Coppock curve update

N.B.  The following is research, not investment advice.  You invest at your own risk, unlike the Wall Street banks, who also invest at your risk.

The Coppock curve is tracking downward.

The Coppock curve sends a long-term bottom signal when it turns up from a negative reading.  Assuming the curve does not bounce up again—anything is possible but it has only bounced from this low before once, in 2012—how long until the next major market bottom?  The mean number of months from a similar Coppock value ~67 to the next bottom (the signal in 2001 was the only false positive and is ignored, taking the second signal in 2002 as the true signal) was 11.6 months, with a max of 19 and a min of 5.

So the average expectation would be for a bottom in the summer of 2014, a very crude second degree polynomial fit to the the series of signal leads gives a lead time of ~8 months for a bottom in spring 2014, which has a certain harmonic resonance with the Seventies big bottom which was in March 1974.

By the way, long interest rates rose all the way up to the bottom in 1974—and beyond, of course.  However, if the world economy hits an air pocket (failure of effective demand) we could see stock prices falling and further disinflation or deflation.  Remember, the last ZIRP lasted from 1934 to 1946, a dozen years.  It could be 2021 before short rates rise.  It is really hard for me to imagine a scenario where inflation takes off except for isolated supply shocks in the current environment.

Pushing on a string seems to work for the stock market, if not the economy.

The crumbling edifice of American financial fascism

I’m a little late to just how far the dumping of the dollar as a transactions currency has gone:

Via:  www.zerohedge.com

Two weeks ago we wrote a post that should have made it all too clear that while the US and Europe continue to pretend that all is well, and they are, somehow, solvent, Asia has been smelling the coffee. To wit: "For anyone wondering how the abandonment of the dollar reserve status would look like we have a Hollow Men reference: not with a bang, but a whimper... Or in this case a whole series of bilateral agreements that quietly seeks to remove the US currency as an intermediate. Such as these: "World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System", "India and Japan sign new $15bn currency swap agreement", and now this: "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says."" Today we add the latest country to join the Asian dollar exclusion zone: "India and Iran have agreed to settle some of their $12 billion annual oil trade in rupees, a government source said on Friday, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher U.S. sanctions." To summarize: Japan, China, Russia, India and Iran: the countries which together account for the bulk of the world's productivity and combined are among the biggest explorers and producers of energy. And now they all have partial bilateral arrangements, and all of which will very likely expand their bilateral arrangements to multilateral, courtesy of Obama's foreign relations stance which by pushing the countries into a corner has forced them to find alternative, USD-exclusive, arrangements. But yes, aside from all of the above, the dollar still is the reserve currency... if only in which to make calculations of how many imaginary money one pays in exchange for imaginary 'developed world' collateral.

Only Ron Paul, of all the candidates in either mainstream party, is speaking anything remotely resembling the truth about America’s status in the world.

The political class vs. the mainstream: who will win?

Via:  Rassmussen Reports

I no longer live on the East Coast, but do visit occasionally, and have contact with friends who are part of the Establishment, the Ruling Class, slurping at the trough of Stimulus Money, or if on Wall Street, turning up their noses at the ignorance the masses display of the value they’re creating, enabling the Soaring of the Human Spirit through Financial Transactions.  You get the picture.  They’ve got their heads in a place where the sun doesn’t shine, the arrogance dripping from their curling upper lips….

67% of Political Class Say U.S. Heading in Right Direction, 84% of Mainstream Disagrees

Tuesday, August 03, 2010

Recent polling has shown huge gaps between the Political Class and Mainstream Americans on issues ranging from immigration to health care to the virtues of free markets. 

The gap is just as big when it comes to the traditional right direction/wrong track polling question.

A Rasmussen Reports national telephone survey shows that 67% of Political Class voters believe the United States is generally heading in the right direction. However, things look a lot different to Mainstream Americans. Among these voters, 84% say the country has gotten off on the wrong track.

Twenty-four percent (24%) of Mainstream voters consider fiscal policy issues such as taxes and government spending to be the most important issue facing the nation today. Just two percent (2%) of Political Class voters agree.

With a gap that wide, it’s not surprising that 68% of voters believe the Political Class doesn’t care what most Americans think.  Fifty-nine percent (59%) are embarrassed by the behavior of the Political Class. 

Just 23% believe the federal government today has the consent of the governed.

Most voters believe that cutting government spending and reducing deficits is good for the economy. The only group that disagrees is America’s Political Class. In addition to the policy implications, this highlights an interesting dilemma when it comes to interpreting polling data based upon questions that make sense only to the Political Class. After all, if someone believes spending cuts are good for the economy, how can they answer a question giving them a choice between spending cuts and helping the economy?

Mainstream Americans tend to trust the wisdom of the crowd more than their political leaders and are skeptical of both big government and big business.

Fifty-eight percent (58%) of voters currently hold Mainstream views. In January, 65% of voters held Mainstream views. In March 2009, just 55% held such views.

Only six percent (6%) now support the Political Class. These voters tend to trust political leaders more than the public at large and are far less skeptical about government.

When leaners are included, 76% are in the Mainstream category, and 14% support the Political Class.

“The American people don’t want to be governed from the left, the right or the center. The American people want to govern themselves," says Scott Rasmussen, president of Rasmussen Reports. “The American attachment to self-governance runs deep. It is one of our nation’s cherished core values and an important part of our cultural DNA.”