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The Morning Line

Sorting Facts from Lies

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Each of us seeks our own version of the truth when we turn on the news. Tucker Carlson, one of the most courageous and honest journalists of this era, is my choice. He has excoriated Democrats and Republicans alike for their moral cowardice in coddling torch mobs. I can’t get my liberal friends to watch him, however, probably for the same reasons they could never get me to watch Rachel Maddow.  It’s true that Carlson used to give snarky interviews to political radicals whom he never took seriously. But he takes them very seriously now because of the grave threat they have come to pose to individual freedom and to the American experiment itself.

I do wonder sometimes what Maddow has been saying about Biden’s supposedly big lead in the polls. This is about as unbelievable as headlines get any more, although it hasn’t stopped Fox News and its chief political analyst, Karl Rove, from taking the surveys seriously. The network’s mostly conservative viewers scoff at such twaddle, having learned their lesson when Hillary’s widely predicted victory in 2016 failed to materialize. This time the polls are wrong simply because the news media and the popular culture have bullied millions of Trump voters into silence. There are many quiet converts going uncounted as well. They include not only a significant number of Jews I know who a year ago could not have imagined themselves ever voting for a Republican, but also some well-closeted apostates in Boulder and San Francisco, where I lived, respectively, for 19 and 22 years.

Civil War Coming?

More unbelievable than Biden’s strong poll numbers are unemployment data that suggest the country is in a strong economic recovery. Trump never tires of telling us how super-amazingly strong it is, but many if not most Americans probably reject this narrative because they can see the falsehood of it in their own lives. They recognize how their own spending habits have changed and how very long it could take before they go to a concert or baseball game, board a cruise ship or an airplane, dine indoors at a restaurant, or travel via subway or bus. A handful of retailers may be doing brisk business, but most will not survive even a 10% hit to margins. Airlines are particularly vulnerable because their profits come from squeezing passengers like sardines.

Retailers aside, the big question is how long it will take before the Republic is in an actual state of civil war. The shooting is likely to begin when Marxist rowdies try to take down the wrong statue in the wrong town. Boise, Idaho, maybe, or Springfield in any of a dozen states. Some of these misguided ‘youths’ will get shot, and the war will begin. It will end quickly, fortunately, because the red team’s militia possesses overwhelming firepower and is ready to use it.

Fear Favors Trump

Concerning the desecration of public monuments, every decent American should be more than merely appalled. It is one thing for rioters to burn stores in a fit of rage; however, the sight of these miscreants toppling statues of Washington, Lincoln, Jefferson and Teddy Roosevelt is far more frightening because it reveals that their goal, and even that of peaceful protesters, has less to do with black lives than with gaining political control over what we are allowed say, to do and even to think. Do enough Americans fear this to put Trump over the top in November? The answer, probably, is yes. It stretches credulity to believe voters will turn to the Democrats to fix urban blight that they themselves have brought on themselves over the past 50 years.

Most big cities have either a black mayor, a black police chief or both. Perhaps four more years of Trump will give voters ample time to face up to the fact that America’s biggest problem is not racism, but rather indigo-blue governance that favors teachers’ unions over students, multi-layered, fat-cat bureaucrats over taxpayers, and encampments of drug abusers over homeowners. In the meantime we ought not get our hopes too high that political tensions will subside. More likely is that they will only worsen between now and November, possibly degenerating into physical violence on a wider scale than we saw in June.

Rick's Picks for Monday
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$+TSLA – Tesla Motors (Last:1208.66)

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$ESU20 – Sep E-Mini S&P (Last:3130.50)

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$AAPL – Apple Computer (Last:364.11)

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$GCQ20 – August Gold (Last:1788.30)

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$NQU20 – Sep E-Mini Nasdaq (Last:10351)

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$DIA – Dow Industrials ETF (Last:258.79)

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DXY – NYBOT Dollar Index (Last:96.98)

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I have not updated my perennially bullish outlook for the dollar for a long time, and you can see why in the chart. DXY has come of March’s 103 high with a so-far 6.3% sell-off that has done no technical damage to the long-term uptrend. Actually, a further selloff of 3.6% would come down to a trendline that is likely to evince good support. Pivoteers may also notice that a pullback to the green line would trip a strong ‘mechanical’ buy signal that is about as textbook as such trades get. ‘Mechanical’ trades work best when speculators get too far ahead of themselves in either direction. The pullback to the green line is Mr. Market’s way of reminding them that overconfidence seldom pays off.

The bullish outlook also implicitly raises a question that seems not to be troubling traders at the moment — namely, what kind of moron would be buying the euro and other currencies in preference to dollars? Indeed, the rally in the euro is as stupid and groundless as the one in U.S. stocks at the moment. No currency will supersede the dollar, simply because it is the only currency big enough to facilitate the quadrillion dollar shell game that makes paper-shufflers rich. Also, the world will continue to prefer to pay for real things, most particularly crude oil, with a currency that is in practically infinite supply.  If you read anything suggesting that the dollar has entered a bear market, save your time energy, since it was written by some bozo with poor comprehension of the currency market’s underlying dynamics.

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$TNX.X – Ten-Year Note Rate (Last:1.26%)

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I’ve revised downward to 0.26% my forecast for interest rates on the Ten-Year Note.  A 0.30% target given here earlier was based on an erroneously drawn pattern discovered by a subscriber. But could the so-far low at 0.39% have been the bottom, especially considering the power of the subsequent rally to 0.98%? It’s possible, but I doubt it. The pattern itself is sufficiently clear and compelling to suggest that the Hidden Pivot target will not merely be closely approached, but actually touched. This revised forecast will have no bearing on my forecast for a drop to 0.73% on the 30-Year Treasury Bond. It  traded down to a record 0.84% last week but has since rebounded as high as 1.63%. The T-Bond sellers who drove rates back up to that height were useful idiots who were simply fulfilling the inviolable law that no trend ever goes sup or down in a straight line without correcting. ______ UPDATE (Mar 18, 9:15 p.m.): This is quite a rally we are witnessing — probably the steepest climb ever recorded for yields on the Ten-Year Note. So, was the dip to 0.39% the finale for the long-term cycle? I doubt it, but I am not going to get in the way of this rally.

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