The End is Here. I Bet My Blog and Lost and Won
I bet my blog on a stock market crash in the early summer and on global economic cracks large enough by summer that no one could reasonably deny the economy is in a serious downturn. I have both lost and won that bet as I will lay out here.
How my bet was lost
Yesterday, the S&P 500 pulled out of the correction deadlock it had been snared in for more than half a year by beating its January record by a thin 1.69 points. The NASDAQ also posted a new all-time high, beating its record by a more distancing 13.7 points. Moreover, it rose because one of its broken FAANGs appears to be on the mend (Netflix up 5.8%), which puts the “N” in “never say never” for the FAANGs.
That latter market victory makes me permanently wrong about July being the NASDAQ’S final high before it enters a bear market because of the break in the FAANG stocks. That may be just a technicality if the NASDAQ fails to hold that high and falls. As it stands right now, though, I lose my bet. I could state that no one ever had the courage to take up the bet against me, so the bet’s off, but I won’t dodge out on that technicality either.
The Dow, on the other hand, remains in correction and could still devolve into a bear market. If it does, that would establish a stock-market crash that began back in January of this year (the Dow’s last summit); but I’m not going to wait to see if that happens before calling my bet either. As MarketWatch has noted, such a lengthy fallow period is highly unusual; but it also comes at a time when the S&P (to the satisfaction of many) just established the longest bull market in history, Trump be praised … or, at least, trumpeted. That, too, is highly unusual.
How my bet was won
While I admit candidly that the stock market beat me, I think that honest admission of failure earns one the right to be equally candid about success — in this case how perfectly the economy matched up to my predictions for the cracks I said would be opening wide by this summer. Here is a recap of the things I said would assail the economy and become worse by summer:
- Housing Collapse 2.0, though still in its nativity, is stacking up evidence by the day. (And I said it wouldn’t start to show until late summer.)
- The Retail Apocalypse continues to slowly expand with Sears/Kmart this week naming even more stores that will be closing just as I said it would develop as a slow build over three years.
- Carmageddon could still become an automobile holocaust as the Big-Three announced this year that they are exiting the car business to focus on their last lines of market-share defense — trucks, SUVs, and vans. I noted more than a year ago that the US automakers would wind up in deep trouble very soon.
- The federal debt blasted completely out of earth’s atmosphere in the past couple of months on a trajectory headed completely out of the known solar system. (I warned the Trump tax cuts would never pay for themselves, yet TheRump coupled those to the biggest government spending in history.)
- Trump’s tariff war with the rest of the planet accelerated late Thursday, proving as I have been saying that it is not going away. China mashed down on the accelerator by bringing nothing of interest to this week’s round of talks (as I averred was most likely). China, then, left the talks stating that it is most likely terminating all tariff negotiations until after US elections (in hope of a congress that will oppose the illegal Trump Tariffs).
- Two FAANGs broke off in July, and US stock indices have labored greatly to get out of a slump that endured from January until this weekend in spite of the greatest tax cuts and stock buybacks in history. (Maybe one of the FAANGs is recovering.)
- Wages adjusted for inflation have refused to budge while dividends have soared, proving my claim that “supply-side” tax cuts never trickle down and never will, not even during a period that is vaunted (albeit falsely) for having the lowest unemployment of all time. Thus, the gap between the 1% and all the rest is widening even faster than before Trump came into office, as I’ve said it would.
- Inflation is already solidly above Fed targets, which locks in more Fed tightening, even as …
- Emerging markets are crashing into economic ruin all over the world due to Fed tightening with Turkey’s threat of contagion leading the fall.
- China (whose market failures have swamped our stock market in recent times past) is suffering major market paroxysms.
- The end of globally synchronized harmonious growth departed this world as quickly this year as it was declared into being. I never bought into it in the first place.
- President Trump is now looking and sounding like there really are legal troubles that he knows are coming his way, which is sure to keep the news churning throughout a rough electoral season, which means a lot more market chop ahead. President Trump, himself, said yesterday that, if he is impeached, the whole market will flush away as if it is just a cult built around one personality, which the Trump Rally actually is.
Talk about obvious cracks forming in the global economy this summer as I said they would! An economic ring of fire is breaking up in volcanic upheavals. So, I think I won that side of my bet; and I made the bet when the majority of market analysts were preening themselves over talk about “recovery” and “harmoniously synchronized global growth.” They thought those terms described what would be the overarching economic picture for this year. I thought otherwise.
Still, the market climbed above previous records, in spite of news today that China is in the tariff war for the long run, in spite of a tweet from Trump that North Korea is not making progress on denuclearization, and in spite of one more witness (head of the Trump Organization) gaining immunity today to testify that Trump was fully knowledgable of illegal campaign contributions. In the face of all that, the market broke out of correction mode and hit new records.
This endless waves of this market that rises on bad news and then falls again makes it hard for me to stomach a continuing to ride on this blog. Few things in this world irritate me more than denial, which the world is full of right now at levels that make me feel like I sloshed down a gallon of ipecac syrup while seasick. So, in spite of the wins above, I am choosing to turn my writing focus to more enjoyable topics. (I can easily write about the negative swirl of economic events around us so long as I see hope that clear understanding of these events can help guide us toward positive economic reconstruction, but right now the US is awash in false belief that the economy is riding on a rising tide when it is merely rising on boundless debt. That fog of denial means a diminishing audience here and a tone-deaf ear to the warning bells of the buoys ahead.)
I may return
… if an when reality crashes in around us enough that people become willing to listen to the warnings. It may be that the first part of my bet (the stock market’s demise) will catch up with me fairly soon. If it turns out that my prediction merely had a slight error in timing and the US stock market does plunge further while the US and global economies suffer much deeper losses, then my sole crow on the wire here (scoffer) will be picking lead shot out of his flesh as he watches the investments he crowed about fall apart all around him. His own investments will shoot him off the wire.
It will be hard to fault me for a minor error in timing if the Fed’s recovery falls into pieces and takes the stock market down with it within 2-3 months of my scheduled departure date for the market. That date was determined by what I now call the Fed’s Recovery Rewind, as their tightening will literally rewind all the illusion of recovery they have created. We can already see the weakest economies crashing in rapid succession due to the Fed’s tightening, which does not even get up to full speed until fall.
Still, that collapse may continue to take longer to become evident to all than I have stomach for, and I’m done chronicling all of this for free. I have done my part to warn as many people as I can. I have moved my own investments to shelter myself as best I can. My audience is shrinking now that I’ve started criticizing President Trump; therefore, writing more on this topic is not going to forewarn any additional people nor broaden my audience as I come all the more to believe my disbelief in Trump was warranted.
As a result, I’m on a quest to find something more interesting and positive to write about. Maybe I’ll write a novel or a screenplay. Those assignments could be a whole lot more fun than keeping a diary of every last breath of a dying dinosaur economy. I’m a writer available for hire (at a good professional rate).
Black swans are filling the wings
As I write my own swan song here, it occurs to me that the potential for black-swan events has rarely been greater. Black swans are born in times of turmoil. They are formed from the chemistry of corruption and the hidden decay of bad ideas that have been slowly rotting beneath the scene. They come suddenly as if out of nowhere, but they always should have been expected (even if we didn’t know exactly in what incarnation they would take flight or when they would first appear). They should have been expected in the sense that, if you see an avalanche coming your way, you don’t have to know which particular rock is going to break your head to know that it is almost certain there is one that will.
In the face of such a cascade of events, the US stock market continues to play as if nothing bad is happening, as if the majority of investors are saying, “I don’t think this particular rock or that particular rock is actually going to hit me.” Maybe that is because there are few real investors left. Most of the market is run by algorithms now. Still, to those who have kept their 401Ks heavily invested ins stocks, I give a final warning that It doesn’t matter if one particular rock or the next one is going to hit you! With so many rocks tumbling in your direction, it’s a ridiculous conversation to even be having! Just get out of the way!
I feel with this departing post, I’ve done my part to warn as many as I can that the economy is not on the solid ground that many think it is. My crows on the wire who cawed about my failure all turned out to be but one person using multiple logins, but that doesn’t matter because it is not because of him that I am quitting this blog nor because of him that I am apologizing when I fulfill the other part of my pledge to my first detractor that I apologize for being so wrong about the economy’s decline if I am.
The accuracy of my predictions
I will be fair to myself, even as I lead up to my promised apology. I have not been proven wrong about the economy’s decline. On the contrary, the cracks laid out above are quite clearly gaping wider by the day. Nor do I feel bad that a rigged stock market has outlasted me. I have both been spot on (in terms of every timing of every major market break during the time I’ve been writing this blog) but also wrong (in terms of the scale of the breakdown.) I, however, was wrong in timing about early summer bringing a second leg down for stocks, although the damage done to the FAANGs could still prove to be lethal to the tired bull.
Here is my record, just to lay it out at this time of my own termination:
- In the summer of 2011 (before writing this blog), I predicted the market would crash in August due to the Republicans’ brinksmanship over the federal debt ceiling and that the market crash would happen because US credit would get downgraded. It did, and it took the major intervening promise of Operation Twist by the Fed to pull the market out of its sudden demise. That relief morphed into QE3. (So, the market’s fall was not a small collapse if it took that big of a promise to stop it from falling further.)
- In 2014, I predicted the market would crash in the fall, and it crashed badly enough in the fall for me to be able to say the bull was dead. It was dead in the sense that market churned sideways for two years from that point without gaining a single dollar in the averages.
- At the end of 2015, I predicted the market would crash by going up immediately after the Fed’s first rate increase, which I said would happen on December 15th, after which the market would round downward, and then very quickly fall off a cliff. It did all of that, ending in a January plunge that was the Dow’s worst January on record.
- I said the market would crash again this January, and the Dow peaked and then took the largest single-day point drop in its history, ending up with both the Dow and the S&P 500 remaining in correction mode until the S&P finally broke out yesterday, seven months later.
At no time in my life have I ever predicted a market crash that did not turn out, in the very least, to be a very, very bad month for the market. As you can see (if you are more fair-minded than my three-headed crow on the wire), the timing of those predictions was precise, and the drop was always historic in size by some measure, never of minor consequence. For each one, however, I erred in predicting something bigger. I predicted what I eventually called “The Epocalypse,” by which I meant an Economic Apocalypse (actually holocaust, as “Apocalypse,” while commonly used to mean holocaust, really means “revelation”) of epochal change (i.e., leading us into a whole new economic era) that would be epic in scale.
None of the market plunges I predicted became a “crash” of that proportion. I’ve been predicting the Epocalypse since 2015, and it still isn’t here. Nevertheless, the cracks in the ground all around us are becoming immense as far as the eye can see (if you have eyes that are not clouded by denial). If you cannot see that, pity you because I assure you that you will shortly and you’ll wish you had once you do. The ground beneath this economy is not at all stable, but is a chasm of debts — personal, corporate and national — the scale of which we never saw even leading into the Great Recession, and these debts are as riddled with faults as those that created the last crisis.
Now, here are my promised apologies
I promised to stop writing on the economy if I missed my bet and to apologize, and I pay my bets, but the apology is not the one the crow thought he had coming. The crow who asked me to apologize asked that I apologize to my readers if I was wrong, not specifically to him, so I’ll give my readers the kind of apology I think they deserve. My readers have been encouraging and fascinating to listen to in their own comments and have encouraged me not to listen to the crows who turned out to be one person in a few guises. My apology is for making this bet in the first place and making my readers slog through it!
Please understand, Dear Readers, that I did it with better intentions than what played out. Seeing that my readership suddenly shrank with Trump’s election and the resulting euphoric rally … and seeing that I was putting in a thousand hours a year and now getting back only enough from advertising to cover the cost of hosting the site and registering the domain each year … and feeling that I didn’t have it in me to keep writing on this topic forever if the euphoria continues … I made a gambit. I decided to bet my blog on the hopes that writing that in headlines here or there would attract some attention.
It didn’t. It was a failed idea, and I apologize for dragging readers through that for the months they had to listen to me pump the bet up. You see, I hoped my willingness to put everything on the line would help my blog become economically successful (as my own hedge against bad economic times). If that didn’t happen, I hoped it would, at least, gather a little bigger audience around (like a barker on a street corner) to widen the warning. I hoped it might function like a ticking clock in a suspense movie, adding tension to the drama.
It did none of that. So, I apologize for dragging you through an exercise in futility.
However, I also did it because I wanted to make it crystal clear that I fully believe in what I have predicted and fully stand by it. I didn’t want to become another permabear who keeps moving his timelines ahead. While my timelines were right for every market plunge, I was wrong that any of those stock-market plunges would bring on “the Epocalypse.” They were always historically severe drops, but never cataclysmic, and I don’t want to be the guy who keeps saying “the sky is falling” when, in fact, it does not fall.
I’m honoring my own standard that my predictions be accurate so that I’m not just the perennial false prognosticator who says something bad is going to happen until it finally does and then says, “See, I was right.” (I don’t want to be the proverbial broken clock that is right by accident twice a day.)
I also want to apologize for all my boasting. You see, that is actually not my nature in everyday life. I saw that Trump boasts endlessly, and his following grows to a size that got him elected president because of it. I saw that Rush Limbaugh brags all the time about being “talent on loan from God,” and his listening audience has grown to be the biggest on radio. I decided I have no name or reputation to draw an audience, so maybe boasting about each success in my predictions would get people to pay attention. I’d give banging a drum or blowing a trumpet a try, even if it made people think, Geeze, he’s arrogant. That, too, might draw attention to what I feel people need badly to understand if we are EVER going to have a sustainably healthy economy that is fair to all.
Because boasting doesn’t work for me as it clearly does for others. I was going to apologize for that, even if this post turned out to be one declaring my bet won. It would also be one declaring that’s the last time I make such a bet and the end of my boasting to get attention to these words.
There was (and still is), however, another sense in which I don’t think it was boasting: I figured that, if you’re going to lay your name on the line for the predictions you’re making, taking ridicule for making them, and if you are willing to be publicly candid about your failures, then you have a right to point out your successes just to be fair to yourself. In other words, I was committed to being equally honest either way. If I was wrong, I would publicly confess my errors (as I am doing now and have done at a few points along the way). If I was right, I’d pronounce that I was right, which would (of course) sound boastful. If nothing else, I hoped it would provoke people enough to get them to listen.
My purpose in saying “I see this coming” and later proclaiming “I saw this coming” (with the written record here to prove it) was always to eliminate the Federal Reserve’s argument that “you cannot see these things coming.” (Their escape route from blame when they crash their own recovery.) No, you can know exactly how they are going to fail and why, and all of the stock-market predictions I made along the way were based on the Fed’s stated timing for its own policy changes. As I’ve shown, I was right with every timing given for those stock-market plunges (except maybe this last one, though the Dow remains in correction), but I was wrong in scale.
Actually, I was wrong with one other timing, but I corrected it well before my time was up. I had predicted the same scenario for last summer that I predicted for early this summer. When I saw events actually unfolding in terms of the housing market starting to falter, the Retail Apocalypse being announced everywhere and Carmageddon, I announced that all of those things that I had said would hit that summer would actually be delayed until this year with retail and auto sales to show poorly early in the year and housing not to show poorly until summer or maybe even fall.
I said that before any statistics came out showing that all of those things were getting bumped further away. I said it would happen because all the wildfires and massive hurricanes would provide a lot of temporary stimulus due to the need to replace quickly hundreds of thousands of automobiles and hundreds of thousands of homes and all of the things wrecked inside those homes. That is a whole heaping huge amount of purchasing.
And that is exactly what happened. I’ve always noted that my predictions are based on economic trends, not divine omniscience about what the weather will do. Unforeseeable cataclysmic earthly events can change economic trend lines. At least, I can say that I revised my economic time scale based on those natural events before any stats came in to show their impact. (Later, I also demonstrated how precisely those markets’ temporary recovery matched with my revised timing and then how precisely they returned to their downtrend on the revised timing I had given.) If one revises his timing due to truly unforeseeable natural causes but gets the revised timing right, then he’s still really right on in terms of where economic cause-and-effect is leading. You just have a sudden outside force to factor in — like a course correction due to a storm.
Those are my apologies, wrong where I was wrong, right where I was right and left for others to make of as they will where they are a little mixed in results.
Off I go … for now anyway
I want to express my gratitude to faithful readers. You are great in spirit, and thank-you for your encouragement. Never would I leave what I’m doing because of the criticism of one raucous little crow, especially over the appreciation of long-term readers. I wouldn’t have made the bet if not as a last-ditch effort to try to gain some attention so that the blog could succeed for the long term or that I could, at least, warn a wider audience.
I feel, however, that I have now done all I can, and we’ll have to wait to see how it plays out. In the meantime, I’m going to focus on writing that is a little more fun or that is profitable. (Hopefully, I’ll find something that is both.)
It is not because of a crow or even some ridiculous level of perfectionism that I am discontinuing this blog; it is because my arguments are gaining no traction, and I have become convinced they won’t until they after prove themselves true. Trump has most conservatives hoodwinked into believing the economy “has never been better” and even into believing he’s anti-establishment when he has given the establishment the greatest gifts ever bestowed! It’s amazing and unfortunate, and the more I take that on, the more readers I lose.
Having built my readership during the Obama years when I was critical of Obama, many were not so willing to hear Trump criticized with equanimity. They also believe that the US under Trump will go on from success to success for another six years of Trumpdom because he’s playing ten-dimensional chess. I, on the other hand, have never believed in the fundamentals of this recovery at all, as it is entirely jacked up on debt, just as stocks are pumped up by stock buybacks. It has been a great recession for the wealthy, while the middle class remains almost stagnant. All recovery efforts have been designed to make the rich richer as a path to helping the middle class, and that never had to be the path taken. I’ve presented other paths that would have been better for all over my years on this blog — paths not taken.
I realize the stock market is not the economy and that the economy clearly is not doing well, but it is still bumping along well enough on the surface that the majority believes they’ve never been better off financially. (Low unemployment, high corporate earnings, solid price/earnings ratios in stocks. Endlessly rising stocks. The things they want to focus on. You hear those terms like a mantra leading to mass hypnosis. Regular readers on my site already understand how all of those things are just an illusion, so I don’t need to explain again why they are not what they seem.)
It is impossible in the present Trumped-up euphoria and mass delusions of greatness to convince anyone the economy is failing, even with such obvious signs, unless they were already of that opinion. As one reader kindly pointed out, my writing, at least, helped him express what he wanted to express to others. When the bankruptcy of these ideas becomes clear, that is when we can have a conversation that might go somewhere.
Until then, Trump is developing himself into the establishment’s perfect scapegoat (another of my predictions from back in his candidacy) as his sexual-finance escapades cause him more trouble and his massive tariff wars cause the whole world trouble. He has wrapped himself up in the rising market as his cloak of honor, so when it fails, he will get to wear its failure, too — never mind that economic failure has been baked in from long before Trump’s chaotic administration.
With that, off I go, maybe to return if the economy proves me right in the next few months, but not staying to beat out a drumbeat of collapse for countless days, should it take longer than I believe it will. Thank you to all — even my crow for serving as the sole foil to my bet. I have no hard feelings, Crow, and hope you do not either. You are not the reason I’m moving on. I journey for my own economic development.
I am particularly grateful, though, to those who have been an encouragement and who have been faithful here and hope you will not feel that your encouragement and belief has not been fully appreciated. I’m journeying forward into the great unknown because sometimes you just have to explore, and sometimes you have to take care of what you need to do for yourself.
I go with no particular destination in sight during what I believe will be dark and troubled times ahead. I fly alone, never settling into this club or that club (Republicans or Democrats, Conservatives or Liberals or whatever) as most do in order to think and talk among like-minded people for the sake of popularity. Others are always welcome to join me for the ride if they find me again. (And, if I do write elsewhere, I’ll come back here to leave a trail of breadcrumbs and let you know where I’ve gone.) Whether I am flying into the sunset or into the dawn, I do not know.
If I rise on the wings of the dawn, if I settle on the far side of the sea,
even there your hand will guide me, your right hand will hold me fast.
If I say, “Surely the darkness will hide me and the light become night
around me,” even the darkness will not be dark to you; the night
will shine like the day, for darkness is as light to you. (Psalm 139:11,12)