Whew! What a year! It reminds me of the theme song to "Car 54 Where are You?"(Youtube) When I (re)started the newsletter, and named it "The Bear Market Blog", one would think I was just talking about the stock market. But it is a lot more than that. It has to do with the economy and society's mood as well. If you can't feel the negative vibes being given off lately, you must not be getting out much.
News on the world front:
The Russian and U.S. governments are having a (excuse the language) "pissing contest". Russia (except in the President-elect's eyes) is becoming our nemesis again rekindling the Cold War.
The Israeli and U.S. governments are at each others' throats because of a U.N. resolution condemning Israel's expansion onto Palestinian soil.
There is another mass murder this time in Berlin using a truck as a murder weapon killing and injuring many holiday shoppers.
On the home front:
President-elect Trump is showing his hand in the next presidency, undoing much that has been done for the last 50 years!
A post on Facebook says it all:
And now you have ex-governor Perry of Texas, as you remember, the guy who couldn't remember the department he wants to do away with (OOPS!), the next Secretary of Energy.(Youtube)
Come on! Enough said about that. Stay tuned on these developments!
And a real shocker that doesn't surprise me:
Mall mayhem: Fights break out across the US (CNN)
Fights broke out at14 different malls. All on the same day! Yikes!
And last but not least, the number of violent crimes continues to escalate in cities like Chicago where the number of murders by shooting:
Few answers as Chicago hit with worst violence in nearly 20 years (Chicago Tribune)
And the list goes on and on.....
I'm not telling you anything you haven't seen on TV. But in previous posts, we now know better!
Let's look at it from a Socionomics perspective. Most people think that the news causes the mood of society. Socionomics has determined that it is just the opposite, that social mood that swings from positive (1990's) to negative (now), determines what large groups of people will think and feel and as a result will do. The news (as above) is full of stories of groups of people expressing their thoughts and feelings in a negative way. If you get enough people together, feeling frustration, anger, impotency, depression, and hopelessness, you are going to get the types of behavior we are seeing, Chicago being a prime example.
The feelings of hopelessness, for example, will make anyone strike out "at the institution" that they feel caused their predicament. The police, government, corporate greed, all are being attacked for their role in "causing" these feelings. Sometimes rightfully so.
So if the "system" isn't working, then "we need to change the system". So in walks Donald Trump who claims that "only I can fix it"! His authoritarian behavior is just what is needed to fix the problems caused by the current institutions. His targets are the "underdogs", the blue collar and white collar workers who have lost decent jobs and they need an "outsider" to fix their predicaments!
So we will continue to see authoritarianism continue to grow during this negative period. Back in the 1990's even Russia was having democratic elections. That has changed to where they are back to a an authoritarian figure, a dictatorship in principle only appearing to have elections for leadership. Nothing can be further from the truth. I'm not saying we'll end up in the same predicament, but certainly we will have an authoritarian in the White House for a while.
Interestingly, it wasn't a sweep election. Donald Trump won the Electoral College and Hillary Clinton won the popular vote. This "mixed message" is telling me that the mood of society (at least in the U.S.) isn't as bad as other countries. This is reflected in the stock market. Remember I said that the stock market is a barometer of mood? well, we are STILL in a bear market rally as measured in real dollars (gold).
Here's an updated chart of the Dow/Gold ratio. Notice that the bear market started in 2000 and we are in a bounce, NOT reaching new highs:
When will this bounce end (and end this big rally)? Although I try not to make any predictions I will be called to the carpet for in the future, I believe, based on certain mathematical calculations built into the market, that we will see the Dow Jones Industrial Average close to 22,000 before this reverses big-time. Here's my scenario:
The Dow will plug along until the end of June this year (2017). How did I determine that? Don't ask. That will be another blog. Suffice it to say, it will continue to rise for another 6 months and then collapse. We'll see. This means that President Trump might even get a bit of a honeymoon period before everything hits the fan.
Bonds are a different story. Janet Yellen raised interest rates because she had to. She has to keep short term interest rates in line with long term bond rates (prices). When bond prices go down, interest rates go up. Investors want more interest if prices are going down. This is actually good news for investors putting their money in short term CD's and savings accounts. We should see these rates go up as well, FINALLY!
As you can see, 30 year bonds topped last July and are in a small bounce right now as nothing goes straight up or straight down. So hopefully you will start to see a rise in your savings interest rates!
As far as prices of goods are concerned, I don't see them falling until the stock market reverses. In this "bounce" people are spending more (albeit on-line instead of brick and mortar stores putting pressure on Macy's and Sears). As I learned in school, higher demand for goods keeps prices from going down. But again, this will change when people will feel poorer as their stock holding plunge!
I also think the dollar will continue to go up against other currencies like the Euro and British Pound now that it has rested in the last year. That's good new for anyone traveling to foreign countries for a vacation. That also includes Canada.
Here's the dollar in the last 3 years compared to other currencies:
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