The Morning Line

The headline explains why the voracious bounders on Capitol Hill are willing to spend so much time, money and effort getting re-elected. For they are not just investment insiders, they are recidivist sponsors of legislation that directly benefits their stock portfolios. It is quite a racket, and whatever laws exist to prevent them from getting rich serving corporate lobbyists above all, those laws obviously are not working.  If you're interested in the sordid details behind their headline-worthy investment success, a website called UnusualWhales publishes an annual report filled with titillating information. "By analyzing publicly accessible financial disclosures," the Whale's authors proclaim, "we found that a quarter of Congress actively traded up to $788M in various assets through 12,700+ transactions in 2022. Although this matches the number of transactions in 2021, the total value has dropped." I was unaware of Unusual Whales' efforts to shine a light on our nation's political cockroaches until my brother, Allen, sent me a link to their site. "For me, reading the headline Congress Outperforms S&P in 2022 was all the clickbait I needed," he wrote. "While it's my habit to look for the best in people, I eagerly make an exception for all politicians. The loftier their position, the greater my skepticism. To temper my deep disdain for them, I try to remember the old adage that it's only 98% of them that give the rest a bad name. Their Favorite Plays  "Admittedly,' he continued, "the report is too long for me to read at one sitting -- think Tolstoy -- and although I don't think it will provide any revelations, it makes for fascinating reading nonetheless.  Imbibe just the opening paragraphs and you'll see how the greed of Republicans and Democrats run on somewhat different tracks.  The top sectors with the highest stock investments

[The following went out in mid-December to clients of  Doug Behnfield, a Boulder-based wealth manager and senior vice president at Morgan Stanley. The letter provides an insightful view of the economic landscape as we enter the new year. Doug foresees falling stocks, falling inflation (or possibly modest deflation) and a continuing rally in long-term Treasurys.  He is one of the most successful investors I know, and also one of the wisest. I have featured his work here many times in the past and am grateful for the opportunity to share his timely thoughts with Rick's Picks readers. I've substituted my own charts from Tradestation for the ones in the original report because they reproduce with greater clarity. Also, the irreverent picture above was my choice, not Doug's. He was assisted in preparing the report by his son Max Behnfield, a financial advisor at Morgan Stanley; and by Amelia Guidi, vice president and financial advisor in Morgan Stanley's Boulder office. RA ] As we wind down a challenging year in the financial markets, there are many events that have occurred that shaped the outcomes that are much easier to see in retrospect. At this time last year, the stock market was making its last glorious run to all-time highsjust as Jerome Powell, the chairman of the Federal Reserve, was being handed the Keys to the City in terms of controlling inflation by President Biden. Powell immediately set out to alter the course of monetary policy that had been Fed Doctrine since 1987, when Alan Greenspan took over as Fed Chairman from Paul Volcker. What has happened since has been quite dramatic. Considering the very recent, downward reversal in long-term interest rates and the accompanying rally in the bond market, now seems like an appropriate time to chronicle what has transpired over the

Be skeptical if stocks start the new year on a positive note, since that would be the perfect way for Mr Market to set the hook to trap bulls and bears alike. It would probably take most of the opening session on Tuesday for an enticing rally to build up steam, since the bears who would be doing most of the buying via short-covering will need some painful prodding before they hit the panic button. Mr Market has had an especially hard time trying to stampede them lately, since he holds such lousy cards. Recession is upon us, tightening its grip as the shares of such former world-beaters as Apple, Tesla, Google, Facebook and Amazon have collapsed. This has caused the "wealth effect" to deflate precipitously, unnerving investors who understand that the carnage will end only when a tsunami of exhaustion selling lays waste to the most resilient bulls. Not Bottomless My best-case scenario comes from AAPL's chart, which looks ugly but not bottomless. In fact, the stock need only fall a further $8 or so, to around $121, to find good support at a trendline I've been drum-rolling for months. "Get Apple right and you get the stock market right" has been Rick's Picks' mantra for nearly two years, and it has served us well. Because the stock provided a decade-long free ride for portfolio managers and has hooked them like dope, it will always tell us exactly what's on their minds. Now, despite grim headlines and dark clouds of war and recession hanging over 2023, Apple's chart says the stock market's decline may have just a little further to go before either stabilizing or rebounding. Some of my guru colleagues appear to expect strongly otherwise and have been predicting a January disaster. But don't be surprised if stocks

In an economy that over decades has grown increasingly dependent on revved-up holiday sales, investors have responded by praying more fervently each year for a Santa rally. It's an odd metaphor, however, considering that Wall Street even at its seasonal cheeriest has a heart as cold and dark as volcanic glass. The Santa of investors' imaginations is assuredly not the fat, jolly one originally drawn by a Dutch artist Haddon Sundblom for the Coca-Cola company, but rather someone more like Fed Chairman Jerome Powell gone silly in a headdress of fluffy white dove feathers. Unfortunately, Powell has not left much room for silliness in this holiday season. Gone are the days when Neiman Marcus could get a rise by featuring his-and-hers Bentleys in their Christmas catalog. The typical American household is thinking about more practical presents in these recessionary times: PG&E gift certificates...bread machines and pasta makers...survivalist seed packets...battery chargers. More Turbulence The result for investors has been a balky stock-market shaped more by Scrooge than Santa. Even with bullish seasonality at maximum force last week, the Dow Industrials could muster only a 300-point gain. They closed on Friday at 33,203, down a thousand points since Thanksgiving. More turbulence seems likely in the final days of 2022. Perhaps the best we can hope for when the markets lurch into gear on January 3 is that stocks continue to drift through a circa 1914 minefield without triggering a nuclear war or the debt deflation we all know is coming. [What do the charts say? Click here for my latest interview with Howe Street's Jim Goddard. RA]

The modest bear market rally begun in October likely ended last week when stocks turned sharply lower after failing to achieve clear 'Hidden Pivot' rally targets. Now, if the selling should continue to exceed minor abcd targets as occurred last week, that would affirm that Papa Bear is back. AAPL in particular, the world's most valuable stock, took a dive that has another 10% to go before good support is likely to materialize near $120 (see chart, above). The smart money that manipulates AAPL was finding it increasingly difficulty to distribute stocks to widows, pensioners and rubes. Making the shares affordable to the masses was their intention when they split the stock 4:1 in August 2020. AAPL was trading for around $600 at the time, priced well beyond the reach of most individual investors. How the Game Works The split allowed AAPL's canny institutional sponsors to rig the stock's price action so that AAPL could forge steeply higher without requiring large infusions of cash. This simple trick was always performed in the dead of night, when volume typically dries up. The smart guys would pull their bids, letting AAPL fall for no apparent reason. With sellers exhausted ahead of the opening bell, it was easy for the thimble-riggers to trigger off a short squeeze, gapping the stock well above the level where overnight selling had begun. It was even easier to create bullish gaps when AAPL wafted higher overnight on thin volume, since the day began with shorts already spooked out of their wits and hemorrhaging losses. Covering their positions was costly because DaBoyz backed off their offers, causing the stock to soar on light volume. Very little stock changes hands in these gaps. AAPL could be trading for, say, 147 on the close, and then open the next morning

Bloomberg News, buzzed on Fed Kool-Aid as always, thinks the banksters have engineered a soft landing for deflation. Although it's true that price bubbles in everything from used cars to styrofoam surfboard blanks have begun to detumesce, there is no reason to think the shrinkage will stop when inflation falls to some 'comfortable' level. That's not how deflation works, especially when it is correcting excesses of the biggest financial bubble ever. In residential real estate, the implosion has been mild enough so far that sellers actually seem to think they'll get their price if they wait long enough. Sitting pretty? Only in their dreams. With 30-year fixed mortgages currently averaging 7.5%, many first-time buyers might be starting to wonder whether they will ever own a home. They need little convincing in the meantime that we're in a recession, even if owners of unmortgaged homes priced above $2 million think the U.S. economy is hunky-dory. Muddling Toward a Crash If business merely muddles along in 2023 without slipping deeper into recession, the gap between buyers and sellers can only widen. To the extent this is already happening, we're in the beginning of a silent crash in residential property values. It is particularly deceptive because mortgage-based transactions have dried up, turning price discovery opaque. Incipient deflation is more visible in commercial real estate, with vacancy rates above 15% in Houston (18.9%), Dallas (17.6%), San Francisco (15.5%), Washington (15.2%) and Chicago (15.08%). These figures grossly understate the problem, since many urban centers are slipping into a self-perpetuating spiral of declining tax revenues, decaying public amenities and an exodus of workers to places that are more livable and affordable. Texas, Tennessee, Florida, Arizona and Nevada are among the biggest gainers, California the biggest loser. San Francisco, for all of its natural gifts, could be

Last week's commentary went full contrarian with the seemingly nutty idea that 2023 could be a dull year for investors despite the looming possibility of a global economic collapse. Inflation, deep recession, war, disease and political unrest are just a few of the factors that could bring a badly limping financial system down. But suppose the global picture were to brighten significantly? Consider the possibilities: a senile U.S. president is forced to step down; Putin negotiates an end to a war in Ukraine that has become unwinnable; the nascent rebellion in China is joined by sympathetic soldiers; anti-communism rises up around the world, even in the U.S.; free speech returns on a global swell of popularity; and the content of Hunter Biden's laptop gets fully exposed, rousing Americans to root out corruption at the FBI, State and Justice departments. Rebellion against the globalists and communists is stirring everywhere. All hell could break loose, but a positive outcome is hardly inconceivable. Farmers in Canada, Netherlands and elsewhere could prevail over climate-change zealots who would prefer that everyone eat tofu. Brazilians could stymie the fraudulently elected Lula da Silva from opening Latin America's back door to his Chinese comrades; Italy's new premier, Giorgia Meloni, could bring down the EU by demonstrating that supposedly 'far-right' leaders are actually just mainstream champions of a common-sense path back to economic health. There are also mounting protests against Iran's Islamist dictatorship that could strengthen and spread to the Muslim world. They surfaced last week when Iranian soccer players declined to sing the national anthem at their opening World Cup game against England. The Laptop That Keeps Giving Regarding the world's most infamous laptop, no longer can its incriminating contents be suppressed online or by the partisan hacks who run the New York Times, Washington Post, L.A.

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

Twitter and bitcoin share a key similarity in that their success while it lasted was just hubris. Realize that both were birthed by a virtual medium capable of monetizing turds if there is any discoverable demand for them. Cardi B's megahit single Wet Ass Pussy was proof of this. Twitter proffered turds in the form of members-only censorship that took delight in defecating on the Bill of Rights, particularly the First Amendment. But it took Elon Musk, with unlimited quantities of f**k-you money, to put a number on Twitter: $44 billion. Unfortunately for him, nearly all of it was for 'good will' that appears to have vanished. Nor is he likely to be consoled when it is discovered that the dark secret of Twitter's overwrought ex-employees is that they can start a Twitter of their own with just a few mill, a rackful of servers and a dozen high school dropouts working from home, paid $20/hour to code. Cute Little Bird So what are the notoriously spoiled workers so disgruntled about? Leave it to an apparent millennial sympathizer reporting for The Wall Street Journal to excuse them with a high-minded quote uttered by no one in particular: "Employees said Mr. Musk pushed people to work well over 40 hours a week, but said they didn’t feel there was a compelling vision to justify it." A compelling vision? Yeah, sure.  And exactly what lofty end did they see themselves serving under Jack Dorsey, Orwell's darkest nightmare masquerading as a little blue birdie? Stay tuned to the blogosphere for more dithering on this and other topics of scant interest to folks who live in the real world. What should please the company's make-believe workforce in any event is that Musk set an intergalactic record for overpayment.  If Twitter had changed hands for,