The Morning Line

I will be on holiday for a short while, far from Florida's disabling seasonal heat and eager to enjoy what so far has been the coolest, foggiest summer anyone who lives in San Francisco can remember. This will be a busman's holiday, since I plan to update the actionable 'touts' on this page 24/7 and to remain fully engaged in the chat room as always, providing timely ideas whenever unusual opportunities arise, and answering all questions related to trading. I will also continue to put out actionable guidance at GoldenMeadow.eu. However, in this space, instead of the usual weekly commentary and graphics, I will present a changing selection of paintings by Geoffrey Leckie, my college roommate during our third year at the University of Virginia. His canvases are beautiful and extraordinary (see above), and can speak for themselves. If you want to know more about the artist, click here. Expect a Melt-Up Concerning the stock market, it would not be unusual for it to go nuts while I'm away from my desk for an extended period. If so, expect the direction of the craziness to be UP. I am on record with a prediction that the S&Ps are about to stage a thousand-point rally. A crash will follow, but I doubt it will happen before late October.

Trump looks like a hero now, but he could become a goat when the bull market ends. He campaigned as the man who would make America great again, and no one should doubt the sincerity of this quest or his commitment to returning the nation to its core values. To judge from his accomplishments so far, he is up to the task. Few could have imagined he would crush the entrenched woke movement and hamstring Deep State within less than a year of taking office. If he can finish the job by bringing criminal charges against Obama, Hillary Clinton, Comey, Clapper, Brennan et al., and make the charges stick, his presidency would become one for the ages. But odds are considerably less favorable that he will be able to prevent the stock market and the U.S. economy from imploding under the weight of public debts grown far too large to repay. They include $37 trillion owed by the U.S. Treasury, as well as the financial liabilities of at least two dozen states, led by the breathtakingly reckless Illinois, whose pension system, along with many others, is just a bear market away from failure. The sums involved are much too big for a taxpayer bailout, and when they are ultimately deflated to zero by bankruptcies, the result will distance America more than ever from greatness. Many Jobs -- for Robots Trump's plan is to ignite economic growth robust enough to make public debts manageable and homes more affordable. But the way he is going about it, with a surge in deficit spending and a Federal Reserve Board hand-picked to turbocharge an already overheated financial system, will only add more IOUs to the mountainous pile that already exists. Although there will eventually be offsets from tariff collections and the re-shoring of U.S.

You've got to hand it to DaBoyz for reviving Apple as a 'wealth'-effect dynamo. The company couldn't innovate its way out of a wet paper bag, and it doesn't even have a horse in the AI race. And yet, the stock recently lurched back to life, emulating those two bull-market superstars, Microsoft and Nvidia. Indeed, any investor who held shares in the company last week, including Vanguard, BlackRock, Berkshire Hathaway and approximately 25,000 other lucky investors, became significantly wealthier on paper without lifting a finger. Rising sharply on gap openings last Wednesday and Thursday (see chart), and on a nasty short-squeeze Friday for good measure, the Cupertino-based seller of iPhones added nearly $500 billion to the world's store of illusory wealth. The Element of Surprise As I've explained here before, almost no stock changes hands on gap openings, and what little actual buying occurs comes almost entirely from short covering. In this instance, AAPL ended last Tuesday's session at around $203 per share. Then news came out after the close that they had sold quite a few more iPhones than benighted analysts had expected. It didn't matter that the flurry of phone-buying could have been a one-time effect caused by consumers trying to get ahead of new tariffs. All that was needed to goose AAPL skyward was the element of surprise. After the earnings beat, the stock's clever handlers lost no time working their levitation scam. By simply pulling their offers overnight and on Wednesday's opening, they enabled panicked bears to do all the lifting into a supply vacuum. Rotation Is Costless It's easy to underestimate the crooks who ply this game. Although we know they routinely rotate money from one sector to the next to push stocks higher with relatively small outlays, we sometimes overlook that they can top

The stock market is priced for perfection in a grotesquely imperfect world. Trump provided a fleeting respite by showing us how the Art of the Deal works in trade negotiations. Fox News rightly rubbed the legacy media’s face in his success while the President took a half-dozen victory laps to muted global applause. This may turn out to be more than he deserves, since no one can predict what will come of the new taxes that have been imposed on global trade. Because eggheads, editorialists and Bloomberg’s talking heads have no deep understanding of tariffs, here’s an interesting thought from someone who does — Reagan budget director David Stockman. The point he makes is too basic to ignore: If capitalism is truly free and functioning, he points out, America doesn’t need a dealmaker in the White House. Affordability is our big problem anyway, as the nation’s erstwhile middle class continues to sink into poverty. Nearly everything we buy has become not merely expensive, but too expensive, particularly big-ticket items like homes and automobiles. The average price of a used car hit $32,000, up from $23,000 just three years ago. It can cost $400 or more to take a family to a ballgame, where a hot dog and a beer are now $25. The $9.99 breakfast special in Las Vegas has risen to $29.99. And if shrinkflation at the supermarket gets any worse, we’ll be buying staples by the gram rather than the ounce.                             Putin’s Hole Cards Inflation will not be the worst of our problems if the Ukraine war takes a turn for the worse. Putin is Trump’s only equal in global power and influence, and he will not bend to Trump’s ultimatums like the pantywaists

Although the biggest players in the tech world have sunk trillions of dollars into AI research and development, none of them has made a dime. Will they ever? That’s a reasonable question, considering no one really knows how AI will reshape the economic world, other than eliminating many millions of jobs. The investment frenzy continues to gain momentum nonetheless, recalling the South Sea Bubble of the ‘roaring’ 1720s. A widely quoted item from that era was a prospectus for a company claiming to be carrying on "an undertaking of Great Advantage but no one to know what it is." One could argue that it’s different this time, but is it really? Quite possibly not, considering that Bitcoin, a currency with no intrinsic value, has increased in value from an initial $0.003 in 2010 to a current $118,000. These are crazy times, and nothing drives people crazier than the prospect of thousandfold returns on their savings. However, before you plunk down your own hard-earned dollars on a flight of fantasy, check out my recent interview on Howe Street. (Note: I make an exception for Nvidia shares, for reasons that are explained in the interview.)

The stock market continues to waft higher with the riskless predictability of loaded dice. DaBoyz have trained their firepower on just a few high-flyers, chiefly Microsoft and Nvidia, in order to squeeze the broad averages skyward with an absolute minimum of capital. I've explained here before in exhaustive detail how this carnival midway trick is performed, beginning with a short-covering gap on most mornings that precipitously reverses overnight selling after it has dried up. Putting aside the fakery and tedium of the seemingly endless bull market, along with the Epstein saga and Trump's tiresome tariff antics, the most interesting story in the news last week was Tulsi Gabbard's tweets implicating Barack Obama in treason. Although Biden, frequently photographed slurping an ice cream cone, would seem to have a lock on Worst President Ever, it is Obama who will go down in history as the leader who did America the most harm, all of it deliberate. A Years-Long Coup Treason is not too strong a word here, although we shouldn't get our hopes too high that his punishment, assuming he is charged and convicted, will fit the crime. When he summoned Comey, Clapper and Brennan to the Oval Office on December 9, 2016, they had already stated publicly there was no evidence Russia had interfered in the 2016 election. Despite this, said Gabbard, Obama directed them to fabricate a new narrative asserting that the Russians had in fact worked behind-the-scenes to help Trump beat Hillary. The three men and their staffs proceeded to reverse their findings, said Gabbard. Then, two weeks before Trump took office, they "unveiled the new, Obama-directed politicized assessment, a gross weaponization of intelligence that laid the groundwork for a years-long coup intended to subvert President Trump's entire presidency." Gabbard, the director of national intelligence, said she has

Nvidia became the world's first $4 trillion company last week, leapfrogging Microsoft, Tesla, Google and every other company struggling to stay in the AI game.  Our money is on Musk to compete the hardest. He is Nvidia's biggest customer for their most powerful chips, which sell for as much as $200,000. Musk has been buying them by the tens of thousands. He recently converted a vacuum cleaner factory in Tennessee into a site for the world's largest supercomputer. It draws so much power that the cooling plant alone cost will cost $80 million. The machine will be used to train Grok, Musk's horse in an AI field crowded with corporate strivers. Grok reportedly overtook competitors recently with a demonstration that showed the app capable of thinking almost like a human. Even skeptics were impressed with the way Grok figured out a novel way for hospitals to save power.  What startled them, however, was that Grok hadn't even been asked about this; the AI assistant simply inferred and suggested it based on another, seemingly unrelated, energy solution it had worked on that even MIT-trained engineers hadn't thought of. But even if Nvidia has yet a few more prospective customers in Musk's league, is the company worth $4 trillion?  A physicist friend of mine who uses AI intensively in his business said the stock is only warming up and that NVDA's current price is a certain bet to double yet again. But exactly what will their chip customers sell to the world that could possibly justify such astronomical valuations? It would have to be much more than mere gains in productivity -- or even that old investible standby, a cure for cancer. Monsters from the Id In an earlier commentary, I suggested facetiously that Nvidia and companies immediately downstream of it were

We're all waiting anxiously to see whether Trump's bold initiatives usher in a golden economic era. If this is going to happen, we should see the Dow Industrial lurch toward 100,000 at any time. Just a few short weeks ago, you could have counted me among the skeptics. It is a habit that has become deeply ingrained in me after writing collapsitarian essays and editorials for the last 30 years. However, I have been so wrong about this for so many years that I would never, ever insist that such a seemingly outrageous rally is impossible.  Skeptics aside, there are perhaps 80 to 100 million Americans rooting with all their might for the President to fall on his face. This is Trump Derangement Syndrome at its stupidest and most hateful, since a really bad year for the President could mean our children will have to suffer through a Second Great Depression. The good/bad news is that we should know soon how things are likely to turn out. That's because the stock market is in fly-or-die mode, so dangerously pumped with crazy, Wall Street hype and AI hubris that it cannot possibly sustain altitude unless investors decide to go all-in, and soon.  It would be a peculiar time for stocks to take flight, since U.S. consumers are tapped out and falling increasingly behind on car and house payments, and GDP shrank by 0.4% in the first quarter.  We may have entered a recession, and it has the potential to become a devastating one because, publicly and privately, the nation is so deep in hock. It is not yet so deep, however, that an adroitly engineered bear squeeze could not prevent a potentially fatal, contractionary mindset from taking root. America Ascendant The graph above holds the key to our best hopes and

The S&Ps and Nasdaq hit record highs last week, a surreal milestone that only the Wall Street toadies at Bloomberg and the Wall Street Journal who fabricate the news could take seriously.  These are the same folks who bestowed the name 'Magnificent Seven' on a bunch of high-flying stocks whose short-squeeze histrionics qualify them for membership in a stock-market Hall of Shame. Portfolio managers, who surely know better, are go-along buyers at these heights and will remain so until a tsunami of redemptions bends them to the impending reality of massive deflationary write-downs when the Everything Bubble bursts. That reality darkened last week with news that the U.S. economy shrunk at an annualized rate of 0.5 percent in the first quarter.  Perennially giddy investors would seem to be betting either that the recession that probably already has begun will be short, or that the statistic itself is a meaningless outlier caused by the world-class uncertainties of Trump's tariff policies. A popular explanation for the staying power of the bull market against a backdrop of global storm clouds, geopolitical mayhem and economic sclerosis is that AI will save us from...everything. As the story has it, artificial intelligence will boost worker productivity, improve outcomes from brain surgery, make steering wheels obsolete, turn $20-an-hour paralegals into Clarence Darrows, and lay to rest the arguments of Talmudic scholars. In unfortunate reality, the driving force behind AI is its ability to put people out of work, particularly white-collar employees whose jobs have been untouched so far by robotics. Can Joe Six-pack Deliver? That raises the question of how lunatic-sector companies that have invested trillions of dollars in AI development, and who say they plan to invest much, much more, can ever hope to recoup their money, let alone multiply it voluminously as they seem to