The Morning Line

Here are a couple of headlines concerning the economy that appeared atop Bloomberg's front page on the same day last week. Taken together, they could make one's head spin. First the happy news: IMF Lifts World GDP Outlook on U.S. Strength. But here's the article just beneath: UPS to Cut 12,000 Jobs. A case of schizophrenia on the copy desk -- or were they just trying to be provocative? Since no mainstream news outlet save USA Today out-cheerleads the economy (and crime-infested Gotham) more obnoxiously than Bloomberg, we can assume that the UPS layoffs were simply too important to bury on an inside page. The company is one of America's biggest employers, and its ubiquitous delivery trucks are a visual bellwether for the economy -- so much so that it would not exaggerate to say, "As UPS goes, so goes the nation." Amazon has been laying off as well, but it is predictable that both stories will ultimately get less ink than Facebook's whoopee-cushion leap Thursday triggered by an earnings beat and some other smiley-face 'surprises' from Zuckerberg.  The glorified advertising firm's shares tacked on an instant $66 after the close, adding a reported $200 billion to the global ledger and $50 billion to Zuckerberg's s piggy bank. We've discussed these wild but frequent effusions before, and how they contribute enormous sums to the 'wealth effect' without altering the economy in any real or constructive way. Sure, a few of the big winners will reward themselves for all their hard work by buying ocean-going yachts and Lamborghinis in crazy colors. But most of the money will get plowed right back into the market, the better to pump still more gaseous wealth into a handful of stocks held unto death by portfolio managers. A Dollar Krakatoa Actually, even hydrogen has more

[This week's commentary was written by David Isham, a longtime Rick's Picks subscribers from Northern California who has been investing in bullion since he was in grade school four decades ago. RA ] Although gold appears to have broken out of a triple top and recently hit fresh all-time highs at $2152, the gold miners are trading at the same prices they were 20 years ago. I believe this strange disconnect is going to change this year, since gold is finally starting to outperform the CRB commodities index, oil in particular. Because energy makes up 60% of a mining company's costs, this implies the miners are about to become more profitable. Every bull or bear market has three phases -- accumulation, manipulation and distribution. We are in the accumulation phase now, where smart money is accumulating gold mining shares for the coming, multiyear bull market. Next will come the manipulation phase, also known as 'The Judas Swing'.  Aptly named for Judas’ betrayal of Jesus, in the stock-market world it is defined as a false move preceding a real move in the opposite direction. Telltale Sign One of the telltale signs that the miners have embarked on a new bull market will be a show of relative strength if the price of physical gold drops significantly in the months ahead. If mining stocks don't fall as much percentage-wise, gold investors should take encouragement, since the rise that follows will mark the likely resumption of the long-term bull market begun nearly two decades ago.  Finally, there will be a distribution phase where miners go parabolic and the public jumps in belatedly, buying stocks at or near the top. No one can say for sure how deeply gold will correct before it turns to embark on a spectacular run-up, but I wouldn't be

When forecasting stock prices, it helps to view the market as a crazed creature driven by fear, greed, and most of all, stupidity. Of course, everyone but the "theme"-obsessed chimpanzees who purport to manage your money understands that the stock market's heedless ascent into horrifying news is rock-bottom stupid.  In this case, the very bad news coming is already known: Treasury borrowing over the next twelve months will dwarf anything that has ever been attempted before. "The volume to be financed in U.S. Government debt is staggering, historically unprecedented, and absolutely impossible," writes my colleague Jim Willie. Nearly $1.6 trillion will be needed to finance outlays for fiscal year 2024, and an additional $7 trillion of maturing debt must be rolled, much of it into paper of shorter duration.  "That comes to around $800 billion per month, when $100 billion has been difficult on a monthly basis," Willie notes. It will occur at a time when sovereign buyers of U.S. debt, particularly China, have been dumping T-bonds. The extremely heavy auction calendar portends a sharp rise in interest rates that threatens to crush corporate earnings, create a tsunami of bankruptcies and trip the U.S. economy into deepest recession. The shock of it would be made worse by the brazen statistical lies The Guvmint has fed us concerning GDP growth, hiring and the supposed health of the economy. All have been egregiously overstated in an election year, gobs of bright lipstick on a pig. Triggering 'Stupid'  This grim picture, in contrarian fashion, appears to have triggered the 'stupid' factor into overdrive, sending stocks soaring on Friday as though the U.S. and global financial picture were just peachy. How long can this gusher of mass hysteria last?  Once again, I turn to a chart of Microsoft shares for the answer. It still

Reader Scott Baker took issue last week with my unsettling prediction of a deflationary bust. The mountain of debts that I believe will cause this is really no big deal, says Baker. He quotes economist Michael Hudson to back him up: "Debts that can't be repaid, won't be." That certainly doesn't sound very menacing. So who will lose if a global banking system holding $2 quadrillion in hyper-leveraged securities implodes?  According to Baker, the pain will fall mainly on supposedly sophisticated investors who failed to perform due diligence.  And fortunately for them, the damage won't be nearly as bad as I've calculated, he says, since the value of all derivatives is probably less than half of the $2 quadrillion figure that is accepted widely, if not universally. Well, okay, I'll give him a little slack on that. But even if one allows that the size of the market is 'merely' $1 quadrillion, that's still nearly ten times as much as the world produces in goods and services. That can only mean that the collateral backing the market is dangerously thin.  Baker believes the economy could survive the hit anyway, but for a reason that sounds like something Yogi Berra might say: 'Because derivatives are on all kinds of things...they literally cannot fail all at once.' A Debt Bomb The clock is ticking on this debt bomb, and optimism is not going to prevent it from triggering. Nor will any of us escape the effects. The late C.V. Myers, whom I've quoted here before many times, has provided the simplest explanation of why deflation is so likely:  Ultimately every penny of debt must be paid -- if not by the borrower then by the lender.  To understand why, you need only consider that if, say, students skip out on $1.8 trillion

The stock market is so pumped with hubris, lies and delusions that I'm beginning to doubt whether the bull market will see Microsoft rally to $430 before everything comes crashing down. I've been using MSFT as a bellwether because it has been the strongest megacap stock in the world for the last four years, and because the company's subscription-based revenues will continue to flow even in a severe economic downturn. The stock's weekly chart implies it will make a very important top if and when it hits 430, but there are no guarantees it will get there. The chart's bullishness is persuasive on this point because of the ease with which buyers exceeded the p=322 'midpoint pivot' of the pattern. However, the implied power of the move would have been greater if the rally had impaled p and never looked back. Instead, MSFT took its sweet old time over a period of five months in turning the midpoint pivot into a launching pad. This, in my estimation, has made the stock an 80% likelihood to reach 430, as opposed to a 95% bet if buyers had pulverized p=322 on first contact. So how do we deal with 20% uncertainty about how and when a top will occur? It is important to get this right, since the bear market that's coming stands to bring even greater hardship to most Americans than the 1930s. People were more resourceful then, with 30% of the work force tied to agriculture, literally living off the land. They were not in hock up to their eyeballs, and women had the option of staying home with their children. The dollar was backed by gold and fundamentally sound. Government statistics tied to job creation, unemployment and GDP growth were not horse manure like the numbers shoveled at us

In these way-too-interesting times, there aren't many publications that would trumpet a New Year's Eve headline like the one above. It topped the front page of the South Florida Sun Sentinel, however, a tribute to the Sunshine State's winning performance on the playing field. Two college basketball teams, University of Miami and Florida American University, made it to the NCAA Final Four, while the Panthers and the Miami Heat did much better than expected in, respectively, professional hockey and professional basketball. Many investors, too, will be hoping for a repeat of 2023. The S&Ps tacked on nearly 1,000 points since the start of the year, and that is bound to have raised their expectations for more of the same in 2024. My own forecast suggests they may be in for disappointment. Although I see the broad averages going at least somewhat higher, a moonshot looks doubtful. That's because shares of Microsoft, currently trading for around $375, look incapable of exceeding a granite 'Hidden Pivot' ceiling at $430 without experiencing a major correction or a bear market first. MSFT has taken AAPL's place as my #1 stock-market bellwether because iPhone sales will be extremely vulnerable in a recession, even as subscription revenues for Microsoft Windows/Outlook continue to roll in no matter what happens to the global economy. MSFT is therefore the single most important stock in the world, and when its long roll of the dice sevens out, that will signal the end of the stock market's near-vertical climb. Bullion Gathering Strength If there is great news coming for investors, look for it to happen in the bullion sector. Silver and gold have spent more than three years consolidating for a push that will turn $2000 into bedrock support for the latter. The move has been such a long time in

[The following was written by my good friend James Trabulse.  A devout Catholic, Jim regularly attends a Latin mass. He is also a gifted trader who brings rigorous science and outside-the-box thinking to nearly everything he does, including playing golf, staying healthy, cooking savory, nutritious meals and training Olympic-caliber athletes. RA ] Merry Christmas, and may the Lord's blessings be on your house. When we first said 'Merry Christmas!' in A.D. Zero, the baby slumbered in an animal-feeder in Bethlehem, 90 miles south of Nazareth -- hardly a pleasant affair, with no one there save Mary and Joseph. As we sing in the Roman Rite at the Intrit: Puer natus est pro nobis, is this the fulfillment of Isiah when he prophesied: For a child has been born to us, a son given to us, and the authority is upon his shoulder, and the wondrous adviser, the mighty God, the everlasting Father, called his name, 'the prince of peace.'  We said 'Merry Christmas!', to the derision of the Romans for 254 years. They outlawed us, put us in with hungry lions in the great Colosseum, along with a cheering crowd and Caesar’s thumbs turned down. Taming the Visigoths And when we said 'Merry Christmas!' to bring the good news to the Goths and Visigoths, they burned us and ran us through. Five-hundred years later, they were saying 'Merry Christmas!' in German, one of their own being Saint Nicolas! And 'Merry Christmas!' in Tunis and Algiers was met with the Star and Crescent and beheadings; but we said 'Merry Christmas! The Child of eternal hope is here!' And then, 'Merry Christmas!' in Ye Olde England under the Puritans was met with hangings, exile and nothing merry at all; but we continued the greeting long after Elizabeth and Cromwell were dead and

Most of us had been expecting gold to explode through the $2000 "barrier" and soar into the wild blue yonder. Instead, it spasmed to $2152 for a nanosecond on December 4, then crashed back down below $2000 like an anvil dropped into an elevator shaft. What happened? Gold is most certainly in a bull market, even if the ascent has been tortuous. One might think bull-market psychology would limit the extent to which bullion's price can be manipulated, especially lower. And it has, evidently, judging from the way the last takedown attempt reversed without even getting close to a prior low at 1955. This is despite the fact that gold's price is controlled by white-collar criminals who act with the blessings and complicity of regulators and their evil masters in the upper echelons of banking. We suggest that you Google our old friend Andy Maguire if you want to understand exactly how these slimeballs from Wharton, Sloan and Stanford operate. Their mothers actually believe they are respectable businessmen. Use the Trendline So when might we expect gold to get off the launching pad with enough firepower to turn the bad guys' pelotas into roasted chestnuts? It is logical to think this will happen when gold has finished consolidating at the $2000 level. However, because it has spent the last year making a muddle of this idea, I'll suggest using the trendline in the chart above to determine when COMEX futures have broken out for a run-up to at least $2500.  That implies a consolidation above $2100 rather than at the ponderously symbolic $2000. A second, decisive poke above $2100 this month or next would hasten the process, especially if the futures can settle above the trendline for two or more consecutive weeks. Bulls can afford to be patient, since anyone

[This essay originally appeared here in July 2022 and was written by a friend who spends a lot of time thinking outside the box. His provocative thesis is that that there is a physiological basis for our political differences; moreover, he notes, liberals cancel and ghost their conservative friends for reasons that are tied to their deepest fears about survival as a species. How else to explain why they become so outraged over seemingly little things that they would end a long friendship over them? It happened to me most recently when a Boulder woman I'd known for years visited Florida. We took some long walks on the beach, had a few great dinner conversations and generally enjoyed each other's company. After she returned to Colorado, I asked her in an email whether her news sources, including CNN and MSNBC, ever showed videos of Biden stumbling through a speech or falling off a podium. She insisted that such videos had been doctored by the Republicans; then, a few days later, this otherwise courtly woman admonished me in an email with some informational links to"Read this, you fucking moron!" So much for the strong mutual respect that had always obtained between us over the years. Yet another close friendship had bitten the dust. Please circulate this to anyone who might find it interesting, especially liberal friends who have stopped taking your calls . At the author’s request, I have not identified him. RA ] *** Many of us have noticed that our liberal friends are more likely to 'ghost' us than the other way around. Typically, they terminate our friendships in ways that are meant to be final. Their way of doing so ranges from slipping away to kissing us off with a righteous display of indignation and disgust. Here is