The Case for a Merely Choppy 2023

Early in October, it lifted my spirits to be able to bloviate about how a too-widely-anticipated October crash seemed as likely as a Martian invasion. One lunar calendar-based prediction in particular had October 21 as the crash date, although the forecast went squishy at sundown that day when dark clouds failed to materialize over Wall Street. Even so, the trading world remained atwitter about the guru and his earth-shaking prediction until after the election. Now, five weeks later, who even remembers his name?

At the time, I made the boldest prediction that a guru can make — i.e., that nothing even remotely interesting would happen for the foreseeable future. This was going way out on a limb, since we gurus are always expected to predict that ‘something’ will happen, even if we sometimes wuss out with a ‘sooner or later’ qualifier. But more months of nothing? Zilch? Nada? When was the last time such a boring forecast was celebrated for its prescience? And which guru made the call? What makes this one so daring, however, is that even the village idiot knows that the global economy is poised to collapse at any time — perhaps even before you have read this commentary.

Bloomberg’s A-Team 

Instead, we have the usual eggheads and Bloomberg regulars debating whether the U.S. is even in a recession. Yes, the pundits nearly always embarrass themselves.  All of us can see that tens of millions of middle-class Americans are making the kind of economic tradeoffs that are usually associated with hard times. But perhaps the eggheads have a point, not necessarily on the top of their heads. Maybe things are not so bad after all, and the economy will continue to limp along until the next outbreak of buy-side psychosis strikes the proletarian mind.

To assess the odds, consider the chart of AAPL, above. The eye senses several possibilities: 1) the stock could continue to screw the pooch, staying in the channel for longer than most of us might imagine, especially with iPhone sales about to confront simultaneous recessions in Europe, Asia and the U.S.; 2) the next upthrust could impale the upper red line for no logical reason, propelling AAPL, if not necessarily the broad averages, to new record highs; or, finally 3) AAPL could collapse, taking out the lower channel support.

A Black Swan

From a purely visual standpoint, #3 somehow seems least likely. Perhaps it is because AAPL’s decision-free sponsors look so comfortable where they are now, in the middle of a cruising zone that has obtained for nearly two years. Whatever happens, AAPL will remain an infallible bellwether for the stock market as a whole.  You need only get AAPL right, as I continue to remind you, in order to get the big picture right. The chart above is the best evidence we have that 2023 could be a do-nothing year.

I say that as a permabear who thinks a deflationary collapse is coming that will be even worse than the Great Depression. Plummeting stocks will lead us into the abyss, but this will not occur because money managers have changed their minds about owning stocks. Rather, massive redemptions will force them to sell, implying the catalyst will be an exogenous shock — a black-swan the exact nature of which cannot be predicted by any seer.

  • John December 1, 2022, 10:04 am

    I told you so several months ago.
    Musket is part of the cabal crazies.



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  • RICHARD CHARLES November 28, 2022, 12:26 pm

    Mutual respect for deflationary collapse permabears Rick.
    China, Credit Suisse, FTX, Pandemic, RE, VC, Woke, BlockFi falling market harbingers upon US now, despite HODL Wall Street Public Market Criers.
    Not to forget interlocking firms with market counter-party risk as credibility and money supplies contract ?
    So many Concerned still plan to ride this – 16 % storm out rather than face Gamblers Fallacy, Recency Bias, taxes, losses.
    Capitulation ahead.
    Few went broke taking a profit.
    Losses reduce taxes and seed corn.
    Higher inflation and interest rates eat savings and capital.
    How many people in markets since 2000 grokked the True Lifetime Big Bear market hidden by rigged Cost of Living and Gold Currency Adjustments that nominally broke even, when it really took a generation if at all ?
    Does a million dollar shack nobody wanted now or a decade ago really mean productive prosperity is upon US ?
    Freshman year college costs of $1700 were a lot with Work Study at $1.49 an hour.
    They still are at $77,339 per year at Harvey Mudd, $76,826 at UPenn, with a $7.25 Federal Minimum Wage that Liberal Arts Majors might earn if they could find work outside their tribe.
    Six figure student loan borrowers vote for politicians promising ephemeral debt jubilees to crush the economy.
    Many of them rue the broken promises of a college degree.
    How many have a lifetime to break even or wait to live ?
    No wonder they vote for socialist handouts and tax the rich now.
    Never mind 47 % of Americans paid no income tax at all.
    With 99.9 M Americans of working age Not in the Labor Force, per BLS Fed FRED, facing real Costs of Living, replaced by illegals and tax scabs, many may have a leisurely chance to repent in their tent cities.
    Does everyone in the markets understand leveraged deposits now legal corporate assets instead of liabilities ?
    SBF knows.
    Does everyone on the financial system understand $250,000 FDIC Deposit Insurance actual reserves are 1.35 % ?
    Printing fiat to pay off defaulted Bank Accounts and Treasuries beggared Argentina, Hungary, Mexico, Weimar and Zimbabwe.
    Adds new illustrations to Financial Fallout Fraud.
    Markets down in terms of gold since August 2020, heralding precipitous regime change.
    How is this possible in the richest country in the world ?
    Actually, USA went from Creditor to Debtor nation in 1985.
    So we are accumulating VGPMX, Target + 125 % from 11.57 to 26 + 3.47 % Dividend, Risk to 9.95
    and SLVP, Target + 19 % from 10.245 to 12.22 + 2.04 % Dividend, Risk to 9.12, for respite.
    Yes, we have More questions than answers.
    We share faith in Rick’s Pics.