My object in living is to unite
My avocation and my vocation
As my two eyes make one in sight.
Only where love and need are one,
And the work is play for mortal stakes,
Is the deed ever really done
For Heaven and the future’s sakes.
– Robert Frost, “Two Tramps in Mud Time”
YOUGHAL, IRELAND – The Dow closed up more than 400 points. End of the correction? Mr. Market’s fake-out?
In a bull market, you buy the dips. In a bear market, you sell the bounces. Which is it?
We don’t know yet, but our guess is that you won’t regret selling now.
We are homeless in Ireland as we wait for our new house to be renovated. In the meantime, we’re staying at a remote hotel perched on a cliff overlooking the sea.
Last night, we had a telephone conversation with a woman with a silky American accent:
“Would you come to my room with a couple of champagne glasses?” she asked.
“Uhh… Are you staying in the hotel?”
“Yes, room 26… Come on up.”
“Are you the woman with blond hair who was in the lobby this afternoon?”
“Well, it’s just that we’ve never met. This is a bit of a surprise…”
“And I don’t think this is a good idea…” We were about to explain that we didn’t do that sort of thing.
“Wait… Is this the front desk?”
The world is full of miscues and wrong numbers.
Meanwhile, over at the house we are renovating…
“So… you do this for fun?” An Irish workman was puzzled. Like Frost’s tramps in mud time, he wondered why this 70-year-old American was dressed in dirty jeans and a sweatshirt.
And why was he mixing cement and climbing a scaffold with heavy stones? The workman seemed genuinely concerned… and ready to call the mental health authorities.
“Yes… I like physical work,” we explained. “I’ve always done it – stone masonry, in particular. My career has been spent in front of a computer, studying things that are either lies, frauds, or misunderstandings. Nothing is straight, true, level, or plumb.
“Stone masonry is real… and solid. It doesn’t pretend to be something it is not.
“But getting the stone up on the scaffold is hard.”
He must have thought we were a bit odd… but perhaps not stark, raving mad. He shook his head and went back to his own work, as we returned to ours.
In the meantime… when we left off yesterday, we had just connected some dots. And a disturbing picture was coming into clearer focus.
Here’s what we’re looking at…
Government spending is now impossible to restrain. Donald J. Trump probably had the last opportunity to bring it under control. We suspected that the promise of “draining the swamp” was just a political feint. But we kept an open mind.
Now, we know… Instead of cutting the budget, he increased it. The deficit is projected to hit $1.3 trillion next year. And now, between the Deep State insisting on more money for “defense” and aging voters insisting on their pills and pensions, deficits are certain to increase.
The Fed is making Mistake #2, raising interest rates in order to try to return to “normalcy.” But it’s far too late. The damage from leaving rates too low for too long (Mistake #1) is already done.
The world is already out in the deep water, with a titanic debt of $250 trillion. Higher interest rates (tighter money) will sink it.
These two trends – higher rates and higher deficits – are incompatible. The Donald is right; the Fed is wrecking his beautiful economy.
But none of this is straight, true, level, or plumb. Every number is a counterfeit… every statement is a fraud… and everything that passes for truth is an outright lie.
As rates rise, it will become more and more expensive for the feds to finance its jackass, trillion-dollar deficits. Government borrowing will “crowd out” private borrowing, forcing rates up further and driving the whole shebang into crisis.
Higher rates are already starting to bite and blister. From CNBC:
Higher mortgage rates and overheated home prices hit Southern California home sales hard in September.
The number of new and existing houses and condominiums sold during the month plummeted nearly 18 percent compared with September 2017, according to CoreLogic. That was the slowest September pace since 2007, when the national housing and mortgage crisis was hitting.
Sales have been falling on an annual basis for much of this year, but this was the biggest annual drop for any month in almost eight years. It was also more than twice the annual drop seen in August. […]
On a monthly basis, sales fell 22 percent in September compared with August. Sales usually fall about 10 percent from August to September.
At “normal” interest rates, in many places, the average person cannot afford the average house.
At “normal” interest rates, the feds’ deficits get worse.
And at “normal” interest rates, the world’s debt sits like an iceberg waiting for the Titanic to show up.
Like ballast in a leaky ship, the excess debt worldwide – which we estimate at about $115 trillion – will go to the bottom.
Sell the bounce.
By Joe Withrow, Head of Research, Bonner & Partners
Total venture capital (VC) investment in the U.S. this year has already hit its highest level since the 2008 crisis.
That’s the story today as we chart total yearly investment by VC firms in the U.S. going back to 2009. These are temporary equity investments in young and innovative private companies that are not publicly traded.
As you can see, total VC investment hit $84.3 billion through the first three quarters of 2018 – already surpassing last year’s total of $82 billion. That means VC investment has now risen 211% since 2009.
According to Bonner and Partners’ chief technology analyst Jeff Brown, this explosion of private capital has enabled the best technology companies to remain private for longer, leading to a backlog of exciting tech initial public offerings (IPOs).
This dynamic has allowed the best tech companies to grow and develop while private, away from the prying eyes of Wall Street. Then, when they do go public, these companies are much closer to profitability and exponential growth.
Because of this, Jeff says there has never been a better time to invest in cutting-edge technologies. Over the next 10 years, barriers will be broken as new industries are created.
– Joe Withrow
P.S. One week from today, on November 7, Jeff is hosting a free webinar. There, he’ll give you details of a new piece of technology that’s poised to transform your daily life starting on November 14…
The car you drive, how you work, and the doctors you see will change. Jeff believes this will be the biggest investing opportunity of the decade. Even if you never put a penny into this technology, you should still tune in to get all the details, so you’re not caught off guard. Go right here.
Paul Volcker’s Guide to the Almighty Dollar
Former Fed chair Paul Volcker, the man Bill has described as “one of the few honest central bankers,” has a few rules for understanding the U.S. dollar. America needs these three things to make it truly great again…
An Update on the Doom Index
The Q3 data is in… So what is the Doom Index saying about America’s economy? Bonner & Partners’ head of research Joe Withrow gives us an update.
Seven Charts That Show How Crazy October Was
This month saw several market drops, double-digit declines in blue-chip stocks, and a spike in volatility. Here’s a look back at October… with charts.
In the mailbag, dear readers take up a pertinent question: How does one address POTUS?
I continue to be amazed at readers who believe the president should be addressed in a respectful, if not honorific, manner just because he is the president. I always thought while the rest of us have to get up early every morning and prove ourselves without any expectation of respect, apparently, the president has the right to show up for work at 11 a.m. (after a round of golf), say a lot of nasty and untrue things, and still be addressed in a way that totally ignores his serious shortcomings.
Maybe if people acknowledged their leaders’ shortcomings rather than standing on empty formalities, history would have avoided a few horrendous wars.
– David H.
I see that some dear readers continue to expend their energy trying to get you to more formally address the “odious one” – The Donald. As I see it, respect is earned, not given because of tradition. That man has earned the title I gave him above.
Thank you for being your own, thinking man. Your Diary is a must-read for me… and more than “fair warning” for the sheep. Too bad they are stuck preaching picayune non-issues as a juggernaut of titanic proportions bears down upon them.
– Bill S.
I don’t care if you call the president by just “Trump.” That shows plenty of respect. For one thing, he’s a public servant, and it’s not disrespectful to call a servant “Jeeves,” “Godfrey,” or “Carson,” if that’s his last name.
Also, you respect the country plenty when you point out how many things Trump gets blamed for that are not his fault. The office of the president is also frequently defended, since it really isn’t the responsibility of that office to balance the budget or declare war, anyway. As for calling him “The Donald,” isn’t that a name his friends gave him?
– Sandra K.
As a Canadian, my feeling is you are quite right and entitled to refer to your president as “The Donald,” “Trump,” etc. until he starts acting like the president of the USA; stops spouting false news; stops insulting minorities, women, and immigrants; stops his idiotic posting on Twitter; and stops commenting negatively and insultingly about our Trudeau and Canadian tariff negotiators… True presidents do not act this way.
I enjoy your newsletter very much. Please don’t listen to these people who insist you have to have respect for Trump simply because he occupies the White House. I am neither left nor right; in fact, I haven’t voted in decades. Americans need to arise from their comas and wake up to the fact that, in the end, it doesn’t matter who the president is.
People refer to our “democracy,” when, in fact, we are supposed to be a constitutional republic. Unfortunately, we are presently neither. I am simply amazed at the masses who still believe in this monstrosity we call government.
Frankly, I can’t think of a single president during my 58 years who has done anything but lie. But of course, they are just the frontmen. You should exercise your right to free speech while you can, as the censorship marches ever forward. Thank you.
– Stephanie G.
“This will be the biggest investing opportunity of the decade.”
That’s the message from Jeff Brown, Bill’s top technology analyst.
What is this new idea Jeff has uncovered?