The Morning Line

The disconnect between tight Fed policy and a U.S. economy on the brink of recession is growing more unsettling every day. A key question is which economy we are talking about, since there are two distinctly different ones that Fed actions can affect. The first is the economy of consumer goods and services. It is about to keel over dead. This will be a very big deal, since consumption accounts for 70% of the nation’s GDP. Most of it comes from the broad middle class, which is staggering under the weight of higher costs for nearly everything. Some of those costs, particularly for car and home insurance, must be fully borne no matter how high they go. Other outlays are discretionary and include food, travel and entertainment. Those sectors of the economy are close to being asphyxiated by high prices and high interest rates, even as delinquent payments for cars, homes, credit card balances and rent climb into the red zone. The other economy comprises financial assets, and it is flourishing as never before, dancing in the ether. Soaring stock prices and home valuations have made many Americans think and act like they are rich, and they are continuing to spend freely. An estimated 10% of America’s 131 million households have net worth of $2 million or more. That is an impressive number, but it is not nearly big enough to prop up an economy whose health is determined by the other 90%. These days, the 90% are barely keeping McDonald’s afloat, even if East Side foodies are paying reservation specialists $500 or more to snag a decent table on a Saturday night. A 1930s Spiral The two economies have put the Fed in an inescapable bind. If the central bank loosens, the additional inflation this is likely to cause

Last week's rabid short-squeeze punctured bull-market targets I've been drum-rolling for months in Microsoft, Apple and QQQ. Moreover, the bullish look of the S&P 500 chart shown above is so clear and compelling that even the most stubborn permabears will need to make room for more upside to at least 6118, a nearly 13% rally from these levels. If the uptrend maintains its current pitch, it would hit the target just in time for Papa Bear to come bellowing from his lair at the 'correct' time of year -- i.e., when autumn leaves start to fall. The long-term charts allow three other scenarios that should not be ruled out. The first would be for the bull market to flame out here and now, with the S&Ps lying just a split hair from the pattern's 'secondary Hidden Pivot resistance' at 5461. I would rate this scenario a 40% possibility. More likely is a continuation to 6118, and then a major selloff. This is based, as are all Hidden Pivot forecasts, on price action at the red line, a 'midpoint' Hidden Pivot at 4804 that got shredded back in December. If a midpoint resistance is easily exceeded the first time it's touched, that's usually a sign that the target itself -- in this case 6118 -- will eventually be achieved. However, as you can see in the chart, the move through the red line was gradual rather than dramatic. This implies that although a further run-up to 6118 is likely, it is not a lead-pipe cinch. Second Wind, and Then... Given the pattern's clarity, it is difficult to imagine that the S&Ps will quickly push past 6118 when they get there. There will almost certainly be a tradeable pullback, and the odds are about 60% that it will be the beginning of

Those who think the wizards at the Fed have engineered a soft landing for the grotesquely pumped U.S. economy are in for a rude awakening. Strip out the "wealth effect" from mega-cap stocks driven mostly by hot air and short covering, and the economy is already in recessionary muck. Although yacht sales reportedly are still brisk and nearly every American has booked an exotic cruise, retail sales to the broad middle class have slipped so badly that even lowly Dollar Tree is struggling for air. Consumer confidence has begun to fall because wages are again losing ground to inflation. A look ahead is even more dispiriting with AI breathing down everyone's neck, since it is potentially the biggest job-killer the global economy has ever faced.  While work-saving innovations may have created more jobs than they've destroyed, it's difficult to imagine how that will happen in an era where the machines themselves are capable of rooting out inefficiency more ruthlessly than any human could. Tesla as Savior So what would a soft landing imagined by Wall Street look like?  It would probably start with a 10%-15% selloff in stocks-- not quite a statistical bear market, just enough to allow investors to do some bargain-hunting ahead of the next big run-up.  Car manufacturers would sink into genuine recession, but it would be cushioned by Tesla's unique ability to ride out the storm with fabulous high-tech innovations yet to be imagined. Tesla shares have already fallen nearly 60% from their 2021 highs just above $400, so the worst, we'll be told, may be past. The Street's spinmeisters would also be fixated on the prospect of lower fuel prices, lower inflation and lower interest rates. The mainstream media, too stupid and lazy to deviate from the popular narrative, would give these fantasies a boost

Speaking of my fellow gurus, our switchboards have lit up to warn that something big is looming.  Even the oddballs who think stocks are headed much higher seem to agree that a punitive correction is long overdue. And although each of us would like to believe that the arrival time of whatever dreadnought is coming will precisely match our individual forecasts, Friday's Kabuki drama on Wall Street drove home the reality that none of us stands a chance of being exactly right. What an extraordinary day it was -- far freakier, even, than we have come to expect on a Friday. As the Dow Industrials steamed higher, Nasdaq stocks were getting savaged. The high-fliers in particular suffered a memorable drubbing, unable to lure buyers for most of the day. These behemoths have been egregiously misnamed The Magnificent Seven, but there is nothing magnificent about them at all; they are just flying pigs, bloated with enough hydrogen to levitate a million Hindenburgs.  A cynic would say the zeppelin fleet's smoking room is located in the Eccles Building. Jackpotters Numbed Call options went begging for bids on Friday as well, discouraging Rick's Picks subscribers from even thinking about the 'jackpot bets' we sometimes make when stocks look ripe for a suddden mood change. And then came the blitzkrieg!  As the Dow rally went vertical, a thousand bogged-down stocks got caught in the vortex, rising like a spout to finish the day with miraculous, modest gains or little net change. The craziness was most intense in the final 30 minutes, demonstrating the remarkable agility of trade-desk lackeys who have mastered the tactic of rotating your hard-earned dollars from one flavor-of-the-day to the next. Repo Man Thwarted It was Microsoft, the world's most valuable company, that had led the way down. The software giant

Is the bull market about to come crashing down, or will we have to wait until autumn when such disasters traditionally occur? I'm a traditionalist myself and expect the bear that's looming to usher in America's umpteenth panic and sixth full-blown depression. The hard times ahead will see the collapse of private and public pension systems, the triaging of Medicare, relentless waves of bankruptcies, and the rewriting of most mortgages so that the current occupants can stay on as tenants or sharecroppers.  The dollar will be very strong, but not in the good way, since debtors will have to make payments unto death in hard currency. All of this is unavoidable no matter what you read; it is only a question of when. There will always be optimists who think the bull market is never going to end, but they are obviously not paying attention.  They have much in common with delusionists who still think the covid "vaccine" was a blessing even though it has killed millions and continues to stop athletes in particular dead in their tracks.  Many still adore the pathological liar Fauci, and Facebook's Zuckerberg, who financed enough ballot harvesting in 2020 to subvert the election. The true believers are so crazy they probably believe that Nvidia, having achieved a $3 trillion valuation, is about to double again in the next 12 months. Wave Theorists 'Divided' So why do we think the bull market begun in 2009 still has a ways to go?  For one, although Elliott Wave experts seem divided on whether the top is already in, some of the better ones (Walter Murphy, for one) have noted that market breadth -- the percentage of stocks participating in the rally -- has not gone sufficiently out-of-whack to set up the haymaker. Concerning seasonality, there was an

The white-collar thieves who manipulate bullion appear to be losing their grip. Silver bulls have long wondered how prices could languish even when demand for physical appeared to overwhelm dealer supplies. Blame paper proxies for precious metals, since many if not most investors would rather store and swap the stuff in virtual form than pay to insure it in a rented vault. Bullion bankers love it that way, since they can sit on actual bars and ingots, loaning them at interest, or borrowing them for next to nothing, while everyone else trades up a storm of near-gold and near-silver pledges and IOUs. However, the steep price rise lately has threatened to upend this arrangement by increasing demand for actual bullion. Ordinarily, the thieves, a sleazy cabal that includes some of the biggest banks in the world, have relied on 'Mr Slammy' to rescue them.  He appears on the scene whenever they pull their bids and let prices plunge to relative bargain levels. Within the last month, we've seen downdrafts in gold of $80 and $130 respectively, and similar moves in silver. Unfortunately for the bad guys, prices have rebounded too quickly in each instance to allow them to replenish their doubly hocked inventories on-the-cheap. Short a Billion Ounces Now it looks like they're about to get creamed. Last week, July Silver broke out on the weekly chart with enough force to imply it will reach a minimum $37 an ounce. That would represent a 16% move on top of the already impressive 28% gain achieved since late March. The chart would seem to allow little respite for the bullion bankers. (If any of you ass-bandits are reading this, the 'hidden' resistance at 32.419 shown in the chart could be your last chance to get 'em back below $37. (Note: Just

Although there is no publicly traded company called Pirate's Treasure, the impressive price history displayed in the chart above is real enough. The Canadian company holds royalties to five gold mines that could conceivably rank among the largest in the world someday, according to 'Spartacus', a Rick's Picks regular known for his street savvy, his encyclopedic knowledge of the mining world, and his insightful posts in the chat room. The stock is a classic 'be right, sit tight' winner, he says, and enviable profits will be made by investors patient enough to play the waiting game. If you want to find out the real name of 'Pirate's Treasure', and of similarly promising stocks that are routinely discussed in the chat room, click here. This will give you free access to all the features and amenities of Rick's Picks, including provocative commentary and actionable 'touts' for such popular vehicles as the E-Mini S&Ps, crude oil, gold and silver futures, the Dollar Index, TLT, bitcoin, Microsoft and Apple. Put and call options are a specialty, with occasional 'Friday jackpot bets' intended to at least double or quadruple one's stake in an hour or less. (Certain caveats apply, as noted in the disclaimer below.)  There are also two chat rooms that draw some of the best traders in the blogosphere. One of them is devoted mainly to timely trading ideas; the other, a 'coffee house', to more freewheeling discussion. Fahrenheit 430.58 Technical forecasts in the touts section are often precise-to-the-penny, but also intuitive.  There is MSFT, for instance, which has served lately as our #1 bellwether for the bull market. We predicted in a headline last year that a 430.58 high in the stock could signal the end of the grandaddy of all bull markets. This forecast is still viable and could prove

Some of you may remember Gary Liebowitz, a troll that I 86'd from the site years ago. He still harangues me now and then, and I am saddened to report that his rage has only worsened, especially where Trump is concerned. Here's a pungent note from Gary that just plopped into my email box. I am reprinting it here because it casts him in a role he was born to play: useful idiot. Your deflationary theory has already been proven wrong as the current market is careening towards a TOP as it and YOU ignore the real signs of a 40-year INFLATIONARY Cycle that has started. As predicted by Warren Buffet himself when discussing cycles. He acknowledged this pattern.  The dollar is moving UP (WITH) rising Inflation.  10-year note will oblige.  In an election year the FED will be FORCED to sit on its hand even if clear signs of inflation are seen. Your refusal to accept the current reality matches you love of a fascist.  From Rape, extortion, sedition, and treason there is no act Trump can commit that will allow you to change your mind.  Rigid fanatical cult-like thinking is always a prescription for disaster. But since 50% of this nation believe as you, I can only conclude the recent fascist Hitler with his 12 year reign is more common and repetitive than anyone thought possible. Millennials' Burden Gary hasn't gotten everything wrong. I'd have to concede, for one, that I did not foresee the current round of inflation. However, I still believe that a catastrophic deleveraging -- aka deflation -- is the only mechanism through which public debts that long ago ceased to be repayable can be discharged. The inevitable bear market in stocks, postponed by fiscal and credit stimulus of almost unimaginable proportions for far longer

The chart above shows RCA's spectacular climb to the Mother of All Tops in 1929. The larger chart that frames it shows what Nvidia shares would have to do to replicate the peaks and troughs that set up RCA's plunge into hell. Notice that the stock's final top (#4) was just marginally higher than one recorded six months earlier. NVDA's chart would look nearly identical if the stock were to hit 1000 in May. It got a potential running start on this with last week's 120-point leap to 877.35. Nvidia is the dominant supplier of hardware and software for AI and makes a good comparison with RCA. The latter had a commanding position in one of the hottest games in town, home entertainment. The company's console radios and record players provided a big step up from the days when a spinet piano in the parlor was the main source of music in the home. How Hot Is Nvidia? So how hot is Nvidia? Two months ago, it became the third company in U.S. history to achieve a $2 trillion valuation. Moreover, it reached that benchmark just 180 days after hitting the $1 trillion mark. That compares with 500 days for the two biggest companies, Apple and Microsoft. Nvidia is also regarded as one of the most exciting places to work in Silicon Valley at a time when many firms have been downsizing. Half of the firm's workers reportedly made more than $228,000 last year. The company's hold on investors' imagination of the future has produced a buying mania in the stock that is every bit as heated as the one that occurred in RCA nearly a century ago. Will their charts ultimately coincide, implying a bloodbath ahead? Quite possibly not, especially if the coincident charts become too widely observed in