The Morning Line

My 'Chipotle indicator' suggests that CMG, along with other high-fliers and the broad averages, could fall by at least 27% from recent highs before the bull market resumes later this summer. We last visited the burrito vendor's chart in early May, just after a short-squeeze powered by feverish buying speared the red line, a 'midpoint Hidden Pivot' resistance at 1968. This stood to be a formidable impediment, especially since it closely coincided with the structural resistance of a key high at 1958 recorded 19 months earlier. But buyers, mostly bears scrambling to cover bets against the stock that were exploding in their faces, gutted the resistance with ease, managing to hold the stock effortlessly aloft for three months. Last week, however, it dove through the line in a shakeout that was stage-managed just as effectively as the gaseous rally. DaBoyz evidently had decided there was not sufficient buying power to keep the stock moving sideways indefinitely, so they pulled their bids, letting it plummet toward levels where they eventually will be able to accumulate shares once again with a thimble-rigger's confidence. A High-Odds Bet  If the selling should exhaust itself near the green line at $1582, that would trigger what in Hidden Pivot parlance is called a 'mechanical' buy. As longtime subscribers to Rick's Picks could attest, such bets seldom lose when they follow steep, powerful rallies such as the one that occurred in this stock during the peak covid years 2020-21. Ordinarily, we should expect the rally to reach the 'D' target at 2739. Stocks nearly always achieve 'D' when the midpoint pivot, in this case 1968, has gotten shredded on first contact.  Assuming Chipotle eventually hits its mark, the bull market in stocks would have significantly higher to go, since CMG and a handful of other world-beaters would

Last week's commentary predicted that rates on the Ten-Year Note, currently around 3.8%, will hit a minimum 5.5% before inflation lurches into reverse and the U.S. begins a hellish descent into a full-blown debt deflation. The following, insightful response came from our friend Richard Charles at Alpine Capital: Well done, Rick, for highlighting the crux of markets today. On May 19, the Ten-Year Note broke a triple top to new highs and we were off to the races with our mutual 5.5 % target, which broke several boutique banks parking capital in Treasuries. Long-term T-Bonds now target an even more ferocious 6.75%. Having conjured some $14 Trillion in M1 deposits since 2020 to fight debt default deflation of $294 Trillion in unfunded US debts and liabilities, it's no surprise there are bond vigilantes who don’t quit but get less vocal. Not everyone kens the contracting market signal of M2 savings losing over a trillion in the past year to monetary heaven (or is it hell?) Any wonder, then, that BRICS sell US Treasuries and plan gold-backed currencies while Western banks salivate for central bank digital control fiat with endless war profits on passive populations? Trafficking Are the millions of military age men and trafficked children finally on the border political-radar with [the smash-hit movie] Sound of Freedom? Are political candidates really ready to bomb the cartels? Martin Armstrong blames neocons running Uncle Joe and thinks markets may not resolve until 2032 after war demands drive Jim Grant’s predicted decades-long bear market in bonds. We are not so sure. In any event, energy, food and precious metals remain undervalued assets, while commercial/residential real estate and their mortgages (a.k.a. death pledges) decline and default with little media awareness yet. The Old Testament tells us to retire debts every sabbatical. By that calendar

Jim Grant, the financial word's adult in the room, says the bear market in Treasury bonds could last for decades. Do the long-term charts bear him out? The one reproduced above suggests that it's at least possible that we are in the early stages of such a move. Most immediately, the chart projects a further rise in 10-year rates to at least 5.5% over the next 2-3 years, a 45% leap from the current 3.9%. If this were to occur, it means the deflationary bust I have long predicted will have to wait. That's because rates that high could not possibly co-exist for long with falling asset values. Think back to the real estate crash of 2007-09, when home prices across the U.S. plummeted by more than 10% per year.  This subjected property owners with 5% mortgages to crushing real rates exceeding 15%. If credit stimulus had not bailed them out and stabilized property values starting in 2009, millions of homeowners would have been pushed into bankruptcy. All Bets Are Off This will happen eventually when deflation 'cancels' public and private debts that long ago became too large to repay. For now, however, inflation will continue to rule if nominal rates are in fact headed to the 5.5% 'Hidden Pivot' target shown in the chart. Thereafter, all bets are off, since nominal rates could fall below 2% and still be asphyxiatingly high in real terms. The corresponding rise in the price of Treasury paper would bring about a bull market in T-bonds. That's not what Jim Grant envisions, although the outcome, a U.S. and global economy reduced to ruin, is congruent with things he has been writing about for decades.

Will the rich and powerful own everything when the global financial system collapses from too much debt? Supposedly, "they" have been plotting and preparing for this all along -- even getting a new money system ready to make the takeover complete. But this theory makes no more sense than the one that puts the same evil geniuses in charge of the world's wealth after a 'vaccine' time-bomb kills off billions of gene-pool riffraff, including you, me and most of our neighbors. Will "they" really want to live in a world emptied of humanity by death and disease -- a world where yacht skippers, sommeliers, Ferrari mechanics, truffle-hunters, couturiers, gourmet chefs, interior designers and even bootblacks have perished? They might as well be feudal lords living in the 1300s, walled off from the devastation and misery of bubonic plague. Even Bill Gates, who reportedly owns a quarter-million acres of farmland, might have trouble feeding himself and his fellow eugenicists if there are no workers to seed and harvest the land. And how will Klaus Schwab, Imperial Wizard of the One-Worlders, celebrate victory with friends in Davos if there is no one to fly them there, or to provision a banquet hall with ample quantities of Beluga, foie gras and smoked trout croquettes? Those who believe that an all-knowing, all-powerful "they" have been plotting a global shakedown to steal the world's wealth and resources might well ask, What assets will remain for them to command? It is a massive deleveraging event that is coming, and it will turn all kinds of financialized exotica, including reverse floaters, offshore drilling leases and securitized debt, into rubbish. Meanwhile, returns tied to the production and distribution of critical resources such as water end energy will become too tightly regulated during the Second Great Depression to spawn

If you know any kids trying to break into journalism, there are two interesting stories waiting to be developed that have gotten scant attention from the mainstream media, what with all the fuss over a packet of cocaine left in the White House by you-know-who). The first concerns the collapse of America's postal delivery system. We're all familiar with the unofficial motto of the USPS: "Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds," Well, you can fuggeddaboutit, since, these days, it would seem, just about anything can, and does, keep the mail from getting delivered. I discovered this in the worst way when an alimony check that I mailed out on April 24 failed to reach my 'ex' by the first of May.  In fact, it still hasn't reached her, and a subsequent check for the month of June took 16 days to be delivered -- four days late, as it happened. If you are a divorced guy, then you know that few things are as likely to provoke one's former spouse as an alimony check that has failed to arrive when due. Well Fargo, my banker, acknowledged that postal deliveries have been 'slow', but they said there is nothing they can do about it. My solution is to use Zelle for money transfers, even if it, too, has caused problems requiring many hours of back-and-forth on the phone to resolve.   Unfortunately, there is no way to Zelle a card for Mother's Day, Valentine's day or a birthday card, and so one must emply an old-fashioned method to ensure a timely delivery -- i.e., mailing the card three or four weeks in advance. There's no guarantee it will get there in time, but when it doesn't

This promises to be the longest holiday ever celebrated in the U.S., eclipsing even the eight-day festival holidays that frequently pop up on the Jewish calendar. By the time you read this, the Independence Day celebration will be in its unofficial fourth day, having begun in spirit with a pronounced slowdown in the stock market last Thursday. Because the Fourth of July falls on a Tuesday this year, the usual three-day holiday weekend will get stretched by an extra day. Fireworks, barbecues and unsolemn speechifying will remind us that we are celebrating the passage of the Declaration of Independence 247 years ago. A growing number of editorialists will note that 41 of the 56 men who signed the Declaration were white slaveholders, and it is probably only a matter of time before some town in Oregon bans fireworks and other boisterous displays of patriotism, replacing pyrotechnics with a grim minute of silence for the Declaration's failure to deliver freedom to all. Is Independence Day fated to become an anti-holiday, like Columbus Day?  Probably not, and certainly not before gunpowder has been outlawed for 20 or 30 years.  It is unfortunately true, however, that no national holiday can be celebrated these days with the innocence that made them so much fun in the good old days. If you have a neighbor who objects to Blue Angels flyovers and 21-gun salutes, don't let the holiday pass without lighting up a string of Black Cats on her doorstep. Melt-Up Will Continue Concerning the chart displayed above, it is intended as a placeholder to keep my holiday comments from growing stale before The Morning Line changes again next Sunday. It offers a clear picture of the power driving the bull market in one of several key stocks. There are a half-dozen other world-beaters with

Inflation is being crushed from the system by vastly larger forces of deflation that have been lurking for decades. Although we might have expected the trillions in funny money that were force-fed into the U.S. economy during the covid era to have a longer-lasting effect on prices, inflation never had much of a chance. With real and nominal mortgage costs rising, home prices have begun to fall sharply, along with rents, used-car prices, gasoline and even some basic grocery items such as milk and eggs. Real estate is the 800-pound gorilla, though, because it is the chief source of loans that are destined to implode. This is particularly ominous for the commercial sector, since even the sky-high rents that still obtain in New York City, for one, are proving insufficient to service borrowing costs. Residential real estate will not be far behind, however. The median price for existing homes fell 3.1% in May, to a still-pumped $396,100, from a year earlier. We have some catching up to do with Germany, though, where even higher mortgage rates and official recession have caused home values to fall by a record 6.8% year-over-year. The 800-pound gorilla will ultimately be dwarfed by King Kong himself as the biggest cities in America spiral toward economic doom. This will be a key feature of the Second Great Depression, which awaits only an end to the nutty rally on Wall Street to commence. A very run-down San Francisco seems likely to lead the pack, but don't expect New York, Chicago, L.A. et al. to fare much better over the long run.  The cities will collapse economically on three levels:  above  ground (i.e., skyscrapers); at ground level (virtually all amenities, from hot dog carts to concert halls); and below ground (subways, with fixed costs that include $90,000 retirement

When will the rampaging bull run out of steam? A good question, considering how Wall Street has been flouting a slew of good reasons for the broad averages to be at multiyear lows rather than revving up for a shot at new record highs. Two destructive juggernauts in particular are bearing down on the economy with such force that only investors in a far-gone state of madness could contrive to ignore them. For one, an epic collapse in commercial real estate is well under way that will flatten the economy for decades. And for two, the most extreme yield-curve inversion on record is predicting a commensurately extreme recession. Under the circumstances, it would seem logical for traders to short into the stock market's show of bravado. So far, however, this strategy has brought only pain, along with the sight of stubborn bears being carried out in body bags. "This is starting to get out of hand," remarked a bruised and battered Rick's Picks subscriber in the chat room the other day. "What's the latest [Hidden Pivot] for a topping call. At least an intermediate top?"  You can access my precisely detailed response by clicking here, but the bottom line is this: Two bellwether stocks have at least somewhat higher to go before they, and presumably the entire stock market, are ready to keel over from exhaustion. A Setback, then Higher Specifically, MSFT has a 5% rally ahead of it before it reaches a potentially important top, and AAPL an additional 3.6%. These figures are based on Friday's close and differ slightly from the ones given in the recording, a tech analysis session that includes some nifty tricks you can try yourself with put and call options.  The precise price targets for the two stocks lie, respectively, at 360.02 and 191.73.

The Biden Administration can count on Wall Street to celebrate meaningless economic data and bogus GDP growth with steep rallies, even as the visible economy continues to implode. It will become increasingly difficult to ignore signs of impending collapse, however, as anyone who lives in San Francisco could tell you. The city's growing wretchedness is arguably no worse than what you would find in Chicago, Portland, Seattle or L.A., but it seems more appalling because San Francisco, with its cable cars, spectacular scenic vistas, hilly, charming neighborhoods and the world's most beautiful bridge, has always been regarded as a special place. In no song will anyone ever leave his heart in Minneapolis, Boston, Milwaukee or Miami. Labor Market Hubris New York is no better off, with even mighty BlackRock struggling to turn a profit on commercial real estate. Rents are higher than ever, but they haven't kept up with an even steeper rise in the cost of servicing property loans. Nor will they, for the U.S. economy is on the down slope of an inflation/deflation Mt. Everest, so hopelessly burdened by debt as to lie beyond the quack nostrums of Fed policy, let alone capable of regenerating itself with a robust revival. Consumers appear to be tapped out, tech firms are still laying off by the thousands, small businesses are closing at an appalling rate, and the Mother of All Yield-Curve Inversions is predicting a commensurately extreme  recession, Against all these troubles, the spinmeisters would juxtapose the supposed creation of 339,000 jobs in May. Armed with this dubious evidence of economic growth, officialdom is able to speak of a "strong" labor market with a straight face. However, 201,00 of the jobs, or 60%, were in government, health, education, leisure and hospitality, notes economist David Stockman. With growth mainly in low