1999 All Over Again?

I started looking at rabbit years because for some reason they have a 12-year pattern of alternating boom-bust, and I've been thinking about how AI is like the 1999 New Economy, and then I looked into the Fed's liquidity pump and...Oops They Did It Again: Fed Repeats 1999

Troubles in China: Developers Going Down, Province Needs a Bailout

Here we are again, at the starting line for a crisis: Chinese Developers Going Down Like Dominoes

Chart Dump

Lots of great setups again. Going through my old list...

Nikkei Breakout

What culture is more open to automation?

More Important Than the Dollar

Everyone is focused on the dollar most of the time and they're right to.

If the yen weakens much further though, it is going to become the story.

A Look at East Asia Via AUD

I'm not predicting AUD strength, but I look at charts of AUD crosses and wonder. With the RBA relatively hawkish, what if AUD loses less than expected in a USD rally? Many charts would break bullishly for both AUD and by implication, USD should USDAUD be also climbing. RBA Surprise Rate Hike

Something Brewing in South Korea?

The won looks weak, with a possible major bearish breakdown in play. It only looks good versus the yen.

Long EAFE, But Maybe Not Yet

The relative turn from S&P 500 (Nasdaq) leadership to MSCI EAFE (MSCI Emerging Markets) leadership has probably started, but the first stage might still be bearish for stocks. At least it was in the 2000 and 2008 turns...

SPY-EFA Ratio Threatening Breakdown

If this rolls over and drops, it's a major signal for the markets. U.S. stock market leadership is over and it is either the start or end of the bear market.

What do you think? A new bull market is starting along with a new U.S. dollar bear market, led by non-US developed markets or a major top in the U.S. markets is about to pick up downside steam? SPY has way more tech exposure than developed markets, so if bearish, it hints at a resumption of Nasdaq leading the markets lower. If you notice the stochastics below as well, SPX-EAFE ratio bottomed in February 2000 and peaked again in October 2000. This time it peaked in December 2021 and bottomed in February 2023.

Here is EFA versus EEM for comparison. Looks like a massive base in favor of developed markets.

China's Population May Be Shrinking Faster Than Reported

Leaked Data Show China’s Population Is Shrinking Fast

Take the Quiz

Social Awareness poll: Without cheating, what was the inflation-adjusted capital gain in the US equity market for the 75 years following the 1906 peak. Recall how much wealth was created in that window.

— Dave "Rent this Space" Collum (@DavidBCollum) April 12, 2023

After checking the result, I looked up dividend yields and calculated the compounded return. Then I looked up historic dividend yields versus bond yields.

China Prints at Devaluation Speed

China Printing At Devaluation Speed

The annualized three-month growth rate of M2 money supply growth hit 24.1 percent in March. The last time it hit 24.1 percent? July 2015. The “surprise” yuan depreciation was in August 2015 under similar economic circumstances.

Everything is not the same, but the key component in this mix is the U.S. dollar...

Reclosing

Evidence continues to confirm my suspicion that China's lockdowns were hiding a recession. Industrial profits tumble

Ground Shifting Beneath the Bulls' Feet

With Twitter and Substack fighting, links cannot go between the sites. I miss the Internet of the 1990s.

Anyway, this rally is all but done here if the bears want to take it lower or the bulls gets skitting: Ground Shifting Beneath the Rally

Gold Again

Gold

Inflation-Adjusted Possibilities

If the Fed can't or won't stop inflation, the inflation-adjusted losses on the market indexes may erase the entire 40-year bull market. A drop to the 1966 inflation-adjusted DJIA seems like a lock to me in any major bearmarket. It is about a 69 percent loss down to the 1500 area onthe S&P 500, the 2000 and 2007 topping area (I used DJIA for any data before the 1980s because it was the most watched index then), that I think can be hit in nominal terms during a front-loaded bear market. The longer a bear takes to unfold, the more losses will be made up of lost purchasing power. That might sound nuts, but consider the CPI-adjusted low in 1982 matched where the DJIA was in 1947.

The CPI is about 300 right now. What if the CPI hits 500, about 60 percent inflation, over a decade. Multiply the CPI by 30 to get 15,000, matching the inflation-adjusted peak in 1966. Zero inflation-adjusted gains not including dividends. You may point out the dividend gains aren't too shabby and you're right, that's a lot of compounding. However, we are looking ahead. Do you want to suffer that loss while only collecting about 1.6 percent yield on the S&P 500 Index? Also, bonds can compound too. If inflation rises, 10-year treasuries will be paying substantial interest, possibly as much as the 8-percent investment return target many investors and institutions default to.

French Torch Pro-Immigration Politician's Home

Remix: French mayor in support of new asylum center in seaside town has his house burned down

The house of a left-wing mayor in France, who supports a controversial plan to establish an asylum center in the small seaside town of Saint-Brevin-les-Pins, has been burned down in a suspected arson attack.

Immigrants to the USA are probably the safest because the USA considers itself "a nation of immigrants," but there will probably be some rough goings for those who are openly unassimilated and also observably anti-American. In Europe, I'm expecting things won't turn out very badly for the migrants and it'll spark a backlash that will hit long-term citizens such as Turks in Germany.

Incyte

Game Over

Repo is inverse with XLF, not on XLE.