50 Years Ago Today

An important point in my life. The day in July 15, 1970 that I started trading as a Member on the floor of the Chicago Mercantile Exchange. It was a big move for an Ag Economics graduate. From managing a corporate cattle and farming operation in a small rural town in southern Illinois to moving to Chicago to trade cattle. Selling my 1966 427 Corvette and buying a 1970 Thunderbird (I still enjoy cars). It has been a good life and maybe never more challenging than today.

In 1970 part of what I did was write a weekly market letter for trading and hedging livestock clients (cattle, hogs and , pork bellies, plus foreign currency) . I have always enjoyed that part of my life, maybe an extension of the lengthy masters thesis that delved into measuring attributes (by psychological testing tools) of farmer purchasing habits.

Moving beyond those memories..

Todays markets, especially stock and interest rate markets, have never been more chaotic. Never before has the President’s office so manipulated the basic economics. Assisting him is Republican legislators who are much more interested in Power than the interests of the country.

In this day and age it is mind boggling that the President believes that the Stock Market controls the Economy and not vice-versa, as the economics books indicate. Where does this all end? Obviously the election is a big factor going forward.

But part of Trump’s legacy is the MMT funding approach where deficits and debt are meaningless. If Democrats win in 2020, while it will be a plus as to the direction the money flows, community based climate change buildouts, etc, the fact remains that the deficit and debt issues will probably only grow due to overwhelming problems inherited. (Obama had the same kind of thing in 2009).

This can only end in inflation at some point. The question is, will the overhanging corporate and private debt load create a debt wiping plunge in asset values first? I think that is highly probable and is a premise of my market views today.

The Macro Cycle

This is the measure that I use to help me see where we are in the Macro Cycle, whether we are in a growth or no growth section of that cycle. Currently we are in the No Growth section (Macro cycle above “0.0” Gold and Bonds rising relatively versus stocks and commodities). This cycle trend has been going on since October 2018 (see 200 day average).

And to provide short term tracking of that cycle, here is the chart we have been providing for the trade which commenced on Jun 5th, 2020. At the moment, 11:00 AM CDT with the S&P at 3235, here is the chart showing a 2.8 percent positive number. This is a solid No Growth value, and it is holding.

Trump Re-Election Posturing

This No-Growth direction is in spite of the Trump Re-Election posturing of the stock and high risk corporate bond markets. I heard yesterday that all of the profits in stock indexes since the February crash has occurred overnight when the Treasury Plunge Protection Group allegedly dominates the market, 570 points. If one were to be a day trader and bought every day on the opening and sold on the close, you would have basically a net zero for your efforts.