The Morning Line

Microsoft's bullish rampage last week added to already strong evidence that the stock market is headed to new records highs.  The shares of the software leviathan's shares not only jackhammered through granite resistance in the form of the midpoint 'Hidden Pivot' shown in the chart, they ended the week decisively above it. This technical telltale is almost never wrong, as Rick's Picks subscribers could attest. When a stock fist-pumps through the midpoint 'Hidden Pivot' and then stays above it for even a short while, the rally is all but certain to reach the 'D' target -- in this case 430.58. That would equate to a 30% rally from current levels, putting MSFT 80 points above the old all-time high at 349. If the Dow Industrials were to achieve a relatively modest gain of 20% over the same period, they would be trading just shy of 40,000 -- substantially above the record 36,952 achieved in the early days of 2022. Previously, I wrote that similar wilding sprees in Chipotle and AAPL were pointing to the same outcome: new all-time highs for the broad averages. With a third world-beater joining the list, an enticing bet on new all-time highs has become even juicier. This is despite the fact that the radically inverted yield curve the financial system just weathered has never been wrong in predicting a recession. Factor in a collapse in commercial real estate that appears inevitable, as well as a wave of bank failures that even Janet Yellen is expecting, and it would seem that stocks are facing a perfect storm of deflationary forces. So how come your editor, a hard-core bear's bear, thinks stocks are just now lifting from the launching pad?  Very simply, because the market is a rabid beast, inured to all logic, common sense and caution.

Maybe. Yeah, right. A headline here just two weeks ago implied that stocks were about to go bananas: Why a Permabear Is Certain We're Going Much Higher.  Hubris aside, this was based on the very bullish chart of just one stock, Chipotle (CMG). It had just crossed the $2,000 threshold and appeared -- still appears -- bound for a rendezvous with a Hidden Pivot target at $2,739 that lies $600 above Friday's close. Some might question the logic of using a projection for a single stock to make a prediction about the stock market as a whole. I am confident that my method, more intuitive than factual, will prove superior to the benighted, self-serving blather coming from the likes of Jim Cramer, various talking heads on the financial news shows, and from Wall Street shills who get paid by the word to tell us why we should be bullish. These mongers of gladness will always try to connect the stock market's performance with supposedly objective facts tied to the economy and corporate earnings. Unfortunately, and has been demonstrated time and again, this is like trying to predict the behavior of a sea snake by analyzing the contents of the ocean. And in case you haven't noticed, the "facts" that the talking heads cite unrelentingly are used almost solely for one purpose: to justify buying stocks at any price, no matter how grim the economic outlook. (And it is indeed grim, with little doubt that a collapse in commercial real estate is imminent, accompanied by a potentially catastrophic wave of bank failures.) Vaporous 'Wealth' None of which argues that stocks cannot continue to climb heedlessly. It's not as though it takes bullish buying or even real money to make this happen. To the contrary, most of the big rallies occur on

[Editor's note: The following commentary draws parallels between today’s bond market environment and the last great bear market in bonds, which bottomed in 1981. It went out last month to clients of my friend Doug Behnfield, a financial advisor and senior vice president at Morgan Stanley Wealth Management in Boulder. Long-time followers of Rick's Picks will be familiar with Doug's unconventional thoughts on the markets, since they have been featured here many times before. I have always referred to him not only as the smartest investor I know, but one of the smartest guys. I am grateful to him for allowing me to share his insights with you. The charts are my own, since they reproduced better than the ones that accompanied Doug's letter. Also, the photo of the annual Pamplona stampede is an emphatic touch of my own, since I share Doug's very contrarian bullishness on Treasury debt. RA ] Lately, I have been telling the story of my experience leading up to the all-time high in long-term Treasury bond rates that occurred in late 1981. I was kind of a rookie, having started at Merrill Lynch in late 1977 (at age 22). 30-year Treasury bond yields peaked at 15.25% in September 1981 and by then, 6-month CDs were paying 18.5% and the yield on the Merrill Lynch Ready Assets Trust money market fund was pushing 20%. Bond yields had rocketed from 10% to 15% over about 15 months so 30-year Treasury bond prices were down 35% compared to mid-1980. The reason rates got so high was attributable to steeply rising inflation and determined rate hikes by the Volcker Fed to put a stop to it. Back then CPI inflation had reached almost 14%. It was driven mostly by demand coming from an army of emerging Baby Boomers forming

[I'm giving the commentary below a second week on the front page because the thesis is so outrageous even I can scarcely believe it. Stocks screamed higher to end the week, as if everything were right with the world.  What lunacy!  Investors have truly gone out of their minds. Reportedly, there are 186 U.S. banks on the verge of failure. Although the Fed was able to paper over the collapse of three sizable ones earlier this year, what will happen when a few more fall in rapid succession? The minefield this will create will be impossible to navigate.  A run on the banks is a very real possibility no matter what a stock market gone vertical would have us believe. For the time being, however, I'm sticking with my seemingly nutty forecast, since the very bullish look of two bellwethers, Chipotle and Apple, suggests they and a few other institutional must-owns will continue to drag the broad averages higher. Stay tuned. Next week: Why my friend Doug Behnfield, a Boulder-based wealth advisor whose thoughts have been featured here many times, thinks Treasury bonds are the place to be.  RA ] *** Like many of my subscribers, I have been waiting for the stock market to crash so that sanity might have a chance to recover its footing in the investment world. Permabears can always come up with good reasons to explain why a crash is imminent.  Some use technical tools for this. Others cite public and private debts that have grown far too large to repay, and high stock-market valuations that do no square with a credit-driven economy that has been struggling harder and harder to grow. Even Biblical prophesies of doom appear to be gaining sway as the tenets of Western religion come under heavy attack.  If the End of

Readers will be pleased to hear that Alissa Heinerscheid, the Anheuser-Busch marketing whiz responsible for featuring Dylan Mulvaney's unwholesome mug on cans of Bud Light, appears to have lost her job. A-B reportedly put Heinerscheid on a leave of absence, replacing her with a senior executive.  Since the megabrewer is unlikely to promote Alissa, and because she doesn't appear to be the kind of gal who would accept a permanent career plateau gracefully, it's safe to assume she will soon be seeking work elsewhere. The woman was cursed with a face made for radio, but don't be surprised if she scores a cushy off-camera sinecure at CNN or the White House. We wish her quick and total success as she sinks back into obscurity. ​​The disappointing news is that Anheuser-Busch has yet to apologize for offending the vast majority of its customers by making a flaming fruitcake its spokeswhatever for a quintessentially mainstream brand.  Curiously, even in a world that increasingly seems to reward evildoers and pander to woke wackos, BUD shares look poised for an upside breakout. This is despite a reported 10% drop in Bud Light sales.  Investors evidently believe the brand will rebound fully, but don't bet on it. A Medically Concerning Chart Concerning the chart above, it shows the E-Mini S&Ps in a day-long series of spasms on Friday that would be medically concerning if the S&Ps were human. But guess what!  The S&Ps actually are human insofar as they act to fulfill the conscious and subconscious demands of all market participants at every instant.  Moreover, the human thoughts that animate stocks are often so fraught with fear and greed as to produce price swings wild enough to be labeled aberrational or even psychotic.  Realize that the swings are a perfect visual analog for the conflicting

The toppy look of Anheuser-Busch's stock chart (above) implies that the company is at least somewhat likely to lose sales because of its attempt to shove the wretchedly unlovely Dylan Mulvaney down our throats.  Bud Light is undrinkable pisswater to begin with, so perhaps we should not be cheering on the frat boys who made it America's #1 rotgut, surpassing even Rolling Rock, but giving begrudging credit to the woke schemer in A-B's marketing department who managed to spin the brand out to the farthest reaches of the galaxy. Choosing a flaming fruitcake to be Bud Light's spokeswhatever was the brainchild of a 39-year-old, Ivy-educated provocateur named Alissa Heinerscheid, and there's no denying that the brewhaha this prank stirred up has made her a hero to half of America. But that still leaves the other half to boycott Bud Light and sundry other products distributed by Anheuser-Busch. The list includes Stella Artois (which, despite its popularity in the U.S., Belgians evidently regard as their pisswater), Monster Energy Drink and a gallimaufry of craft beers. Dylan's Journey It is by no means assured that Anheuser will lose out, let alone that they will cashier Heinerscheid. Before she even hired Mulvaney, the vomitous saga of his regression to faux girlhood had attracted a reported five million gawkers on TikTok. He is a top influencer and arguably unmenacing as long as he's not chatting up little girls in the schoolyard. Fortunately, Heinerscheid's reach does not yet extend into our back yards. And it is just possible that overexposure will soon force her and her employer to back the hell off. To support this outcome, here's a supposed photo of her cavorting with fratty girls at a Harvard party in 2005. Blowing up condoms, admittedly, is unexceptionable behavior for party girls and debutantes who

Anyone who has played around with ChatGPT knows that it is just dumb enough to succeed wildly. It harbors no opinions, grudges or wit, and it can talk a blue streak without saying anything interesting or exceptionable. This kind of artificial intelligence seems perfectly suited to mimicking the rote tasks that lawyers charge clients hundreds or even thousands of dollars an hour to perform.  And not just churning out boilerplate, either. Put a voice-activated bot in a courtroom and, without a mote of prejudice, it will prosecute or defend whoever is in the docket by drawing on the entire, vast library of U.S. jurisprudence. Will we even need judges to decide cases or instruct juries when machine intelligence can split hairs of precedent down to inarguable singularity? These thoughts occurred to me as I reviewed a lawyer letter for which I had paid a South Florida attorney $1,000.  He made a novel argument concerning why I would be suing the officers of a particular company personally rather than corporately. Their lawyer responded with two thousand words that said, basically, you can't do that, and here's why.  These shysters would still be slinging legalese at each other for $450 an hour if I hadn't pulled the plug on my guy.  I'd paid him $2500 as a retainer; his invoice -- including time spent tallying up the bill! -- was for $2469. A coincidence, I'm sure. The invoice was stamped 'Paid in full', but I had to remind him that he still owed me the $31 difference. Small wonder that lawyer jokes are so vicious:  What's brown and black and looks good on a lawyer? A Doberman. The ABA's Turf There can be no doubt that a lawyerly version of ChatGPT will soon enable litigants to cut to the chase, and for

Well, they finally indicted the proverbial ham sandwich last week, adding to our long list of worries that the world really is falling apart. It’s as good a time as any to trot out William Butler Yeats’ The Second Coming as a reminder of where things are headed. This is arguably the most powerful poem in the English language, so let your imagination run free as you read it: The falcon cannot hear the falconer; Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world, The blood-dimmed tide is loosed, and everywhere The ceremony of innocence is drowned; The best lack all conviction, while the worst Are full of passionate intensity. Opinions differed as to what the criminal indictment of our former president might mean politically. For The New York Piece of Shit Times, it was “a historic development that will shake up the 2024 presidential race and forever mark him as the nation’s first former president to face criminal charges.” The Zapruder Awakening For fully half of the nation’s voters, however, the Manhattan grand jury’s decision to charge Trump with paying hush money to a former mistress was just more Theatre of the Absurd from the same people who would have us believe Hunter Biden was framed. But there were no allegations of Russian disinformation this time, so perhaps the nation is making progress, however tiny, toward restoring civility and sanity to public discourse. Both last obtained until the early 1960s, before the Zapruder film raised questions about who killed JFK. ​For better or worse, the stock market’s wildly erratic brand of sanity held constant last week as shares rallied strongly into simultaneous threats of global war, a run on regional banks, a drag-queen putsch in the nation’s cafetoriums, and an increasingly woke military leadership

When I refer to Fed chairman Powell or to the Fed governors, collectively, as morons, I'm not suggesting that readers take this characterization literally. Indeed, most of them have IQs that are probably twice the 51-70 range that would categorize a person clinically as a moron. (It is only when casting aspersions on politicians, some of whom demonstrate persuasively and often that their IQs are in the 26-50 range, that the term "imbecile" may be construed literally.) To give economists their due -- even economists like Powell and 'Easy Al' Greenspan, who were elevated to positions of leadership by, mostly, political imbeciles -- the men (and woman: Janet Yellen ) who inventively script U.S. monetary policy are intelligent and well-schooled. It is only when they attempt to bend their knowledge toward the running of the economy that we see clear evidence of impaired thinking. How else to characterize the moronic idea that the more we borrow, the richer we become? And yet, so devoted are economists to this crackpot scheme that they would set it aside only temporarily when it appears to beckon disaster. They tighten, that is, only to set up the next phase of easing. This has been the Fed's MO since the central bank was created in 1913 as an instrument financiers could use to steal from the rest of us without detection. The ruse has succeeded to a degree that even the greediest of them may never have imagined, but at the cost of creating increasingly devastating boom-and-bust economic cycles over the last hundred years. We're All Bozos We are all complicit, to be sure, since the Fed is able to 'manage our expectations' only because tens of millions of Americans think and act like economic morons. For instance, we borrow against inflated home values to