The Morning Line

You can always tell when portfolio managers are hard at play, immersed in an epic circle jerk that has become more tediously familiar with each passing week. And so it went on Friday, as money migrated for no discernible reason from certain, temporarily disfavored stocks to flavor-of-the-day hotties.  It seemed almost as though the chimpanzees who purport to manage everyone's money were on a conference call that morning, scripting a narrative simple enough for Jim Cramer to shill to the legions of widows and pensioners addicted to his show. The Dow was down more than 300 points at its lows, even as the lunatic-sector stocks -- you know them as the idiotically misnamed 'Magnificent Seven' -- winked at the thrashing their poor cousins were getting on less sexy exchanges.  The Naz was borne aloft as always by light volume and timid resistance. Bears evidently were too gutless to resist the uptrend, which in recent weeks has become increasingly confident of a Trump victory. 4% Above Sits Trouble Even so, there is a palpable feeling that the stock market has been nutso for so long that it's overdue for a sea change. That could mean irrational exuberance will peak on or around election day. But Mr Market could also surprise with a rally that turns even steeper than the one that has prop-washed the flesh from sane observers and skeptics. So which? The chart above makes a compelling case for something in-between. The 6102 S&P target lies 256 points, or 4.4%, above Friday's close. It would not be as large a gain in points as occurred in August or September. However, if the top were to coincide with the November 5 election, the entire gain would have occurred in just seven trading days. That looks like a good bet, but I

Wall Street has gone all-in for Trump, piling up such extravagant gains in the last few weeks that one might wonder what bold miracles investors expect of him. More likely, unfortunately, is that within a year or two of taking office, he will be overwhelmed by the collapse of a financial bubble that required only the hubris of America's promised return to greatness to set it in motion. Let's hope Mr. Trump gets a chance to clean house first, since Washington is a rat's nest of corruption and plots to bring down America. In the meantime, there is no arguing that the rampaging stock market has got it wrong in predicting that Harris, along with the malignant political philosophy and crackpot schemes she represents, will be overwhelmingly repudiated by voters on November 5. With a gusher of mail-in ballots already pouring in and millions of illegals ready to lend their signatures to the Democrats, it could take weeks or longer to adjudicate the results. Regardless, Trump is riding a wave so powerful that even if the Democrats double the cheating that won them the White House in 2020, they will still come up short. Liberals should listen to Harris's recent interview on Fox with Bret Baier to understand why she can't possibly win. She comes across as so empty and insipid that a conservative could almost wax nostalgic for Hillary's evil cunning and brass cojones. 'A Small Price to Pay' The biggest problem Trump will inherit lies in the Middle East, not Ukraine. He and Putin are neither friends nor enemies but seem to respect each other. This cannot be said of jihadis Trump must confront and what remains of their leadership. Israel has wiped out the terrorists' command structure, and we should expect them to try desperately to settle

[I can’t stomach news reports that take Kamala Harris’s candidacy seriously, especially articles suggesting with brazen implausibility that she is polling dead-even with Trump in some important swing states. Fortunately for those creeped out by all the tilted campaign coverage, my colleague James Howard Kunstler has compressed everything you need to know about the election into a bold, Menckenesque essay that will dazzle you with its insightfulness. He offers three scenarios, two of which could bring America to the brink of civil war. Fortunately, the third, a Trump landslide, seems the most likely and would give Americans a chance to snuff Deep State for good before it can recover from the blow.  With Jim’s kind permission, here is Kamala Unwinding, his latest Clusterfuck Nation essay on substack.  RA] *** “. . . we are facing a catastrophic collapse of governance. With democracy reduced to a tragedy or a farce (probably both things). . . .” — Ugo Bardi <<<<< >>>>> “As the US increasingly resembles ancient Rome, being president is more and more dangerous. Something around 35 emperors met violent deaths, most from people in and around their courts. In other words, members of the Roman Deep State. An ugly situation is brewing in and around Washington DC.” — Doug Casey ***** Don’t kid yourself: Kamala Harris does not want to be President of the United States. She doesn’t even want the ceremonial stuff, the incessant shuffling from one photo op to the next, the tedious Easter egg rolls, the prayer meetings, the turkey pardonings, the tiresome state banquets for men in strange headgear who are unfamiliar with using the fork and knife, and forbidden to sip chardonnay. . . . It’s obvious she has been played for a chump, that she was sandbagged into play-acting “the candidate” by an

If you can keep a cool head while everyone around you is panicking, perhaps you don't understand the situation. That's what they say, anyway. It is exactly what we saw last week when stocks barely shrugged even as the shooting war in the Middle East took another baby step toward nuclear conflagration. The oil markets certainly recognized the danger, spiking sharply after our titular president warned that Israeli warplanes might soon start targeting Iran's refineries. Energy quotes scored their biggest weekly gain in years while stocks, although relatively subdued, appeared to consolidate for yet another psychotic upthrust. What seemed to matter most on Wall Street was not the threat of cities going up in flames, but a few meaningless, cooked job stats implying that droplets of juice from America's financial bacchanal have begun to trickle into the parched gullets of gig workers, nurses and cocktail waitresses (if not yet retail clerks). Longshoremen could join them shortly with a 62% raise to $69 an hour, including the union's legendary no-shows.  It's a little late in the Kondratief cycle for them to become rentiers, but the prospect of owning a few shares of Nvidia seems realistic enough. Although keeping up with the Joneses has gotten easier because the Joneses' inflation-adjusted net worth has been stagnant for 50 years, chasing inflation has only grown harder. And that's measured against phony data that understate inflation by half.  Take heart, all you working stiffs: beating inflation is going to be a cakewalk when the next recession brings it down to, like, minus five percent. What About Microsoft? Speaking of recession, this IBM chart, even to the unschooled eye, suggests the Beamer may be about to reverse in a big way. Although I have never tracked the company's shares closely, there may be a few old-timers

Expect stocks to continue their heedless waft into outer space until the election. They would not likely do so if investors even remotely imagined Kamala Harris might win. James Kunstler provided the most succinct reason we've heard for why this is not going to happen:  "The people in this land are finally sick of a faceless blob ruling madly from the shadows," he wrote in the current edition of Clusterfuck Nation. "Mr. Trump has become a national father figure, a titanic offense to a party run by women with daddy issues and to their Marxist allies dogmatically bent on destroying the family (along with every other institution). As it happens, countries need fathers, both actual and symbolic. What a surprise!" So what about polls that show Harris and Trump neck-and-neck in some swing states? Even ostensibly conservative news outlets such as Fox and the Wall Street Journal have been reporting this as though the data were authentic. My guess is that the editors and news gatherers have all been overwhelmed by the nation's left-tilting news media into believing polls that have been massaged with poor sampling, misleading questions and purposeful misinterpretation. In reality, the believers are like the audience assembled on a barge to witness David Copperfield make the Statue of Liberty disappear.  Although some in the audience would swear this happened, it didn't; the barge had simply been repositioned while a curtain was raised to obscure a large swath of the horizon. 8%-10% More Believable Although the magician eventually revealed how he did the trick, the New York Times et al. will not be called upon to explain how they levitated Ms. Harris, since she is going to lose by 20 million votes. That's a realistic number if forecaster Martin Armstrong is right, as he often is about so

The stock market went bonkers following the Fed's first rate-cut since March 2020, but it's more than a little tempting to sell the news. A return to easing had been rumored for the last couple of years, but with a pitchfork mob threatening to descend on the Eccles Building, Fed Chairman Powell finally gave in to Wall Street. The mainstream media has given him cover with the lame story that lower rates will help spur employment. Historians are more likely to recall that the central bank's pivot toward lower rates came at a time when stocks were breaking out to new all-time highs, inflation was ravaging the middle class, and home prices were at record levels. Still, it's an election year, and what did we expect?  The Open Market Committee is simply revivifying the American Dream -- not with a scrawny chicken in every pot, but with renewed hopes of a leased Lexus in every garage. What will lower rates mean? For one, they could conceivably delay a crash in home prices and stocks for a while. It has been coming ever since the 2007-08 deflation failed to finish the job. At the time, one might have surmised that the nation's most popular and pernicious delusion -- growing rich simply by owning a home -- had suffered a fatal blow. Alas, whatever lessons the Great Financial Crash held for us were erased by a turbocharged recovery that has pushed home prices higher than ever. And stocks, too. Although Powell's steadfast hawkishness may have disappointed investors every month for the last three years, it did not impede the stock market's steep rise even slightly. Nor did it quell Congressional spending, which is currently adding $1 trillion of debt to the U.S. balance sheet every 100 days.  Historians will recall that statistic,

The so-called 'wealth effect' is the Tulipmania of this era on steroids, creating untold sums of money from speculative spume. If materializing vast quantities of spendable cash is the goal, a revved-up wealth effect makes the Fed Open Market Committee look like a ladies' luncheon club. Indeed, it can take long months or even years for the central bank to stoke the consumption furnace using swaps, repos and direct purchases of Treasury debt. These obfuscations are designed mainly to make the promiscuous use of credit more attractive to everyone. However, the money must be borrowed into existence for profligacy to work its magic on the economy, and that takes time. There is a much faster and simpler way to inject cash into the system. It works every time, and the result is instantaneous, effectively showering Wall Street with a blizzard of $1000 bills. This is a monetization trick that is not taught at Wharton. An added feature is that even Joe Sixpack can pitch in simply by buying stocks on margin. Turbocharged by a 4x multiplier and a steeply rising stock market, Joe will be driving an Escalade and living in a grandiose suburban home he will never own in practically no time. The chart shows how it's done, satisfying America's money sickness in ways even the financially ingenious Dutch might not have imagined. Their seaborne empire was at its height in the 1630s, when greed and hysteria combined in just the right proportions to make the masses believe a rare tulip bulb could be worth as much as ten acres of prime farmland. The Burghers who invented the open-outcry exchange had the good sense to restrict futures trading in flower-bulb contracts in one crucial way: traders could not sell them short. Shorts Power Bull Markets In contrast, a key

I continue to believe the bull market's fate can be divined simply by paying close attention to price action in Microsoft shares. The company is not only the second-largest in the world by capitalization, slightly behind Apple; it is also the most important. That's because its huge stream of recurring subscription revenues from Windows and the Office suite is all but impervious to economic downturns. This is not true of Apple, whose iPhone sales will plunge in the next recession. So what is Microsoft saying?  We've been expecting the stock to hit 449.42 for more than a month. Although that would be well shy of the record 468.35 achieved on July 5, it would mark a secondary top corresponding to the one that ushered in the 1929 Crash and the Great Depression.  There remains the possibility the implied rally from Friday's low could head into the wild blue yonder after achieving 449.42, but we'll consider this scenario more seriously if and when the stock blows past the target. One thing that makes the wild-blue-yonder prospect somewhat less likely is that the E-Mini S&Ps on Friday breached a key support decisively enough to imply they are headed significantly lower, to at least 5189 from a current 5403.  We should know by no later than midweek whether they are about to drag MSFT lower, rather than the S&Ps being pulled higher by a resurgent MSFT. Whoopee Cushion Bounce In the meantime, some Rick's Picks subscribers may have taken long positions in MSFT over the weekend, since I'd proffered 401.56 as a perfect place to back up the truck and buy 'em hand-over-fist.  When the stock plummeted on Friday ahead of the opening, it kissed that number and Whoopee Cushioned $10 higher before giving it all back by the closing bell.  If the

[I’m taking a summer break, so this will be my last commentary until after Labor Day. It will be the usual busman’s holiday for me, however, and actionable ‘touts’ for popular symbols will be updated ‘round-the-clock as always. Some recommendations will be accessible to non-paying subscribers, so check the home page regularly, especially if stocks go bonkers. I will also continue to provide tradable guidance and timely analysis in the chat room. To sum up the markets for now, though, let me note that the scripted savaging of the lunatic stocks (aka the egregiously misnamed 'Magnificent Seven') unfolded in July exactly as anticipated. Now, I am focused on the strong possibility that the manic bounce that has ensued will turn out to be a sucker rally, a distribution much like the summer binge that preceded the 1929 Crash. Concerning the painting, it is by Geoffrey Leckie and titled 'Restoration of St. Marco'. Geoff and I attended the University of Virginia at the same time and shared a farmhouse outside of Charlottesville. He is a deeply gifted artist whose works, mostly oil on canvas, include landscapes, still-lifes and portraits that have always stirred me with their beauty and uncompromising style. His California seascapes are a particular favorite of mine, capturing the roughness of the Northern California coastline and the ceaseless fury of the waves. Geoff lives in Venice, Italy, but travels the world for inspiration. Here is a link to some of his other paintings and the galleries that represent him. The Venetian scene is thematically tied to the literary text below, an excerpt from Thomas Mann’s magisterial The Magic Mountain. Mann considered vacations essential to restoring one’s vital energy following boring stretches on-the-job. His novella Death in Venice concerns a writer who takes a holiday to recoup his gifts, only to