- Three catalysts for crisis, starting Jan. 22
- The most important of the three? Jerome Powell’s big mouth
- The Bezos divorce… and Amazon’s founding myth
- Long faces at CES in Vegas… and Blanco thinks he knows why
- Is “red vs. blue” the real conflict in the new American civil war?
Aw, gee — if this shutdown thing drags on much longer, Donald Trump won’t be crashing the power elite’s annual party in Davos, Switzerland, this month.
Actually, Trump went there last year and it turned out to be a total snooze. As The New York Times reported, “A rough consensus emerged over Mr. Trump’s two-day visit that his administration had shown itself to be more pragmatic than advertised.”
Oh, well. Assuming the shutdown is resolved and he does make it over there… it could prove to be one of three market shocks in a nine-day window later this month.
With the volatility of late 2018 still fresh in Wall Street’s memory, “There are several near-term catalysts that might trigger a market crash,” says Jim Rickards.
Davos, set to begin Jan. 22, is the first of these three potential catalysts. If Trump shows, there’s no guarantee it will be as uneventful as last year.
“As always in Davos,” says Jim, “the real action is not on the stage but in the private dinners arranged by JPMorgan Chase CEO Jamie Dimon, International Monetary Fund chief Christine Lagarde and other financial mavens. Sparks could fly if these global elites gang up on Trump’s ‘America First’ vision.
“Another potential catalyst is the start of the Chinese New Year celebration of the Year of the Pig,” says Jim.
“Kicking off with the Little New Year on Jan. 28, this celebration actually stretches over two weeks and is accompanied by reduced productivity and liquidity in Chinese markets. That’s a recipe for volatility.”
Last month, many Chinese factories were letting workers off for the holiday almost two months early. American reporters in Guangdong province spoke with migrant workers boarding trains to their far-flung homes. One middle-aged man at a lamp factory was getting a three-month (unpaid) holiday — that’s how much business was slowing.
And then there’s the next Federal Reserve meeting, set for Jan. 30.
No one expects the Fed to raise rates again; as Jim said here yesterday, even a March increase is off the table. But traders will be on tenterhooks, obsessed with the p-word — “patient.”
Recall the Dow rallied 750 points last Friday after Fed chairman Jay Powell said the Fed would be “patient” in its pursuit of further interest rate increases during 2019; after four increases last year, the Fed is now on pause.
The minutes from the December meeting, released yesterday, underscored that message. Volatile markets, trade war worries, slowing global growth — they all make the future path of rate increases “less clear.” The consensus among the Fed pooh-bahs was that they “could afford to be patient.”
(What do we keep saying about how Fed “minutes” are a political document and not an objective record of what occurred during the meeting?)
Anyway, the Fed will release a statement right after the meeting at 2:00 p.m. EST on Jan. 30. “Markets will be looking for the word ‘patient’ in print,” says Jim, “and if they don’t find it, there could be a violent reversal in the sugar high that started last Friday.”
Ah, but wait — there’s a new wild card to accompany the Fed’s statement later this month.
Powell is going to start doing a press conference after every damn Fed meeting
this year — eight in all.
That’s a doubling of the pace up till now — a pace set by Ben Bernanke when he started doing press conferences in 2011.
Press conferences aren’t entirely scripted affairs. When ad-libbing, even from a set of talking points, there’s always opportunity for the chairman to commit a slip of the tongue. At her first press conference as Fed chair in 2014, Janet Yellen threw markets for a loop when a persistent reporter goaded her to put a time frame on rate increases.
So if Powell says anything even hinting at a departure from the “patient” drumbeat… look out.
“The Davos-China-Fed trifecta may make Jan. 22–30 the most dangerous nine days of the year,” Jim concludes.
“Investors should prepare now before markets reprice and opportunities disappear.”
Jim and his team laid on a trade two days ago — aiming to seize on the potential chaos for quick 200% gains.
To identify the best opportunity, Jim applied a technique he first developed in the early days of the 21st century. That’s when he was helping the CIA identify subtle disruptions in the financial markets that could spot a terrorist attack before it happens.
The market’s strongest short-term run in a decade is running out of gas. As we write, the Dow, S&P 500 and Nasdaq are all in green — but barely.
Going into this morning, the Dow and the S&P turned in their strongest 10-day performance since July 2009. But overnight and early this morning came word that Ford is “restructuring” (cutting jobs) in Europe, while Macy’s posted weak holiday sales numbers. At last check, Macy’s shares are down 19% on the day.
The commodity complex is pulling back a bit, gold at $1,288 and crude at $52.30.
Of course there’s trader buzz about the impending divorce of Amazon CEO Jeff Bezos — not least because MacKenzie Bezos was among the founding employees in 1994.
On this occasion, we can’t help engaging in a little myth busting.
It is not entirely true that Jeff Bezos gave up his comfortable Wall Street job and piled into the car with MacKenzie, heading west to parts unknown — MacKenzie at the wheel while Jeff typed up a business plan on his laptop and called angel investors on his cellphone.
“Bezos had already flown out to California to recruit software engineering talent,” writes Brian McCullough in his book How the Internet Happened. And Bezos already had Seattle in mind as a home base for his online bookstore; he could poach Microsoft’s tech talent in Redmond and he’d have proximity to a major book wholesaler in Oregon.
McCullough points out most of the legendary startups of the ’90s have similar founding myths. Pierre Omidyar did not launch eBay because of his fiancée’s penchant for collecting Pez dispensers; he was a computer geek and armchair economist who figured the internet could bring about a more perfect market of price discovery among buyers and sellers. Bo-ring.
Anyway, enough history. Let’s turn to tech opportunities of the present…
“A notably muted excitement compared with years past,” is how our science-and-wealth maven Ray Blanco describes that atmosphere this week at the Consumer Electronics Show in Las Vegas.
“Yes, there are tons of people here, but the crowds don’t feel as big.
“Yes, there are some amazing technologies on display, but there’s a palpable lack of excitement surrounding many of them.”
Conventional wisdom chalks it up to the trade war’s impact on the tech sector. But after traipsing the exhibit halls and talking with company reps, Ray senses something else going on.
“We’ve reached a plateau in innovation for many consumer-facing technologies,” he says. “Augmented (AR) and virtual reality (VR) have a ton of future promise, but we’re still waiting for that pivotal, scalable breakthrough.
“The same can be said for many consumer-facing technologies on display this year. Sure, a TV with AI-like functions is cool but it’s far from Earth-shattering, and it’s not real AI in any shape or form. It’s more like intuitive programming if anything.
“But with all that said there’s at least one trend still generating major buzz this year,” Ray hastens to add.
It’s the one he was thumping the tub about most of last year — 5G wireless.
“Deployments of new 5G networks started late last year in test markets,” he reminds us. “They’ll expand further this year. And while CES is far from over, 5G seems to be the No. 1 technology on folk’s minds. Which is in turn driving up the prices of certain companies with consumer market exposure in the hot new tech trend.”
Three months ago, Ray told some of his readers about American Tower Corp. — a company sure to benefit from the proliferation of antennas 5G requires. Despite a stomach-churning stock market during the fourth quarter, AMT is up 8% — and worth holding, Ray says.
For access to all of Ray’s favorite names in 5G technology — including the new constellation of 5G satellites that could destroy the cable giants — give this a look.
“I have two kids — one left and one right. Deep division,” a reader writes as our “new American civil war” thesis provokes more discussion.
“They think each other is a crackpot. It’s like a parallel universe with them.
“There is such a huge amount of highly opinionated specialized media these days, run by very powerful people with an agenda, that purposefully only focus on one point of view.
“This allows people to only watch what they want to watch, that dovetails with their political preference, to the exclusion of other points of view. Not like yesteryear.
“That being said, the left controls way more media than the right controls.
“If the Dem-commies clean sweep D.C. again, we could be at serious risk of learning firsthand what the tyranny of the left looks like, when what is left of right-wing opposition (or even centrist) media are swept into the ocean.
“There is very serious tension that could explode, no doubt about it.
“America is changing FAST in more than one way, and it may not be good.”
“Dave, the reader who characterized the new American civil war in terms of red versus blue has, in my opinion, accepted a false premise,” writes one of our regulars. “That’s exactly how our real enemy wants us to think — and it’s evil!
“The theater between America’s ‘left’ and ‘right’ is precisely that. Our politicians and banksters are only actors. They neither write the script nor direct the show. They’re just well-paid bull$#!+ artists who lie and flip-flop as needed to get us to (a) follow phony narratives, (b) fight among ourselves and (c) re-elect them.
“Our true adversaries are the oligarchs that own it all. I’m not talking about the so-called 1%. I’m referring to elite bloodlines who don’t even show up on any lists of the filthy rich.
“Folks, they can only mislead us like this if we allow them to. Unfortunately, they seem to be as good at perception management (read: mass psy-ops) as they are at concentrating wealth and power. It’s exhausting but critically important for each of us to keep our individual baloney detectors humming.
“So I don’t believe the real battleground is between gun owners versus gender benders or any other such groups. It’s between we the people and those who divide us with identity politics.
“They’re one crisis away from replacing our remaining liberties with the full version of tyranny. Revolution or no, let’s pay attention to who’s behind the progressivism curtain…”
The 5: Hear, hear.
Years ago, we’d point out how the tea party movement and Occupy Wall Street had more in common than either side was willing to admit. By 2016, the two movements morphed into support for Donald Trump and Bernie Sanders — each of them an avatar for everyday Americans’ frustration with the decades of destruction wrought by the Bushes and Clintons and their lot.
That’s what makes the yellow-vest protests in France so fascinating. They bring together supporters of both the nationalist Marine Le Pen and the socialist Jean-Luc Mélenchon — united in opposition against President Emmanuel Macron (an Obama-like figure who promised hope and change but turned out to be same-old, same-old) and the Paris-centric elites.
Could something like that happen here? Seems unlikely right now, but you never know…
The 5 Min. Forecast
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