The Morning Line

Tulipmania and the South Sea Bubble have nothing on the bunco game Wall Street has been running with Microsoft shares. I write on this subject often because the numbers are so huge, and because the game, which is intertwined with the biggest financial con-job in history, is not one you will ever read about in The Wall Street Journal or on Bloomberg.com. It thrives on the madness of crowds and grows bigger with every uptick in MSFT and the galaxy of stocks in its vortex. Microsoft's share price has gone from 393 to 483 since April, adding roughly $687 billion to the macro ledger. That is twice the size of California's budget for 2025. It would buy a Porsche 911 for every man, woman and child in New York and Chicago, or a super-deluxe Disney World vacation for every family in America. A clue to how the game works lies in the relentless smoothness of MSFT's ascent. You could comb through a thousand charts without finding one remotely like the one pictured above. You don't have to be a technical analyst to see that the long rally has been tightly controlled every step of the way.  This kind of price action is quite rare, but what makes it extraordinary is that it is not happening to just any stock, but rather to the most valuable stock in the world, a $3 trillion company with a lock on the operating systems of a billion-and-a-half desktop computers. The stock has been ratcheting higher on relatively thin volume and a dearth of bullish buying. Short-covering has done most of the lifting, with more urgency and power than merely optimistic investors could ever supply. Ka-Ching! MSFT's manipulators knew what they were doing when they goosed the stock into a sensational short squeeze on April

There were few headlines out of the Middle East over the weekend, mainly because only Israel and Iran are capable of judging the damage, and neither is saying much. Wall Street, on the other hand, seems quite confident that whatever is happening, and irrespective of the outcome, it will be quite bullish for stocks. As much was evident on Friday, when the lunatic sector (aka 'the Magnificent Seven') bounced back from heavy losses early in the session, then spent the remainder of the day building a plateau from which stocks can launch anew when the all-clear signal comes. This would be appallingly reckless behavior, but we have become used to it as the stock market has increasingly decoupled from geopolitical and even economic reality over the last decade or so. It's possible investors are simply envisioning a brighter tomorrow, with Iran no longer able to export terror to the world. China and North Korea will continue to threaten, of course. But their ability to spread malice and death will be significantly impaired once Israel has cut off the arms and legs of their Iranian proxies. Jihadism will still be with us, and active to the extent its chief sponsor, Qatar, has plenty of crude oil to sell. But perhaps with the inspiration of nuclear terror in remission for a few years, and an entire generation of jihadi leaders rubbed out by Israel, the world might enjoy a period of relative peacefulness. How odd would that be?  [Check out my latest interview on This Week in Money. It delves into the mania that has seized investors in stock and real estate assets.]

The stock market is in a topping process, brazenly manipulated by white-collar carnies who cut their teeth at Sloan, Wharton and Stanford. These newly trained ass-bandits have been working Microsoft shares to hold the broad averages aloft while they offload inventory to widows, pensioners and assorted other bag holders. I described in detail how this game works in a previous commentary. Even though Microsoft, the world's most valuable company, has a $3 trillion capitalization, it costs the perpetrators almost nothing to drive the stock vertically higher, adding hundreds of billions of dollars of gaseous asset inflation (aka 'wealth effect') to the global ledger. Flimsy Reasons When last week ended, the world's largest-cap stock was poking its greasy little snout marginally above the previous all-time high at 468.35 recorded last July. This breakout will not have gone unnoticed by a million dip-buying homunculi, since it is no longer a dip they are buying, but the latest move into thin air. Although MSFT will continue to outperform all other stocks for reasons implied above, I doubt it's short-squeeze histrionics can drag the lumpen mass of securities significantly higher. At best, the also-rans will make marginal new highs until the last buyer runs out of flimsy reasons later this summer. It has never been clearer that mass mental-illness, far more than invented 'fundamentals', is what drives stocks higher in the late stages of a bull market. If news mattered, the 1914-ish darkness of today's headlines would have crushed the Dow six months ago.

The internet has evolved into the perfect medium for spreading crime into every household and every age group, and now Bitcoin is fast becoming the perfect medium for pushing a more violent kind of crime out into the streets. There was a time when one could avoid getting mugged simply by not wearing Italian shoes, a Burberry coat or a Rolex watch in certain neighborhoods. Nowadays, though, any schlepper in a hoodie could be carrying a password in his head with access to Bitcoin enough to buy two-dozen solid-gold Rolexes. The assailant wouldn't even have to risk carrying a gun, since a small pair of pliers to yank out the schlepper's fingernails would be the only tool a thief who uses unfriendly persuasion in its most recently popularized way would need. Don't laugh, because you damned well know this is going to happen in some alley somewhere: a schmuck who wouldn't give up an alphanumeric key stored in his head will lie disfigured in a pool of blood, and the story will instantly be at the top of the news across America. It's impossible to know whether Bitcoin's pseudonymous creator, Satoshi Nakamoto, is feeling remorseful over the current blizzard of headlines concerning the New York crypto investor held captive, tortured, peed on, beaten and threatened with death by two or more young men sadistically determined to pry a bitcoin account password out of him. If Satoshi has any humanity, he is asking himself 'What have I wrought?' Hadn't he simply wanted to invent a mathematically perfect money that would allow people to spend without being watched by the banks and the shadowy regulators who watch them? How ironic, then, that bitcoin has instead turned out to be an all but unusable medium for ordinary transactions while filling the heads of

Of all the nutty ideas in investors' heads these days, none is crazier or more pernicious than the mass delusion that grotesquely inflated asset prices have made tens of millions of us rich.  As equity shares and residential real estate prices have risen higher and higher due to Fed stimulus with money conjured from nowhere, Americans have basked in the so-called wealth effect.  'Easy Al' Greenspan could be their patron saint. An egghead with a PhD in economics, he often spoke of inflated home values as 'wealth' -- i.e. money in the bank. He should have known better. Investors paying homage to Greenspan would have been at their giddiest recently when Microsoft shares opened $31 above the previous day's close. Because the software giant is a $3 trillion company, the biggest in the world by capitalization, this added about $273 billion to investment accounts holding Microsoft shares. The total amount of bullshit wealth produced by the price gap has climbed much higher since, because the short-squeeze that goosed MSFT initially has continued to this day. At last week's $460 high, the tally of vaporous 'wealth' injected into the system by MSFT's scripted explosion was $492 billion. The actual figure is probably at least five times that, or $2.4 trillion, since Microsoft's steep run-up has dragged the entire stock market along with it. The effect was most pronounced in the lunatic sector, which is sometimes referred to as the Magnificent Seven by the clowns who invent the news each day. The group includes Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla, and the orgiastic performance of their shares, far from being 'magnificent', should be a source of embarrassment to civilization itself. Surfing Sea Waves You don't have to be a chartist to see that this won't end well. Stocks tend

I’ve supported Trump since his first term, but my hopes for his success peaked a month ago when a panic-induced plunge in the S&P 500 reversed almost precisely from a 4820 target I’d sent out to subscribers. I saw this as the surprisingly quick end to a bear market that had only just begun in February. If my hunch turned out to be correct, this meant America would experience no recession, and the tariff wars would blow over without causing any lasting harm to the global economy. So far, the prediction — still an outlier, for sure —  looks good, at least on paper. The chart shows how the S&Ps have rallied a Krakatoa-like 1089 points since trampolining in April from within a hair of 4820. The powerful move has somewhat muffled the clamor of TDS sufferers, even if it seems clear by now that nothing will ever bring them around. Meanwhile, dare we hope the radical changes that have set Trump’s agenda will extricate America from a debt trap with no apparent exit?  A debt deflation has long seemed inevitable because public and private debts have grown far too large to repay. DOGE Gains Up in Smoke If Trump initially offered a possible way out and seemed enthusiastic about pulling off the impossible, he may have lost too much momentum already to succeed. The DOGE cuts that fired up so many supporters have been voted down by Congress, including by some Republicans, and it took quiet help from the Fed last week to bolster the appearance of strong demand for long-term Treasury paper. Now, if the Supreme Court fails to put the kibosh on birthright citizenship and nationwide injunctions by woke judges, Trump may need a hat-trick of successes in Ukraine, the Middle East and China to rally the

[The S&Ps are losing steam after recouping two-thirds of their 1400-point loss in March/April. The stall near 5700 has left them hovering in the danger zone, just like the U.S. economy. Will it skirt recession? I have my doubts, even if price action on the S&P chart on April 7 led me to speculate that business would continue to hum along. The index had bottomed slightly above an important Hidden Pivot target at 4820, and so it was no stretch to infer that this may have marked the end of the bear market. Without the chart, though, it's hard for me to imagine that America will skate past recession. A real estate crash is coming, and it's only a matter of time before its mounting weight overwhelms whatever miracles people expect from Trump. His tariff announcements, to the extent they can be construed as bullish for stocks, have lost their ability to affect securities markets for more than an hour or two. He did a deal with Great Britain last week, spinning it as the first of many.  That story will not distract anyone from the only deal that matters, however -- with China. No one could be optimistic that President Xi Jinping will be an easy touch, so don't be surprised if stocks take a header this week. Meanwhile, the commentary below will continue to run until an S&P breach of 4820 proves my bullish thesis wrong. RA ] *** A word of advice if you’re looking for bankable information on the direction of the economy:  tune out the mainstream media’s cavalcade of Trump-deranged bozos and focus on the 4820 target in the SPX chart above. Think of it as Trump’s lucky number, but also a very good place for these all-too-interesting times to find temporary equilibrium. That is

[We are coming up on a month since I blew 'Taps' for a bear market that supposedly was just starting. There was panic in the air that Sunday because America's enemies in Brussels were dumping T-Bonds in an attempt to crash the market. They were intent on forcing Powell to ease, but their plan failed when he stood firm.  The S&Ps dove several hundred points, but instead of continuing into the abyss, they turned from within a hair of a major target at 4820 that I'd billboarded in Rick's Picks. From this, I inferred that the bear market had seen its worst and that there would be no recession, nor any lasting, destructive effects from the tariff war. This prediction seemed outrageous at the time, and perhaps even moreso now, since Canada, America's biggest trading partner, has just elected a leftist who wants to go to war with the U.S. rather than kowtow to Trump's demands. I wish them good luck - and China, too - since curtailing business with the U.S. will send their respective economies into a death spiral. Europe's economy is already dying, and they, too, will eventually have to come around. If the U.S. doesn't sink into recession itself, Trump stands to win it all. The recession would not be due to supposedly falling GDP, which, in the context of reduced government spending is a meaningless heap of statistical manure, but because bear markets happen, and U.S. stocks may already be in the grip of one.  That is notwithstanding what I've written below - my commentary from several weeks ago, when stocks failed to crash.  I will run it every week until the S&Ps prove my thesis wrong by relapsing decisively below 4820.  If and when that happens, it will be time for Katie to bar

[My prediction three weeks ago that the bear market had seen its worst seemed crazy at the time -- particularly to me, because I'm an inveterate permabear.  However, last week, bulls distanced themselves further from the low of the mini-crash that occurred when tariff  panic was in the air.  I'd said the selling would take the S&Ps no lower than 4820, and that is almost exactly what occurred: a 4835 low marked the bottom of a 1312-point plunge. If it also caught the bear's last gasp, that would mean everyone taking pot-shots at Trump for screwing up the world is flat-out wrong. In any case, I will continue to run my original commentary (see below) until SPX proves me wrong by relapsing decisively below 4820. I have reduced the odds that the low will survive to 50-50 because the continuing rise in long-term rates could make it impossible for the economy to avoid a recession. But maybe that trend is about to peter out as well. In any case, it is still much better odds than most economists, the news media and the blogosphere are giving Trump and the economy.  RA ]     *** A word of advice if you’re looking for bankable information on the direction of the economy:  tune out the mainstream media’s cavalcade of Trump-deranged bozos and focus on the 4820 target in the SPX chart above. Think of it as Trump’s lucky number, but also a very good place for these all-too-interesting times to find temporary equilibrium. That is my worst-case target for a bear market that many believe is only just getting started.  As a die-hard permabear myself, I’ve been eagerly anticipating the Mother of All Bears since, like, 2010. The global economy was badly in need of a reset and still is. It will