughout the length of the alleged economic recovery and there is no upward pressure on wages from full employment. When jobs are plentiful, people enter the labor force to take advantage of the work opportunities. This raises the labor force participation rate. When employment is full—which is what a 3.9% unempoyment rate means—wages are bid up as employers compete for scarce labor. Full employment with no wage pressure and no rise in the labor force participation rate is impossible.

The 3.9% unemployment rate is not due to employment. It results from not counting discouraged workers who have ceased to search for jobs because there are no jobs to be had. If an unemployed person is not actively searching for a job, he is not counted as being in the labor force. The way the unemployment rate is measured makes it a hoax.

We highly encourage you to read the report above in full. It is full of gold and satire.

As a result, a very simple setup we have discussed here over the last few months remains.

The stock market is selling at its highest valuation level in history if we make adjustments for 2000 distortions. On top of that the FED is tightening, the yield curve is near inversion, liquidity is going away, deficits are surging, corporate earnings are peaking and if that wasn’t enough, President Trump is launching an unprecedented trade war against, well, nearly everyone.

Our work offers a very simple and somewhat shocking answer to what happens next. Based on our timing and mathematical work, of course. So, will the stock market continue its unlikely run higher or will it finally crash in a spectacular fashion? Please CLICK HERE to find out.

8/2/2018 – Another mixed day with the Dow Jones down 8 points (-0.03%) and the Nasdaq up 95 points (+1.24%) 

All in all, today was very positive for our overall forecast.

First, the market was able to …… If you would like to find out what happens next, based on our mathematical and timing work, in both price and time, please Click Here.  

As we have discussed here over the last few months, Trump’s trade war on nearly everyone is beyond idiotic. He is blaming the wrong people for the trade deficit. In fact, his stance is so wrong that it is equivalent to blaming the Jews for the holocaust during second World War.

The real culprits are the Federal Reserve for distorting our monetary policy to the 10th degree and the American corporations who manufacture overseas and then proceed to import the good into the country. The latter are responsible for 60% of the said trade deficit with China.

Here is another very good look at the subject matter…..

US Trade Policy: Not Only are We Stupid, We are Hypocrites

1. Let the Yuan slide 25% negating the tariffs.
2. Further limit US firms ability to do deals in China
3. Halt Rare Earth Exports. Rare earths are 17 minerals used to make cell phones, hybrid cars, weapons, flat-screen TVs, magnets, mercury-vapor lights, and camera lenses.

Option one has capital flight risks for China of course. But US tariffs pose numerous risks to the US and global economy as well.

Option two is a given.

You Decide…..

8/1/2018 – A mixed day with the Dow Jones down 81 points (-0.32%) and the Nasdaq up 35 points (+0.46%) 

There is very little to add to the analysis presented here over the last few weeks/days.If you would like to find out what the stock market will do next, in both price and time, based on our mathematical and timing work, please Click Here. 

Today’s FED decision on interest rates was “as expected snooze fest”. Here is a very good look at the subject matter.

Word of the Day “Strong”: Just Not Strong Enough to Hike

The word of the day is “strong”. The Fed used that word five times. The Fed’s actual action was not strong.

Fed Ups Economy from Solid to Strong

Words Strong, Action Weak

The Fed elected to hold interest rate at 1-3/4 to 2 percent.

This is rather simple at this point. As we have discussed here in the past the FED will continue to hike interest rates. They have no choice. The next recession and everything bubble collapse is coming and they need ammunition to fight it. Having said that, it is a little too late. Flat and soon to be inverted yield curve is already doing massive damage to our debt driven bubble economy.

Bubble, what Bubble? ….this bubble. 

This Favorite Warren Buffett Metric Tells Us a Stock Market Crash Could Be Coming

This simple indicator, Market Cap/GDP, has been incredibly accurate in the past. That is why I often laugh at money managers talking about Value in this market. There isn’t any, not by a long shot. So much so that today’s valuation levels are the highest in history. We have discussed that in the past.

Over the last few years Mr. Buffett has suggested that it is a no brainer to invest in America over the long-term. And while he might be right over the long-term, do as he does and not as he says.

After all, the lack of attractive investment opportunities has resulted in Berkshire Hathaway accumulating nearly $110 billion of cash and equivalents on its balance sheet.

That is to say, Mr. Buffett is hoarding cash and waiting for much lower stock prices. And so should you.

If you would like to find out when the next collapse happens, based on our mathematical and timing work, please Click Here. 

7/31/2018 – A positive day with the Dow Jones up 108 points (+0.43%) and the Nasdaq up 41 points (+0.55%)

Thus far, the market action has been consistent with what we have discussed in our weekly update.If you would like to find out what happens next, in both price and time, based on our timing and mathematical work, please Click Here

As we have covered before Trump Becomes An Inflation Expert Overnight – Launches Unprecedented Attack On The FED

Ron Paul has excellent point of view on the subject matter as well and I highly encourage you to read it in full.

Trump’s Tweets End the Myth of Fed Independence

President Trump’s recent Tweets expressing displeasure with the Federal Reserve’s (minor) interest rate increases led to accusations that President Trump is undermining the Federal Reserve’s independence. But, the critics ignore the fact that Federal Reserve “independence” is one of the great myths of American politics.

When it comes to intimidating the Federal Reserve, President Trump pales in comparison to President Lyndon Johnson. After the Federal Reserve increased interest rates in 1965, President Johnson summoned then-Fed Chairman William McChesney Martin to Johnson’s Texas ranch where Johnson shoved him against the wall. Physically assaulting the Fed chairman is probably a greater threat to Federal Reserve independence than questioning the Fed’s policies on Twitter.

While Johnson is an extreme example, history is full of cases where presidents pressured the Federal Reserve to adopt policies compatible with the presidents’ agendas — and helpful to their reelection campaigns. Presidents have been pressuring the Fed since its creation. President Warren Harding called on the Fed to lower rates. Richard Nixon was caught on tape joking with then-Fed chair Arthur Burns about Fed independence. And Lloyd Bentsen, President Bill Clinton’s first Treasury secretary, bragged about a “gentleman’s agreement” with then-Fed Chairman Alan Greenspan.

As always, Mr. Paul is dead on the money here.

Yet, here is what almost all observers are missing about today’s environment.

First, the FED is raising interest rates to re-load for the next recession and market bloodbath. They know what they have done, what’s coming and what they need to do now in order to soften the blow.

And should they fail to re-load, the next recession or “Everything Bubble” implosion will end the USA as we know it.

Second, as we have discussed before FED Powell Confirms – Yield Curve Inversion Imminent, it no longer matters if the actual yield curves inverts or not. The damage has already been done by flattening and it is only a matter of time before the mother of all recessions hits Mr. Trump’s perfect economy.

Our timing and mathematical work tends to confirm all of the above. If you would like to find out exactly when the stock market will crater, in both price and time, please Click Here

A mixed week with the Dow Jones up 393 points (+1.56%) and the Nasdaq down 83 points (-1.06%)

This week was incredibly important for the stock market. I am not entirely sure how long, but it has been quite a while since we have seen such a significant % divergence between the Nasdaq and the Dow.

That is exactly what we talk about in our weekly update and what that means for the stock market. If you would like to learn more, and/or what the stock market will do next, in both price and time, please Click Here 

This week’s market action in Facebook (FB) is perfect example of “Price is what you pay and value is what you get”. As we have discussed earlier in the week Facebook was the largest holding across the board for all hedge funds and most likely other institutional investors.

Do you think any of these money managers were concerned about fundamental analysis? Not a trick question. Do you think they cared that they were paying 15 times revenue for a highly speculative company that is being taken over by “old people and cats”. Do you think they care that they are still paying 100+ times earnings for highly speculative small cap companies (Russell 2000)

Of course not. 

The situation we are witnessing today is identical, in terms of dismissal of time proven fundamental analysis, to what we have seen at 2000 and 2007 tops. Perhaps no one does fundamental analysis better today than John Hussman. His latest market analysis is out, it is full of wonderful information and we highly encourage you to read it in full.

Extrapolating Growth

Market returns and economic growth have underlying drivers. At their core, long periods of extraordinary growth and disappointing collapse reflect large moves in those drivers from one extreme to another. Extrapolation becomes a very bad idea once those extremes are reached.

The present combination of record valuations and divergent market internals, coming off of the most wicked ‘overvalued, overbought, overbullish’ extremes in history, creates a danger zone that will not be resolved until some combination of those factors – valuations, internals, and overextended conditions – shifts to a less dangerous mix.

Fundamental analysis is wonderful in helping you identify larger trends. Yet, if you would like to concentrate on immediate market moves, timing analysis is a must.

If you would like to find out what happens next, in both price and time, based on our timing and mathematical work, please Click Here.