The Morning Line

The seemingly strong rally that ended the week merely balanced out three days of bland weakness that had preceded it. In the S&P 500, the upthr ust steepened by the hour but ultimately failed to surpass any important prior peaks. The bear seems out to challenge bulls and bears alike with its obviousness. For one, most of the larger trend moves of the past two months have been reversals off price spikes outside regular hours. And for two, middling ABCD patterns in stocks and futures are finishing at their 'D' targets with predictable regularity. That sums up last week's kabuki in the E-Mini S&Ps, when they head-butted the 3777.00 'D' target of a large 'reverse pattern" repeatedly, only to die a hair short of it at the bell. Docile Sellers Sellers have been particularly docile for more than a month, allowing DaBoyz to twiddle their thumbs until optimal short-squeeze conditions surfaced. Sometimes news was the catalyst, although there seems to be no such thing as bullish or bearish news -- only news to spike the market whichever way seems most opportune at the time. Friday is DaBoyz' favorite day, when half-hearted selling is easily reversed with rallies that gain momentum as the day wears on. That's because no one wants to go home short over the weekend on a day when bears have looked anemic. And so it goes for a bear market that seems destined to become the granddaddy of them all: weeks-long stretches of price action so tedious and haphazard that predicting a Sunday evening opening, or the reaction to Fed 'news' or to earnings announcements, has become a coin toss even for diligent chartists. All bear markets have a touch of Frankenstein in them, but this one's nasty sense of humor promises to be something to endure.

The spread between permabulls and permabears is at an extreme these days, even for October. This is the month when pessimists' hopes are highest that an epic bear market will correct dangerous excesses that have been building up in the financial system for more than 50 years. A presumptive and welcome side effect of such a crash is that it would reset things in accordance not with the designs of nefarious plotters, schemers and conspirators who meet every year in Davos, but in a more natural way that inflicts pain on borrowers and financial evildoers more or less in proportion to their sins. We permabears should be careful what we wish for, however, since deep hardship affecting the broad middle class, the poor and even the very affluent could persist for a long time -- perhaps a decade or more as occurred after the Crash of 1929. It is particularly troubling to consider that it took a world war in which 50 million people died to end the Great Depression rather than persistent fiscal and monetary meddling by the government. Anyone who thinks the Fed will ultimately lift us from the economic abyss into which we are about to descend should recognize that it is the banksters who will have put us there. The Death of Wokeness Meanwhile, it is unsurprising that some top technical forecasters disagree vehemently over what lies just ahead. One who sits in the pantheon of chartists says that, for cyclical reasons, the stock market is about to embark on a major rally. A colleague achieved instant success -- soon to become notoriety? -- with his own cycles-based forecast calling for a crash starting this week and continuing until the November election. Although I fear that a severe crash is coming that will tip the U.S.

A pen-pal from the world of very high-tech inventions is a self-described 'collapsitarian'. He wrote me recently to say he enjoys these weekly screeds for their relentlessly glum insightfulness. (For your information, he is 50% in cash, 25% in gold, and 25% short stocks.) Longtime readers will know that I seldom shout 'The Sky Is Falling!!' in a headline. Rather, the not-so-great news is dispensed matter-of-factly in the final sentence or two, where you are admonished to reef the sails, batten the hatches and retreat below. And if the vessel should pitchpole, leaving one badly shaken and crawling on the galley ceiling, what then?  Prepare for the 100-foot rogue wave yet to hit is about all I can advise. That's what I see coming, "probably" sooner rather than later. The disaster seems all too likely to arrive in the form of an unscheduled bank holiday that touches off a fatal spasm of debt deflation. I often reiterate in that final paragraph, matter-of-factly, that deflation is inevitable because, well, because it is. I've been writing about this-- some would say bloviating -- for long enough to have annoyed more than a few readers. One was upset about a particularly gloomy column I'd written 25 years ago for the San Francisco Examiner. He told me he managed $250 million and asked what qualified me to predict such a scary future. I responded by critiquing some minor errors of grammar and punctuation in his email. He shut me down with an unexpected reply. It turns out the $250 million was his personal money, and English was just one of six languages he, a cosmopolitan Iranian, spoke fluently. Our subsequent exchanges became increasingly friendly, and I never even asked how he'd fared with the enormous stake he'd amassed in Nokia. The Broken Clock Others

[Louie Piro, my barber when I lived in Mountain View CA shortly before Google arrived, became a multimillionaire with a simple investment strategy. I thought of him the other day when a Rick's Picks subscriber wondered aloud in the chat room which investments are most likely to prosper in the recessionary hard times that Americans will soon face. The subscriber evidently favors the shares of gold companies that pay dividends. My own choice comes straight from Louie's playbook: Invest in utility companies that serve growing populations and that have good dividend histories. Thus did Louie's initial, $100 stake in a Nevada purveyor of water and power seed the wealth the haircutter was to amass over the next 50 years. Following is his story, as told in a column I wrote for The San Francisco Sunday Examiner 25 years ago. I have published it here before, but it seems more relevant than ever now, as investors try to figure out which stocks will be favored by the flight to safety that could come at any time. Louie's remarkable saga holds promising investment implications as we watch Californians, New Yorkers and other blue-state refugees flee economically doomed regions of the country for better lives in Florida, Texas, Utah, Tennessee and a few other states that are not so heavy-handed in the way they regulate businesses, schools, commerce and free speech . RA ]  If there is a single word to sum up the success of investor Louis Piro, that word is "dull." Piro has never made a killing on a stock. He doesn't play hunches and he runs from hot tips. He says he passed up Pfizer not long ago because its shares were too pricey even before impotent men started flocking to their Viagra pill for a cure. Nor will Piro

Yields on 10-Year Treasury Notes, currently at 3.70%, are likely to hit 4.90% before they level off. It is hard to imagine an increase of such magnitude not disrupting the U.S. and global economies severely. America is already in a recession that looks all but certain to deepen before we hit bottom in a year or two. And yet the Fed keeps tightening, leaving little doubt with last week's 75-basis-point rate hike, the third in four months, that Powell & Co. are hell-bent on crushing consumer inflation that has been rampaging for two years. The Open Market Committee must have known that our teetering economy, a super-heated real estate sector and a vaporous stock market would implode if they merely talked about raising rates. However, for the first time since Volcker's 1980s heyday, the central bank has actually walked the walk, surprising everyone by pushing up administered rates a total of 275 basis points since last May. This has sent borrowing costs soaring, including mortgage rates that have more than doubled from the sub-3% levels that obtained toward the end of 2021. Under the circumstances, it is surreal for politicians to be splitting hairs over whether the U.S. is in a recession. Only in comparison to the disaster that is coming could the current economy be described, as Biden is wont to do, as holding its own. The stock market has come down hard, so far without the kind of climactic selling we might expect at a bottom. This has taken a little of the steam out of inflation, albeit mainly via falling gasoline prices that reflect a global economy in a state of imminent collapse. But the broadly falling asset prices that lie just ahead eventually will trigger waves of bankruptcies so destructive and relentless that we'll wish we

I've been reluctant to give permabears the all-clear because, being one myself, I've seen the bull market roar back from death a dozen times since 2009, turning my smug eulogies into embarrassments. The most punitive and outrageous of the rallies was the monster that emerged in March 2020, when investors cast off pandemic fears just as global business went into lockdown. What a fooler that was! Who could have guessed that prices for nearly everything were about to soar? A friend who lives in a South Jersey resort sold his home for $1.8 million, thinking he'd be able to buy it back for half that in a year or two. Instead, six months into the Covid lockdown, the house was worth $2.4 million and beyond his reach for a buyback. He's living in an apartment now, but he may ultimately get his wish if real estate prices collapse in the current, deepening recession. Another friend bought his dream vacation home in Naples FL for $4 million, but readily parted with it when a giddy fool came along just 13 months later and offered him $7 million for it. It's not as though the economy has been booming. In fact the opposite is true, notwithstanding Wall Street's idiotic focus on employment numbers that tell us nothing. Who could possibly care about this statistical poppycock when stores, restaurants, movie theaters and countless thousands of other retail businesses have been calling it quits or are within weeks or months of failing on their own? Did Biden's statisticians and pundits even notice last week when the most successful category-killer of them all, Amazon, said it was scaling back growth plans significantly? When mighty Amazon starts tightening its belt, you had better believe that, after two dispiriting quarters, this recession is just getting rolling. Levitation

Leave it to the pundits to tell us what the hell the stock market was celebrating on Friday. The FAANG stocks inspired an inexplicable rampage, just like in the good-old days, and everything seemed right with the world. In the view of those anointed by television producers to make sense of Wall Street's non-stop nuttiness, it is always the central bank's seeming intentions that have caused shares to move, whatever the direction. This is occasionally true, but the tortured reasoning it requires to flesh out the point hardly satisfies skeptics who see a world in meltdown. Shouldn't shares be falling steeply in order to discount the growing unlikelihood, if not to say impossibility, that the U.S. economy will ever return to normalcy, whatever that might be, let alone to good health? There are so many gangrenous appendages in the all-important consumer sector, for one, that it is reasonable to speculate that Amazon will be the only retailer left after this so-far wishy-washy recession turns lethal. The Simple Explanation For the record, there is a simple explanation for the sharp rally that ended the week, and it is this: Every trader on the planet came to his desk Friday morning eager to short every uptick. And so they did, creating perfect conditions for a short-squeeze that put stocks relentlessly on the rise until 15 minutes before the final bell. What happened then underscored the quasi-criminal nature of the game: stocks dove, but only far enough to sodomize holders of call options who were doubtless counting their chickens. Some would have been holding Chipotle 1725 calls that had fluctuated intraday from $5 to $15 and were worth $8 at 3:46 p.m.. Sitting pretty, right? In fact, the calls went to zero in the final 14 minutes when CMG mysteriously plunged to 1723.

Although I am on a busman's holiday and will not resume publishing The Morning Line until Sep 17, here's a timely note concerning AAPL. We've been using a 151.38 downside target that remains viable, but I expect the stock to go much lower in the months and years ahead -- well beneath $100, that is. When the company announced a week ago that iPhone sales were holding up pretty well, it was a clarion call to short the bejeezus out of the stock. Apple was alway going to be more vulnerable than most retailers to an economic downturn, and that downturn has finally arrived. A key market for the company's pricey, over-camera'd cell phones is Europe, which is headed into deep recession. The one-decision chimps of the portfolio world who have ensured AAPL's steady rise over the years are not going to go quietly into the night, however. They'll have their hands full distributing the biggest-cap stock ever to the rubes in a process that will take years. AAPL remains the key bellwether for the stock market as a whole, and it is the only stock one need get right to get the market right. The bear market will still be tricky to play, though, since everyone knows by now that we are in one. Wall Street's shameless shills, particularly the clueless, lazy hacks in the news media, will be talking up the resumption of the bull market each and every day until the Dow falls below 10,000. But if you can contrive to tune out their blather, you'll have a better chance of getting through the nation's slide into darkness without losing eveything,  Here's a link to my interview on Friday with Jim Goddard of Howe Street. (Also interviewed  for This Week in Money were Doug Casey and Ross

[The Morning Line commentary will resume on Sunday, September 17, to allow your editor a holiday break.  In the interim I will continue to update 'touts' and to post in the Rick's Picks trading room as usual. RA]    The way stocks plummeted on Friday, one could almost believe that Fed blatherer-in-chief Jerome Powell made it happen.  We know better; for in fact, the selloff was caused by mysterious cyclical forces that were set in motion billions of years before Powell was born. Go ahead and try to prove the negative if you want, but that's how it works. Markets create the news, not the other way around.  Count on Rick's Picks to ignore the headlines and tell it like it is, always disrespecting Fed quackery.  The only thing the charlatans who run the central bank have caused to happen since they willed themsleves into existence nearly 110 years ago is the destruction of the dollar.   Whatever you think about the Fed, a far more important concern is whether Friday's thousand-point avalanche in the Dow ended what has so far been a tedious, garden-variety bear-market rally. Athough it would seem so, the correct answer is no, it didn't.  How do we know this?  For starters, Jim Cramer supposedly said so on his show -- said, that is, that the June low will stand, presumably till the end of time. He is certain to be wrong about this eventually, but in the meantime, technical signs say higher prices are indeed coming. The bear rally technically has further to go because Friday's plunge followed on the heels of a 15% rally that had exceeded several important peaks on the daily chart. The implication is  that the current selloff is merely corrective in the context of a bigger bear rally yet to