The Market Is Toast

I Think It Trades A Lot Lower

I was skimming both the Financial Times and Wall Street Journal today. Economics Professor Alan Blinder had a column in the WSJ that if we get a recession in 2022 or 2023, it will be mild. Blinder frames his economics from the left side or Keynesian side of the plate.

He’s 100% wrong.

He’s thinking this will look more like 1991 when we raised taxes and the economy slowed down. That’s when the first President George Bush broke his promise after we read his lips. If you weren’t aware, it was the first sign that GOPe existed and that the Republicans in charge weren’t truly conservative. It’s why I had a Perot sign in my front yard that year.

The S+P is headed to 3200-3800. Here is a monthly e-Mini S+P Futures chart so you can see what I am seeing.

Here are links and snippets of other news:

• Japan’s currency value is plummeting signaling weakness. Yellen blew it again.

• China’s economy is contracting. Their currency is also falling in value. Xi’s war on business is working.

• Yra has some great commentary about the Yuan and Yen here.

• Apple beat earnings, but Amazon didn’t.

• They are talking stagflation in the Eurozone. Inflation in the eurozone was 7.5% in the year to April, up from a record high of 7.4% in the previous month. An optimist would say it’s not up that much.

• The US Economy “unexpectedly” contracted by 1.4%. That’s due to the doofuses in charge of it.

• Putin escalates his war against Ukraine. This won’t end well for Ukraine and Putin will get what he wants.

• The price of oil is $109/bbl, and Biden’s people just shut off millions of more acres for exploration. Diesel costs skyrocketed. Enjoy $7/gal gas just in time for the “summer driving season”.

• Biden just invented a “Ministry of Disinformation” so I wonder if blog posts like this will still be a thing in a year or if people like me will be jailed.

• Inflation is here to stay until the government stops printing money.

• Sure, the Republicans might take full control of the House and Senate, but is it really that big a deal when they don’t control the unelected branch of government that is causing 100% of the problems? It’s better than nothing, but we won’t see a sea change until 2024 if the right person is elected.

Keynesian economists look at the world and think we are headed to a slight bump in the road. They put a high value on government intervention and government spending in the economy.

Classical economists don’t put a high value on government intervention or spending. The multiplier effect on government spending as it relates to GDP is 0. Zero.

Hence, two movies same screen.

In 1991 when we had a recession that changed the outcome of the 1992 Presidential election, all the economy was digesting was the effect of higher tax rates. Today, the economy is digesting quite a lot. I think the next recession will look a lot more like 1974 than 1991.

The economy is about ready to throw up.