The Morning Line

The war with Iran has put investors in a deepening state of anxiety, since no one can say for sure how things will turn out. Wall Street’s obsessive focus has been on the price of oil, implicitly trusting that the supposed collective wisdom of markets is superior to whatever information we could glean from headlines and op-ed pages. The trouble is, the story that crude oil spins each day mutates with wild price swings that suggest the markets are an idiot, as clueless as we are. The charts I use to get a tight handle on the stock market are less confusing, however, and they are saying unequivocally that the bull market begun in 2009 is over. To state this in a disinterested, technical way, when ABCD corrections in bull markets start exceeding their ‘D’ targets, as occurred last week in the S&Ps, the major trend has changed. The small target-overshoot in the E-Mini S&P chart above tells us more about the stock market’s health, or lack thereof, than a cacophony of pundits and eggheads ever could. It says a bear market that has always been inevitable has finally begun. This will also mark the end of Trump’s heroic run, negating his magical ability to move the markets and to persuade people that everything will turn out okay if we just give it more time. Trump’s Miracles It is difficult to criticize a man who has produced so many political and geopolitical miracles. Admittedly, we have never believed in the economic kind, since Americans are much too deeply in debt to escape a Second Great Depression. When it comes, it will take down a global regime that has come to depend on America’ economic strength and, more recently, its leadership. The hope remains that Trump will put our domestic house

Although Trump has achieved many spectacular successes in his second term, he has made two big promises he can't possibly keep. The first was to bring back affordability to the broad middle class.  Anyone who believes this must be living on some planet with an all-powerful ruler who generously provides everyone with low-cost homes, apartments, childcare, senior care, pet care, car repairs, college tuition, groceries and insurance. Trump's second promise is that he will wind down the Iran war quickly. This ranks right up there with George W. Bush’s ‘Mission Accomplished’ speech in 2003, when major combat operations in Iraq turned out to have been far from over.  Few took him seriously at the time, just as few believe Trump is close to bringing the mullahs to their knees. Far from surrendering, they reportedly have been pondering whether to attack Israel’s Dimona reactor, a key facility in the nation’s nuclear weapons program.  The town of Dimona was hit by a powerful missile over the weekend, but if Iran targets the reactor, that could conceivably release radioactive material into the atmosphere, threatening not only to kill all human life in the region, but throughout the world. If Israeli were to retaliate proportionately, the destruction this could cause lies beyond imagining. The Annihilation Trade I usually try to focus on investable issues in these weekly commentaries, but they are less-than-trivial in comparison to a nuclear threat that could annihilate mankind.  No one doubts that Iran’s leaders are fanatics who are capable of doing anything to avoid defeat. This threat is not going to go away, nor are oil prices going to retreat any time soon. With interest rates rising, a pumped-up stock market and feverish global economy are facing a perfect storm.  If you are looking for a trade, there is probably

My regular commentary will resume next week when I my return from a busman's holiday on the West Coast. In its place is an excerpt from Thomas Mann’s The Magic Mountain that holds an epiphany for the way we experience and recall the passage of time.  It has been published here before, but this version was masterfully shortened and simplified by ChatGPT so that more readers could understand and appreciate it.  The original can be found in the chapter “Excursus on the Sense of Time” in several translations. RA There is something peculiar about deliberately settling into a new place—making the effort to adjust, to feel at home—only to leave again once that adjustment is complete. We insert such intervals into our lives as a kind of restorative break. They are meant to refresh us when the steady sameness of daily routine has begun to dull and weaken us. But this dulling is not simple physical or mental fatigue; if it were, rest alone would cure it. The real issue is psychological: when life becomes too uniform, our sense of time fades. And because our awareness of time is bound up with our awareness of being alive, when one weakens, so does the other. We commonly think that interesting experiences make time pass quickly, while monotony makes it drag. That is only partly true. Monotony does make hours feel long and tedious. Yet over longer stretches it has the opposite effect: it compresses time. Large, uniform periods shrink in memory until they seem to vanish. By contrast, rich and varied days may fly by in the moment, but they give weight and substance to life as a whole, so that years filled with variety seem fuller and longer than empty ones that slip away unnoticed.          

[Your editor is taking a busman's holiday in San Francisco. Although trading touts will update as usual and I'll be active in the chat room, this commentary and the next come from the archive. You can judge for yourself whether they were sufficiently on-target to still be relevant. RA] Stocks looked leaden as the week ended, adding to the impression that the aging bull market is topping. The Dow tacked on a perfunctory 104 points, or 0.22%, and it wasn't pretty. There was little life in the lunatic sector (aka 'the Magnificent Seven'), which until recently could be relied on to celebrate its wildest flights of fantasy on Fridays. The biggest winner in the bunch was META, which rose 1.80% on news that Zuckerberg is having second thoughts about his all-in bet on a metaverse. If you're unfamiliar with the term, it refers to a virtual world in which users interact online through avatars. Zuckerberg evidently thought there were hundreds of millions of us, if not billions, eager to escape the pain and drudgery of day-to-day life. He was so certain about this that he changed the name of his company in 2021 from Facebook to Meta.  But after sinking $70 billion into the concept, there has been precious little payback. Even more troubling to investors is that there are no obvious ways to make back what has been spent already, nor to recoup any further sums Meta might pour into the idea. Counting on Investors' Stupidity   To cover up this boo-boo, and to avoid being thought clueless, Zuckerberg did what any muckety-muck CEO in the digital world would have done: a twisting somersault onto the AI bandwagon.  "AI is the most important technology we are working on," he said, evidently hoping investors have forgotten that he spent the last

[Events in the Middle East have overshadowed my narrow economic critique of President Trump in the commentary below.  His alliance with Israel to knock out global jihad's command structure is likely to change the world in ways no one can predict. It will also test the idea that only military might can secure a lasting peace.  RA ] Stocks used to turn feisty toward the end of the week, but as the chart shows, the last few 'Freaky Fridays' have been pretty tame. My gut feeling is that this picture of tedium is the calm before the storm, and that stocks are being heavily distributed ahead of a major breakdown. Although I promised a few weeks ago that I wouldn't mention the words 'topping process' again, the alternative would make me sound like a Wall Street shill. The Street's best and brightest have been flat-out bullish on stocks since the 1929 Crash, having failed to issue a sell signal even on stocks implicated in some of the biggest scandals of the last hundred years. To cite a particularly notorious example, many of them were gung-ho on the shares of Equity Funding until the moment regulators halted trading in the stock one day in March 1973. Read about it here. So why have shares been unable to develop a head of steam on Fridays, when irrational exuberance has typically been highest?  There are two likely reasons. For one, the AI Bubble has popped. This occurred without much fanfare on January 29, when Microsoft shares dove $60, or 12%, overnight. The shills initially took this for a one-off event, an 'adjustment' in the share price of a big company they felt was heavily over-invested in AI. Rick's Picks saw it as the beginning of the end for AI mania and said so

Robot demonstrations are notorious for going comically awry. Seat Robby at a staged dinner and he will stab himself in the eye with a forkful of make-believe mashed potatoes. Have him put a butter dish back in the refrigerator and he'll slam the door on his head. So what, then, are we to make of this video, which showcases China's latest entry in the global competition to build robots that are more human? Stunning, isn't it? This is a kung-fu ballet, performed by acrobatic children and a troupe of robots who move with the gracefulness of dancers at the barre. When they abruptly shift gears, vaulting into ten-foot-high somersaults, they land squarely on the rubberized balls of their feet, perfectly balanced. Even more impressive is that there are a dozen of them doing these elaborately choreographed moves in perfect synchronicity. Search Google for a skeptical take on all this and you have to call up a fifth page of results to find anyone who doubts the video is real. Ever the skeptic, my instinct is to disregard all the oohs and ahhs and focus on the doubters, just as many of us do with product reviews on Amazon. Here's a jibe on X from an observer who supposedly witnessed a similar demonstration in Shenzen a month earlier: "The [robots were] slow, shaky and could barely shuffle, let alone do any of this. This isn't the first time [Chinese manufacturer) Unitree has used CGI to fake capability." "13 Billion Views" So who's telling the truth? It's an important question, since the video reportedly has attracted 13 billion views so far. That's according to Chinese news sources, but does the outside world have any reason to trust them? The country's leaders have a strong incentive to show off the nation's technological prowess,

AI hubris has got itself in a bind, trapped between two conflicting stories, neither of which seems likely to end well. One story has the boys in the billionaire's club throwing untold sums of money at a technology that seems increasingly unlikely to produce commensurate returns. The other story has been threatening whole sectors of the economy with creative destruction: software development, financial, legal and accounting services, money management, entertainment and even trucking. Each day, there's a menacing new headline about some industry whose workers, mostly white-collar, are about to be replaced by thinking machines. The recent trucking news concerned the logistical problem of routing vans so that they are filled with cargo all the time. Artificial intelligence has taken on this challenge, squeezing out inefficiencies in ways that human workers could not have imagined just a few years ago.  The shares of companies that do this work crashed last week, victims of AI's Grim Reaper. It won't end there, either, since driverless fleets of trucks are coming, and soon. Humans will be needed to load and unload them -- that is, until Musk robots come along to relieve them of their jobs. A Chimpanzee Reflex Whenever creative-destruction stories hit the tape, the chimpanzees entrusted with America's 401(k) savings instantly dump the shares of all companies likely to be impacted. The trouble is that the list is growing so fast that it has become hard to imagine an area of the economy that will not be affected. We are talking mainly about job losses, and there seems to be no end to the number and variety of positions in AI's crosshairs. So what's an investor to do?  Our money is on Musk, arguably the only player with a strategy imaginative enough to encompass and integrate AI's myriad possibilities while also

[The following commentary was written by Steve Houck,a longtime investor in bullion and knows the markets well.  He is also a friend and a former business partner.  RA ] Looking at the froth in silver, it became apparent it was time to rotate from overvalued to undervalued once again.  Selling precious-metal ETFs like SLV and AGQ meant cash was available for the next trade, but where to go?  While silver has been on a relentless tear, the miners have only grudgingly moved higher.  Yes, there have been good moves in many of the miners, but quite a few trade with a ball and chain weighing them down in the form of fear.  That's because the last two times silver surpassed $50, in 1980 and 2011, it collapsed and went into long, grinding bear markets.  Silver mining stocks get caught up in this because the public doesn't believe prices will hold, and that silver will fall back to earth. But what if the new floor is $55 to $70, and not the $15 to $25 range that obtained for decades?  This silver run-up is different because it’s about one thing:  physical metal.  Just look what;s happening: China, the U.S. and the rest of the world are hoarding and trying to secure metals. That puts the miners in the catbird seat, because they produce and control the supply.  Their shares, however, are still being priced as though silver were selling in the  $20s even though it averaged close to $50 for the entire fourth quarter 2025.  The miners wil start to report earnings next week, beginning on February 16.  Because many of them will announce blowout earnings, now is the time to capitalize! How to Play It How to play this?  Over the last two decades of investing in silver miners, the

Pity the J-school rookies who are paid to explain why the stock market did what it did on a given day. On Thursday, Microsoft shares lost nearly a half-a-trillion dollars of value. But why? Bloomberg's Evening Briefing called it a 'rap on the knuckles' for the company's huge spending on AI projects that seem increasingly unlikely to pay off. But isn't a rap on the knuckles the way nuns used to deal with minor behavioral lapses in young boys? If so, then Microsoft deserved 40 lashes with a rattan cane. Although the story was treated by the hacks who wrote it as a news event, what it portends is nothing short of financial calamity, reported in daily installments. For it is not just Microsoft that has squandered hitherto unimaginable sums on failing AI projects, but a dozen other corporate behemoths, including lunatic-sector (aka 'Magnificent Seven') stalwarts Amazon, Google, Facebook, Nvidia and Tesla. Analysts have projected total global AI spending of $2.6 trillion across all companies and markets in 2026. Here's where the math gets interesting. Microsoft share of those outlays would be an estimated $140 billion. Investors knocked three times that from the company's valuation last week, while also imploding the world's gaseous 'wealth effect' by a rich but still-invisible multiple. If equal punishment were to be inflicted on the companies planning to spend the $2.6 trillion, the haircut would amount to nearly $8 trillion. That is arguably the approximate size of the AI deflation that lies just ahead, and it will activate a black hole that could double or triple losses in other classes of investible assets. Treasury paper will go bounding in the other direction, finally getting some respect as a safe haven. When to Take Heart Granted, neither the math nor the logic is airtight. But the