Wednesday, August 16, 2017

2017 Social Security Trustees Report

The 2017 Social Security Trustees Report is out.  Key findings:

Under the Trustees’ intermediate assumptions, projected OASDI cost will exceed total income by increasing amounts starting in 2022, and the dollar level of the hypothetical combined trust fund reserves declines until reserves become depleted in 2034. Considered separately, the DI Trust Fund reserves become depleted in 2028 and the OASI Trust Fund reserves become depleted in 2035. In last year’s report, the projected reserve depletion years were 2034 for OASDI, 2023 for DI, and 2035 for OASI. 

So, the combined trust fund will be solvent until 2034.  This is the same as in last year's report.

What about the 75-year deficit?
The open group unfunded obligation for OASDI over the 75-year period is $12.5 trillion in present value and is $1.2 trillion more than the measured level of $11.4 trillion a year ago.
The 75-year deficit was $11.4 trillion in 2016,  $10.7 trillion in 2015, and $10.6 trillion in 2014.

The word "unsustainable" was not used in the report.

Thursday, August 10, 2017

New Peak for the Dow

The Dow closed at 22,118.42 on Aug. 7.  The SP 500 closed on 2480.91 on Aug. 7.   I'm calling that this is the high for the year.  Of course, I have done that several times before and been wrong, but this really might be the high for the year.  I'm anticipating about a 10% drop, to below 20,000, between now and the end of October.  I think the massive 40% drop will be next September.  We will see.

Saturday, August 5, 2017

The Calm Before The Storm

I haven't posted in a while because everything looks great.  The stock market keeps booming, and the economy is creating lots of jobs.  However, it won't be long until everything comes crashing down.

Step 1:  The debt crisis.  Congress won't have a budget and debt agreement before October 1, and so the government will shut down for a little while.  Ordinarily, this wouldn't be any big thing as it has happened several times before, most recently in 2013.  Within a couple of weeks, an agreement will be hammered out, and everything will be back to normal.  But not before forces set in motion ...

Step 2: A stock market crash.  David Stockman thinks there could be a 40% crash this fall.  I think that this won't be the big crash, just a way overdue correction of 5-10%, which with the Dow at 22,000 means 1100 to 2200.  With Amazon trading at 20 million times earnings (I just made that up), just a little whiff of panic will cause it to implode.  This will lead to ...

Step 3:  A coup d'etat against President Trump sometime in the Spring of 2018.  It will be a revolt against Trump by his own party, where unfortunately he doesn't have any friends.  Trump has really pissed off the Deep State and it is fighting back.  The clueless libs think that his removal will fix everything.  However, it won't stop ....

Step 4:  A fullblown constitutional crisis and possible civil war.  Don't underestimate the power of the American people. Quote: I expect Trump to be escorted to the South Lawn for his final trip aboard the Richard Nixon memorial helicopter. What is different this time, however, is that America is in no shape to weather the ensuing storm. (https://dailyreckoning.com/trump-another-nixon/)

I hope none of this happens.  I hope the debt crisis gets quickly solved, I hope the stock market keeps going up forever, I hope Trump has a good 8 years, and I hope the Deep State doesn't try to take control.  However, this is the most likely scenario.

Friday, July 21, 2017

Happy Moon Landing Day!

Thursday, July 13, 2017

Government spending goes wild



The U.S. government just spent $429 billion in June 2017.  That is the first time it has ever spent more than $400 bn in a single month.  Compare to the $323 bn in outlays in June 2016.

So, this brings up a related question - what was the deficit for June? $90 billion.  Wow.  Are we sure that the government won't run out of cash by Sept. 30 and have to shut down?

Tuesday, July 11, 2017

While you were sleeping

























Source: https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52801-june2017outlook.pdf

The projected deficit just got a lot bigger.  I previously speculated that $800 billion was the danger point for the deficit, and it was going to exceed this in 2022.  Well that has been bumped up a year, as the deficit in 2021 is now projected to be $879 billion, up from $797 billion previously projected for 2021.   Again, this assumes no recession.

Also notice that the deficit is projected to "bottom out" at $565 billion in 2018.  Just a few months ago, the 2018 deficit was projected to be $487 billion.

Of course, these numbers will skyrocket when the recession hits in 2018.  I think the deficit will exceed $1 trillion in 2019 and then explode from there.

Monday, July 3, 2017

Market Meltdown predicted before the end of the year

Market analyst Lynette Zang has deep Wall Street experience and is starting to see a worse setup than just before the 2008 market meltdown. ....So, how long can central banks keep the debt party going? When is the next crash? Zang says, “I am worried that it will happen before the end of this year. What do you do when the computer says no? 
 There is a certain amount of cash in the ATM, maybe $60 a day, maybe $300 a day. Who knows? But it’s not going to be enough. So, that’s what it is going to look like. Most people will freak out because they have about three days of food in their house. Most grocery stores have about three days of food on their shelves. So, what happens after day six? People will be scared for sure, and they will panic.”
http://usawatchdog.com/market-crash-coming-insiders-run-lynette-zang/

I am just repeating what I am reading.  I think there will be a major crash, but next year, not this. And I don't think it will cause people to run out of food.  But who knows.

Sunday, June 25, 2017

Stock Market Crash Predicted for Valentine's Day 2018

One River Asset Management's CIO Eric Peters broke with that tradition and dared to "pin a tail on the donkey" of when the next market crash - one which he agrees with us will be driven by a collapse in the global credit impulse - will take place. His prediction: Valentine's Day 2018. “But when the global credit impulse reverses, it’ll be a cascade, an avalanche. And I pin the tail on that donkey to be Valentine’s Day 2018.”
http://www.zerohedge.com/news/2017-06-25/it%E2%80%99ll-be-avalanche-hedge-fund-cio-sets-day-when-next-crash-begins

So we have about 7 months left to party.  I think it will be a few months longer than that but I wouldn't bet on it.  So eat, drink and be merry, for next year we will die!

Thursday, June 22, 2017

Peak for the Dow

The DJIA hit 21528.99 on June 19.  I waited a couple of days to see if it would hit a new high.  At some point, it will hit a peak for this business cycle, and that might be it.

What I think will happen at some point soon is that the Dow will decline by 500 or more points over a few days, enough so that we are sure the Dow won't go even higher.  Then the real estate bubble will burst - probably this fall.  Then the unemployment rate will start rising, say about January.  It is very low now, so I think it has a ways to go to trigger a recession, but the recession should start early next year.  Then a full blown crisis will hit in September 2018, with a huge stock market crash.

Of course, I could be wrong - I am wrong more than I am right - and this boom could keep going forever.  I don't think so though.

Sunday, June 18, 2017

Valiant Thor



Valiant Thor is supposedly an alien from Venus who spoke 100 languages who has been working for the Pentagon since 1937 and hasn't aged a day since.  This is one of the more interesting conspiracy theories that I have heard.  Phil Schneider made this video shortly before his mysterious death in 1996.

Saturday, June 17, 2017

The Mother of All Debt Ceiling Crises is Coming

 The Treasury’s cash balance yesterday [June 11] stood at only $153 billion — down by $130 billion just since the tax season peak was reached on April 25th.  Uncle Sam has been burning cash at a rate of $3.2 billion per calendar day since then and has no more room to borrow. That’s because the public debt ceiling is frozen at its March 15th level ($19.808 trillion) and the mavens at the Treasury Building have run out of borrowing gimmicks. It will be impossible to pay Uncle Sam’s bills in full after Labor Day unless the debt ceiling is raised well the $20 trillion mark.  https://dailyreckoning.com/coming-mother-debt-ceiling-crises/
The "drop-dead" date appears to be Labor Day, which is on September 4 and a holiday.  So on September 5 we will be in for a world of hurt unless something big changes.  (The date could be even earlier - $153B divided by $3.2B is 47.8 days.  June 11 + 48 days is July 29).

The Democrats aren't going to support a clean debt ceiling increase because they want Trump to fail.  The Liberty/Freedom caucus wants to see more cuts.  So it is up to the moderate Republicans, the same group that couldn't pass TrumpCare.  Everyone just assumes that a deal will happen at the last minute.  But Stockman doesn't think so:  "And unlike the saves which were put together at the 11th hour in August 2011 and October 2015 by President Obama and Speaker Boehner, this time there will be absolute legislative paralysis."

And even if the debt ceiling gets raised, the government is only funded through the end of September.  So the two issues will get merged, which makes this an all-or-nothing event, without much room for compromise.  The other thing that makes this different from prior fights is that the left is totally crazy, unlike the right.  There is no equivalent of Boehner on the left who can pull them together.

So look for a mini-default on September 5.

================
Update:  Now we have until October. See http://www.zerohedge.com/news/2017-06-29/treasury-will-run-out-cash-mid-october-cbo-warns

So the issue will definitely conflate with the budget issue.  Look for a shutdown on Monday, October 2.

Wednesday, June 14, 2017

Yet another high for the Dow

The Dow reached yet another high on June 14 of 21,374.56.

Saturday, June 10, 2017

Baby Boomers are sucking the economy dry

Dow closes at all-time high of 21,271.97 on June 9

The SP 500 however, did not set a new high.  The high remains at 2439.07, which was set on June 2.

The NASDAQ Composite set a new high of 6,321.76 on June 8, and is down 1.8% since then.

For the FANG stocks, the bubble may have finally popped:

Facebook (FB) hit a high of 154.71 on June 8, and is down 3.3% since then.
Amazon (AMZN) hit a high of 1,011.34 on June 5, and is down over 3% since then.
Netflix (NFLX) hit a high of 165.88 on June 8, and is down almost 8% since then to 158.
Google/Alphabet (GOOGL) hit a hit of 1,004.28 on June 8, and is down 3.4% since then.

It is possible, but unlikely, that these stocks may keep going up.  The Fed I'm sure will just focus on the Dow, and this pretty much seals in the rate hike on June 14, and that will in turn ensure that the June 9 high is indeed the high.

So we are looking for a stock market drop this fall, to parallel the 2000 and 2007 markets, a recovery next Spring that does not break the all-time high, and then the big event in Sept 2018. 

Update:
I left out Apple (AAPL), which hit its high of 156.10 back on May 12.  It was down almost 4% yesterday, ending at 148.98.  It is not really part of the FANG gang because it left the party early.

Saturday, June 3, 2017

Classical Gas on Acid



This is very jazzed up version of Classical Gas. It's worth watching just to see how crazy it is.  But ultimately, he ruined it.  This is him just showing off.

Classical Gas on Piano


Classical Gas on Piano. This is very hard to get right on piano, and this the one I like the best so far. I Professional pianists tend to add their own trills which aren't part of it, or do it in the wrong key, or get the rhythm wrong. It should start off very simple, like this guy is doing, and then jump into a bunch of chord changes.  I also like the fact that this guy is pausing to turn the page.  But the ending doesn't sound right.

Friday, June 2, 2017

Dow closes at all-time high of 21,206.29 on June 2.

This beats the previous high of 21,115 on March 1, 2017.   The Dow tends to make a high about a year-and-a-half before a crash.  So this still points to a fall 2018 crash, not this fall.

The S&P 500 closed at 2439.07, also an all-time high.

Tuesday, May 30, 2017

Nenner, Nenner, Seven, Seven, Seven

Some guy named Charles Nenner fervently believes that there will be a stock market crash this fall. "Renowned financial and geopolitical analyst Charles Nenner is doubling down on his prediction last year that the financial markets will crash in the fall of 2017. Now, Nenner has additional research that backs up his position, and it involves the number 7."
http://usawatchdog.com/suicidal-to-stay-in-this-market-charles-nenner/

I don't think so.  I think it will happen in the fall of 2018.  Real estate hasn't crashed yet and I think that will happen prior to a stock market crash.

Secret Underground City below Central Park

This complex, known as the Manhattan Project (or MP) was housed in a series of underground caves designed to protect the Union government if the Confederacy started to win the United States Civil War (1861-1865). After the war the project was abandoned until it was later revised and expanded to 300 acres during World War One (1914-1918). Since that time it has been expanded several times to now include over 700 acres in a huge underground city within a city. It is located deep within the bedrock, over 300 feet below the park. This massive city complex is now designed to safely house up to 4,000 central Government personnel in the event of a nuclear strike. It presently houses all United States government UFO activities and was the home for Nazi Adolf Hitler until his death in 1956. This Super-secret location is the site of the main Emergency Government War Headquarters - the hub of the Country's alternative seat of power outside Washington, D.C. http://gothamist.com/2017/01/23/its_not_a_bad_idea_really.php

You had me until you said Hitler.  Good conspiracy theory though.

The Trump Budget

















Source: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/budget.pdf

This shows a surplus in 2027.  I don't believe it will pass but one can always dream.  In addition to the political problems with passing the budget, it doesn't have any room for a recession.

My forecast is still for the system to have a full-blown crisis in 2029 because of defaulting on Social Security payments.  Even the rosy Trump budget above shows a $350 billion hole in Social Security in 2027, increasing at the rate of $50 billion+ per year.

I think that there will be another 2008-style recession starting in 2018, and from 2019 on out we will have trillion dollar deficits and rapidly increasing.  I hope I am wrong.