MARKETCYCLE WEALTH MANAGEMENT

Market Exhaustion

 

 

Bulls expect the market to move higher (the horns on a bull point up); bears expect the market to move lower (the claws on a bear point down).  As I often write, the stock market is made up of close to 50% bulls and 50% bears at any given time.  The market moves higher when the percentages skew slightly toward the bulls and it falls when the percentages skew slightly toward the bears.  51% bulls and 49% bears is all it takes to produce a bull market.  Markets always zig-zag in their upward and downward trends because of this constant battle between the percentages of bulls and bears, with the bulls winning most of the time during a bull market.

Sometimes this emotional battle moves to an extreme.  Now is one of those times.  In the chart below, “consumers” just means “people,” the same people that invest in stocks.  “Consumer Sentiment” indicates the percentages of what camp these emotional people have shifted into.  The AAII Pole, from the American Association of Individual Investors, currently shows a similar extreme sentiment.

Investor sentiment usually is not very helpful in determining stock market price moves because it only shifts in minute amounts and not enough to truly move the markets.  It is only when sentiment (rarely) reaches an extreme that it is of any help in determining the future direction of the market.

Today, investor sentiment has shifted into an extreme bearish position, the same extreme that was seen at the END of the prolonged secular bear market of the 1970’s and also the extreme bearishness that was seen at the BOTTOM of the big Financial Bear Market of 2008.  Simply put, today’s sentiment is so bearish that it has priced in much more damage than has actually been done in the past four months.  This may be the catalyst for an eventual stock market (bullish) rebound as these too bearish investors slowly and steadily shift to the other side of the boat.  This change might not be immediate, but it should happen sooner rather than later.

So, sentiment is currently near record bearishness and in my opinion, it will powerfully reverse direction (see far right orange line on the chart below).  Extreme bearishness is extremely BULLISH because it shows that many of the “sellers” have already sold.  It is now a majority of bullish-buyers that remain on the scene and ready to act.  (This chart is courtesy of J.C. Parets, Chief Market Strategist at All Star Charts):

 

Another very important change that has also happened during the past four months is that the amount of (worrying) “margin” in the markets has been reduced by almost 20%.  Margin is money that investors borrow from their brokerage house in order to put it into the markets, usually directed toward speculation rather than investing.  It is dangerous and it always blows up, so it is good to see the level finally decreasing (and it is good to see the investors themselves cutting back on borrowed margin rather than the brokerage houses forcing their hand).  This is further evidence that the high level of bearish sentiment amongst investors is clearing the path for a higher stock market.  (Chart courtesy of Wolf Street):

 

Readers know that I am not a big fan of hedge funds.  Hedge funds are where so many rich and “sophisticated” investors put their money.  This study from Goldman Sachs shows that hedge funds are lagging the S&P-500 by 21% this year and if you were to include their astronomical fee charges, the lag is by even more.  (Chart courtesy of Goldman Sachs’ Global Investment Research):

 

Finally, it is important that investors are now positioned into assets that perform well during the 3rd-stage of the market cycle and this includes TIPS (Treasury Inflation Protected Securities).  They also happen to be standard protection assets during any volatile inflationary periods; if the market were to tank, TIPS would go up.  They are “protection” that also pay tax-free interest.

 

That’s it.  Thanks for reading!

MarketCycle Wealth Management is in the business of navigating your investment account through rough waters.  It is easy to do and it is always affordable; we strive hard to earn our keep.  There is a CONTACT tab on the website should you want to discuss what MarketCycle can do for you.

The link for our paid member’s REPORT site is on this website.

 

 

 

MARKET CYCLE  —  TREND FOLLOWING  —  DUAL MOMENTUM  —  LOW VOLATILITY  —  HEDGE FUNDS

MARKETCYCLE WEALTH MANAGEMENT

No, the yield curve has NOT inverted.

 

Every two seconds in the financial press:  “The yield curve has inverted and we’re heading into recession!  The yield curve has inverted and we’re heading into recession!”  But, no it has NOT inverted and the U.S. is NOT heading into a recession.

The normal yield curve, in a healthy bull market, looks like the panel on the (above) left; short-term interest rates are at a lower yield-percentage than are long-term interest rates. To borrow money, one would have recently paid 2% for a less risky short-term loan (that might be paid back within a few years) and perhaps 5% for a long-term 30 year loan (because loaning money out for a full 30 years is more risky).  The Federal Reserve directly controls short-term interest rates and traders/investors mostly control long-term rates.

When the economy becomes overheated and/or if inflation rises too high, then the Federal Reserve must raise short-term interest rate levels in an attempt to weaken the economy enough to allow for the release of excess built-up economic heat (before everything literally blows up).  It is better to release a controlled amount of steam than it is to allow for the explosion of the entire economy.  If the Fed raises short-term rates, then it costs corporations more money to borrow for their short-term needs; if corporations weaken, then stocks weaken since stock ownership represents partial ownership in a corporation.

The right side of the above image shows an inverted yield curve where the Fed has had to purposefully weaken an overheating economy.  They raise the part of the yield curve that they control, the short-term rates, to an extremely high level even while the long-term rate level falls as investors buy long-dated Treasury-bonds as investment account protection.

The economy works sort of like a pair of lungs; it expands and then it contracts.  It is better to be able to offer some controls, via interest rates, than it is to allow economic growth to go too far in either direction.

With interest rates having fallen for the past 40 years and with the short-term rates recently near 0%, the Federal Reserve will generally, over the next 15 years, be gradually raising interest rates in a zig-zag manner based on where the economy is at any given time. They will still lower rates during recessions and raise rates during any over-heating, with a general and gradual upward bias over time.

In my opinion, we may eventually see the short-term interest rates near 25% in the late 2030s, but we’ll reserve this economy-crippling story for another time.

The financial press is all about how the YIELD CURVE has now inverted.  It has not.  Again, it has not inverted.  The only part of the yield curve that is important (and always accurate) is the 3-month as compared to the 10-year.  This next chart, which offers a unique view of the yield curve, shows that the yield curve is not only NOT in inversion territory, but it is getting even stronger and more bullish. (Note: the blue arrow on the right side of this chart shows where we are today, the S&P-500 is shown as a black line, the red boxes show recessions that correspond to the red “WARNING” dips below the green line.)  Simply put, on this chart below, red = WARNING… but right now, as of today, the green area is going higher, not lower.  It would take a minimum of a full year to reach the red “RECESSION-WARNING” zone and likely even longer.

 

 

So, even though MarketCycle expects some increasing volatility in the near-term, the U.S. economy itself is, once again, getting even more bullish.  The United States economy is currently (still) leading in strength relative to all other countries.  Where our economy goes, so goes the economies of everyone else.  So, the U.S. avoiding an economic recession in the near-term is vitally important on a global scale.

 

Thanks for reading!

MarketCycle Wealth Management is in the business of navigating client investment accounts through rough waters.  We have worked hard to be able to identify high risk periods and to protect client accounts when we foresee this happening.  The process is simple and easy and affordable.  There is a CONTACT tab at the top on the website.

Our second (paid member) website (REPORT) can be accessed via the link on this website.

 

 

MARKET CYCLE  —  DUAL MOMENTUM  —  TREND FOLLOWING  —  LOW VOLATILITY  —  HEDGE FUNDS 

MarketCycle Wealth Management

The following is a synopsis of what the larger professional institutions and their research departments are expecting for 2022.  Their opinions do not necessarily coincide with MarketCycle’s current stance or predictions.

This is our highly condensed version extracted from literally hundreds of pages and dozens of videos and podcasts.  [Note: PDF & print function can be found in the bottom blue footer area of our website.]  Some of the newsletters from which this information is extracted are quite expensive and often unavailable to the retail investor.

Many of the predictions below offer end-of-year targets.  I can vouch for the fact that nobody actually knows where the stock market will end the year 2022, but in December of 2020 MarketCycle did correctly state that the highest that the S&P-500 could go in 2021 while still remaining in its current trend channel was 4800 (which it hit on December 30, 2021).  While not a prediction, I know that the highest that the S&P-500 could go in 2022, while staying within its current trend channel, is roughly in the range of 5400 to 5500 in late December of 2022.

The current trend channel started in early 2009 (immediately after the 2008 Financial Crash) and breaking a 13 year long trend channel to the upside would be difficult, but not impossible.  However, we have to remember that this secular bull market often surprises investors by its inherent strength.

 

 

So, drumroll please…  here are the institutional predictions for 2022:

 

GOLDMAN SACHS:

1. End-of-year S&P target = 5100
2. “Decelerating economic growth, a tightening Fed and rising real yields suggest that investors should expect modest returns next year.  The S&P-500 has historically generated an average 12-month return of 8% in environments of positive but slowing economic activity and rising real interest rates.”
3. “Corporate profits are set to be the driving force for a further rise in the stock market next year.”
4. “The Fed will begin to hike rates in July; real interest rates will rise, solidifying the ceiling on valuation multiples and driving rotations within the market.”

 

CHARLES SCHWAB:

1. “The U.S. stock market will probably deliver more modest gains in 2022, accompanied by higher volatility.”
2. “We will likely be dealing with gluts next year rather than shortages of consumer goods.”
3. “Inflation pressures are likely to ease by mid-year.”
4. “There is a risk that the major stock indices, at some point in early 2022, will reflect the same weakness that has persisted under the surface.”
5. “Because of inexperienced younger retail investors, there is a ‘surrender to the narrative or else’ attitude online and it is really frightening, because if you say that Bitcoin is overvalued, or Tesla is overvalued, or whatever SPAC is overvalued, these trolls in anonymous accounts come out of the woodwork and start attacking you.”
6. “Buying on speculation has increasingly been leveraged by ever-higher levels of margin debt (borrowing money from a brokerage in order to invest).  Given that margin borrowing is now being used by a broader cohort of young investors, it means that margin calls (the brokerage taking back the loaned money) may come more frequently and after smaller downside moves in stocks, a risk to consider as we head into 2022.”
7. “The recent weaker breadth trends bear close watching in 2022.”
8. “Macro backdrops that include slower growth and a move from a loose to a tighter monetary policy tend to usher in higher intra-market correlations and greater tail risks.  We continue to recommend a bias toward Quality stocks and not trying to utilize sector rotations.  For stock pickers, we believe that factor-based investing makes more sense than simple sector-based (or traditional growth/value index-based) investing.”

 

EVERCORE (Ed Hyman, voted #1 Economist for the past 41 straight years via Institutional Investor’s Annual Survey):

1. Ed predicted a profitable “blow-out” year in 2021.
2. “2022 will be a very great year too.”
3. “The extreme growth of 2021 will continue in 2022 because monetary stimulation acts with as much as a 5 year lag and $4-trillion was added in 2021 alone, and additional stimultion continues even today.  There is still a huge wealth effect comng from the Fed and various governments.”
4. “I expect 7% GDP in 2022 and this is big.”
5. “Inflation has already peaked and supply chain problems have already gotten better.”
6. “Wage inflation and also our attempt to fight the changes coming from climate change will slow the drop in inflation levels.”
7. “This inflation spike may eventualy bottom at 3%-3.5% rather than at the prior 2% level.”
8. “It feels like we are eventually heading towards a future 70’s type inflation situation.”
9. “Watching the Federal Reserve is even more important than usual.  The Fed will raise rates to 3-4% over the next couple of years with a negative impact coming two years later.”
10. “Corporate earnings will be well above average in 2022.”
11. “For 2022, move back into technology stocks and add healthcare stocks.”
12. He feels that the Fed won’t be restrictive until they exceed 4% interest rates, perhaps in late 2023, and the market will not react until 1-2 years after that threshold is hit.

 

BRIEFING INVESTOR:

1. “2022 stock market return expectations should get dialed down.”
2. “There is a burgeoning understanding that earnings growth will be slowing in coming quarters.  According to FactSet, calendar 2022 earnings growth is projected to be 9.0%, so the price return for the S&P-500 should be closer to its long-term average.”

 

(Bill) MILLER PARTNERS: 

1. “The market is fairly valued with some sections still cheap; it is very cheap as compared to 1999.”
2. “Big technology, including Amazon, still offers value.”

 

DWS GROUP:

1. End-of-year S&P target = 5000
2. “Stock market rise in 2022 will be surported by a combination of sustained earnings & economic growth and a contained rise in rates.”
3. “This is not the 1970s; we think the best way to protect against inflation is simply to own the best Quality businesses.”
4. They are overweight financials and healthcare.

 

FIDELITY:

1. “Stocks are poised to deliver positive returns in 2022, but likely not as much as they did in 2021 as earnings growth slows and the Fed tightens.”
2. “Growth stocks could continue to outperform value if interest rates stay low.  They have been leading the market since 2014.”
3. “The secular bull market that begain in 2009 will continue, driven by demographics, low rates and strong cash flows from the ‘big growers’.”
4. “As 2022 begins, we expect the markets to mean-revert back to trend-like-growth, and for the Fed to take the first steps on the road back to a neutral monetary policy.”
5. “Most economic indicators suggest that the U.S. remains in the mid-cycle phase (of the market cycle) following the early recovery from the pandemic in the second quarter of 2021.”
6. “Convertible bonds, floating-rate bank loans, floating-rate preferred stock, dividend-paying stocks (especially of gold producers), master limited partnerships (MLPs) and real estate investment trusts (REITs) are among the investments that may offer income opportunities in 2022.  Professional investment managers have the expertise necessary to identify mispricings and to manage the risks associated with these higher-yielding securities.”

 

JEFFERIES:

1. End-of-year S&P target = 5000
2. “Growth is not likely to be a problem in 2022 as the U.S. consumer, corporate, government and possibly even the banks unleash their spending.  But base effects work against earnings and high valuations meaning that market multiples may finally matter.”

 

BNP PARIBAS:

1. End-of-year S&P target = 5100
2. “We expect to see some compression of price/earnings ratio multiples as rates rise.  However, strong earnings growth could still translate into a 10% total return.”

 

WELLS FARGO:

1. End-of-year S&P target = 5300
2. “We expect supportive monetary policy along with public and private spending to push equity markets higher through the entire year.”

 

BANK of AMERICA:

1. End-of-year S&P target = 4600
2. “Unfortunately, we see a lot of similarities between today and 2000, the tech bubble peak.”
3. “Drivers for our lower than consensus stock market target are a higher discount rate, U.S. GDP primacy vs. China, rising capex (business costs), slowing consumption of goods and the impending end of stock buybacks (corporations buying their own stocks in order to drive up the price).”
4. “Priortize commodities, stocks and then bonds.  We also prefer small-caps versus large-caps and value stocks versus growth.”

 

NEW YORK LIFE INVESTMENTS:

1. “Recent market jitters are being caused by the potential move by the Federal Reserve to remove some accommodation from the market faster than investors had anticipated.  Increased inflationary pressure is likely to mean more rate hikes in 2022 than currently expected, creating more market risk and lower market returns than in 2021.”

 

BARCLAYS:

1. End-of-year S&P target = 4800
2. “We see modest upside for equities in 2022 because of persistent supply chain woes, reversal of goods consumption to trend, and a China hard-landing as a tail risk.”

 

MORGAN STANLEY:

1. End-of-year S&P target = 4400
2. “We have a bearish outlook.  The biggest driver of the dip will be a higher-rate environment, however, defensive Quality stocks should hold up.”
3. “We expect the S&P-500 to be range-bound & volatile and for bond returns to be negative net-of-inflation.”
4. “Investors should move toward careful asset picking and away from owning passive index funds.”
5. “Strong nominal GDP growth should continue to provide plenty of good stock market opportunities for experienced investment managers.”

 

(Consuelo Mack) WEALTHTRACK:

1. “For 2022, we need to recognize the high amount of stimulus that is still flowing through the system.”

 

BLACKROCK:

1. ‘We expect another year of positive global stocks returns coupled with a down year for bonds.  We see inflation settling above pre-Covid trends; we’re going to be living with inflation.  We favor equities over fixed income as a result.”
2. “We expect the Fed to start rising rates in 2022, albeit not as soon as the market is currently pricing in.”
3. “Climate change risk: We favor sectors with clear transition plans and stocks such as technology and healthcare because of their relatively low carbon emissions.”
4. They suggest holding U.S. stocks over other regions and U.S. TIPs (Treasuries that are inflation protected) over all other bonds.

 

NEUBERGER BERMAN:

1. “There will be persistant inflation; expect falling bond prices.”
2. “The economy is going to remain strong in 2022.”

 

FUNDSTRAT:

1. End-of-year S&P target = 5400
2. “Base case, the rally in 2022 still has a lot of fuel.”
3. “Stocks will be lower by 10% by mid-year, but will be higher by end-of-year.”
4. “Big tech will lead the way.”

 

INVESCO:

1. “Inflation to peak by mid-year with the Federal Reserve still raising rates in the back half of 2022.”
2. Invesco expects strength in:  global large-cap growth & Quality equities, especially in the sectors of technology, healthcare, consumer staples and REITs.  They favor long-duration Treasury-bonds (20-30 year) as well as short-duration floating rate bank-loan instruments.

 

WISDOM TREE:

1. End-of-year S&P target = 5000
2. “Today is very different from 2000.  Valuations are much lower and interest rates are also much lower.”
3. “Despite inflation, long dated bonds (20-30 year) are in demand as hedge instruments.  The long-term bond rate might stay below 3%, but short-term rates will have to go up more aggressively.”
4. “Throughout history, dividend yields on stocks, although they’re not guaranteed like bonds, match and in fact exceed the rate of inflation.”
5. Higher interest rates argue for the value sector.”
6. “Inflation is the exact inverse of the price-of-money.  You cannot ignore the supply of money when you talk about inflation.  The Fed must pay attention to the supply of Dollars that it is putting (‘printing’) into the economy.”
7. “Looking into 2022, we expect the consumer to remain a solid contributor toward growth.”
8. “Inflation is transitory.  While the October 2021 CPI print of +6.2% may not be where inflation ends up, we do feel that the “final” number will still be well above the Fed’s plus-2% threshold.”
9. “Earnings growth should bode well for equities in 2022.  We do believe that Quality stocks (strong earnings, balance sheets and cash flows), which has been an underappreciated risk factor for most of the past 2-3 years, may become increasingly important as we move through the year.”
10. “We expect commodities to continue to rally.  Furthermore, we expect investors to regain interest in real assets and non-traditional income sources such as MLPs, REITs, covered calls and preferred shares.”
11. “Dollar bulls should continue to be rewarded.”
12. “Stocks over bonds; USDollar over other currencies; bullish on the broader commodity complex; small-cap stocks may catch a bid.”

 

VANGUARD:

1. “While the economic recovery is expected to continue through 2022, the easy gains in growth from rebounding activity are behind us.”
2. “Although a return to 1970s-style stagflation is not in the cards, we expect inflation to remain elevated across developed markets as the forces of demand and supply take some time to stabilize.”

 

FIRST TRUST:

1. End-of-year S&P target = 5250
2. “The budget deficit will be much smaller in 2022 than in the past two years.  That will generate a short-term headwind for growth.  Meanwhile, more businesses should be getting back to normal with small business start-ups gradually replacing businesses that were killed off by overly strict COVID rules.”
3. “We haven’t had a 10% correction in 2021, and, although we never try to time the market, we wouldn’t at all be surprised by one happening at some point in 2022.”
4. “There are clouds on the horizon, but not overhead.  Equities have further to run.”

 

FRANKLIN TEMPLETON (via Brandywine, Clarion Partners, ClearBridge, Royce and Western Asset):

1. “While they may not rise to the extent of 2021’s record-breaking year, corporate profits in 2022 should continue to surprise to the upside; we remain constructive on risk assets.”
2. “Consumers, in aggregate, possess an enornous amount of savings ready to deploy as the economy continues to normalize.  Consumers may be shifting their consumption (away from consumer goods) back to consumer services after a nearly two-year hiatus.”
3. “Inflation will retreat in 2022; the surprise could be a bigger drop than expected, but we still favor commodity-driven sectors like energy and basic materials.  With respect to inflation, what’s interesting is how technology stocks have fared.  Tech companies generally have high gross margins, which provide a lot of flexibility in terms of absorbing (inflationary) cost pressures.”
4. “We’re placing an emphasis on large-cap U.S. Quality stocks.”

 

YARDENI RESEARCH:

1. End-of-year S&P target = 5200
2. “Faster Fed taper than expected because of higher than expected inflation.”

 

JP MORGAN:

1. End-of-year S&P target = 5050
2. “Most of the equity upside should be realized during the first half of the year when monetary and fiscal policy tailwinds will be strongest.”
3. “We expect international equities and emerging markets and cyclical market segments to outperform.”

 

OPPENHEIMER:

1. End-of-year S&P target = 5330
2. “Continuation of the stateside economy and positive corporate revenue & earnings trends likely to persist as the U.S. economy moves out from under pandemic oppression toward the next new normal.”
3. “Monetary policy at the Federal Reserve to remain supportive of the U.S. economy as the central bank tapers to end its monthly bond buying program over the course of the next three to six months.”

 

LEUTHOLD GROUP:

1. End-of-year S&P target = 5000
2. “We are way overdue for a correction, and we’re going to get one of perhaps 15%.” (NOTE:  One month ago they saw a big pullback during the first half of the year with an end-of-year target of 5500, but now they are calling for a big pullback during the second half of the year with a mid-year target of 5400 and a final end-of-year target of 5000.)
3. “Spend time re-positioning your portfolio now.”
4. “Don’t run away from stocks.”
5. “Inflation will moderate to 3%; bond yields to stay below 3%.”
6. “We expect small-caps and mid-caps, cyclical stocks and international markets to emerge as the big winners by the end of 2022.”

 

CREDIT SUISSE GROUP

1. End-of-year S&P target = 5200
2. “We have raised our end of year target from 5000 to 5200 because we expect robust economic growth.”
3. “Consumer spending should remain strong as the employment rate drops further, accompanied by higher wages.”
4. They are overweight energy, materials and consumer sectors; market weight technology; underweight financials and healthcare.

 

UBS:

1. End-of-year S&P target = 4850
2. “Strong growth in the first half of the year; weaker in the back half.”

 

RUSSELL INVESTMENTS:

1. “2022 will be a year of moderation after the excesses of 2021, although there will still be above trend growth globally.”
2. “The spike in inflation will be transitory, so there will be no rate hikes in 2022.”
3. “China will have a deep downturn.”
4. “Europe and the UK stronger than in 2021 and value stocks to excel in these regions.”
5. “We expect the USDollar to weaken against all other currencies, especially the EURO.”  (The overwhelming institutional view is for a strong or sideways USDollar.)

 

DOUBLELINE:

1. “Rough waters for stocks during the second half of 2022.”
2. “Inflation to be elevated until mid-2022.”
3. “Emerging markets to outperform as the USDollar starts to decline; gold price to go up.”

 

LPL RESEARCH:

1. End-of-year S&P target = 5100
2. “The economy moves more into mid-cycle with both consumers and corporations creating bullish conditions.”
3. “We favor the U.S. over other regions.”
4. “10 year bond at 2% by end-of-year.”
5. “Inflation settles back to 2.5%.”
6. “We remain positive on industrial metals but neutral on gold and oil.”
7. “Best sectors are financials, industrials, REITs and healthcare.”

 

RIVERFRONT:

1. “U.S. stocks will generate positive returns in 2022, but with more volatility.”
2. “We are overweight U.S. stocks and underweight fixed-income (bonds).”
3. “The biggest risk is not the pandemic, but rather interest rates rising faster than expected.”

 

RICHARD BERNSTEIN ADVISORY:

1. “Unlike during much of the past decade, the U.S. is now importing inflation.  The very early-stages of a wage-price spiral appear to be forming.  Some have suggested that technological innovation has curtailed inflation, but productivity data strongly refutes that assertion.”
2. “2022 will likely be a year of slightly slowing nominal economic growth and earnings growth, but nominal growth could still positively surprise during 2022.  If nominal growth begins to accelerate, then the more traditionally cyclical sectors (consumer discretionary and industrials and financials, etc.) could outperform and consumer staples might be an interesting sector as a (other end of) barbell to nominal growth-sensitive sectors.”
3. “Treasuries were the worst asset class during the (inflationary) 1960s and 1970s.  They provided low returns and high volatility.  Small-cap value stocks, an asset class generally ignored today, were a very good performing asset class as inflation ramped up.  They provided higher returns and lower probabilities of losing money than did Treasuries over the 20-year period.”
4. “For fixed-income, we continue to believe that buy-and-hold strategies (for bonds) will underperform and we are focusing on the flexible management of quality, credit and interest rate shifts.”
5. “2022 could be the beginning of the end of easy diversification.”
6. “2022 could be the continuation of the early stages of a new inflation paradigm.”

 

COMMONWEALTH FINANCIAL NETWORK:

1. End-of-year S&P target = 5000
2. “As we enter 2022 the question is, can this momentum continue?  The answer is yes.  The improvement will likely slow as we approach the new normal.  But this existing economic and market momentum should be enough to keep the country growing and markets rising throughout the year.”
3. “2022 will be a year of growth.  The economic problems are real:  inflation, labor shortages, rising interest rates, political dysfunction, and more.  But this scenario is normal and those problems will be accommodated.  Even the medical problems, while likely to continue, are also just part of the new normal.”

 

RBC ROYAL BANK:

1. End-of-year S&P target = 5050
2. “We are bullish because of cash deployment trends, normalized earnings revisions, contrarian bearish individual investor sentiment and a fiscal policy that still tilts supportive with corporate tax hikes less of a threat.  The onset of tapering and proximity of Fed hikes have kept investors uneasy, but stocks normally post good gains during interest rate increases as long as the economy is strong enough to handle it.”

 

DEUTSCHE BANK:

1. End-of-year S&P target = 5000
2. “While the Fed may become more aggressive in tapering its bond purchases, potentially completing the process in March instead of June, we expect that the Fed will still be ‘dovish’ on rates in 2022.  The Fed will raise rates just once next year, which is below consensus.”

 

CITI GROUP:

1. End-of-year S&P target = 4900
2. “There probably will be some elevated volatility around the potential tightening of Fed Policy, but investors have appeared encouraged.”
3. “We are mid-cycle, so we like Quality stocks and dividend-growers and healthcare.”

 

ISHARES:

1. “Robotics and artificial intelligence technology should grow in response to ongoing supply chain bottlenecks and wage inflation.”

 

STANCHART (Standard Chartered Bank):

1. “We are overweight China stocks and Middle-east stocks.”
2. “We do not expect the Federal Reserve to raise rates until September of 2022.” (NOTE: Their thinking may be that the Fed waiting to raise interest rates would shift relative strength away from the United States early in the year.)

 

BMO:

1. End-of-year S&P target = 5300
2. “An accommodative Fed, excessively low interest rates, potential peaking inflation & supply chain fears, and positive earnings growth remain a very good recipe for equities.”

 

 

2021 CHARITY:  As mentioned last month, MarketCycle takes a good-sized chunk of the money received from the management fees of client accounts and gives it to one charity each year.  This year a check was written directly to the Turpin Siblings from Diane Sawyer’s ABC Special:  Escape from a House of Horror.  Since the money source originally comes via our clients, I’d like to thank all of them for this privilege… this is a group effort.

 

FOX MOUNTAIN RETREAT:  Clients are allowed to stay in our Airbnb for 3 days at no charge (and bring a group of up to 5).  I’ve not met roughly 90% of my global clients, so this is a chance for us to meet… this peaceful retreat house is on our property in Charlottesville, Virginia.  The retreat house is also available via Airbnb but clients must contact me directly and I will x-out the dates at Airbnb so that nobody else can book them.

WEBSITE:  https://FoxMountainRetreat.com/

Airbnb listing:  https://airbnb.com/h/FoxMountainRetreat

 

 

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MARKET CYCLE  —  HEDGE FUND  —  DUAL MOMENTUM  —  TREND FOLLOWING  — LOW VOLATILITY

 

A price chart is a sequence of prices ploted over a specific timeframe; information is shown at the top, prices on the right and time at the bottom.  A price chart can plot the price of almost anything, including the cost of a head-of-lettuce, over any selected period of time.  Shown below is what you want to see on a stock price chart.  CSQ is one of our portfolio holdings and it has an almost identical price chart to our other closed-end-fund (CEF) holdings of RNP and ACV.  Over just the past 12 months, CSQ started at a price of $12 per share and it is now $18.62 per share for a 12 month gain of roughly 55% and it also paid 5.5% in interest payments directly into client accounts.  This was accomplished despite having lower risk than does the S&P-500.  You want to see chart price lines moving up from lower left to upper right.

 

PDBC is our commodities fund.  We picked this particular fund because it does not exploit animals as commodities and it sometimes pays interest (I’ve seen the yield as high as 2.5%) and it has no complicated K-1 tax form.  And we like this type of fund because it merely sets its value based on the price of commodities and it does not participate in the actual mining, drilling, lumbering or basic exploitation of the environment.  Notice how PDBC moves differently than CSQ so it helps to smooth out the path of profits; sometimes when stocks and bonds drop, PDBC will go up.  PDBC has gained 70% in the past 12 months (try beating this via flipping houses!):

 

SWAN is an example of a protective portfolio asset that MarketCycle also holds.  Like CSQ, it also moves from lower left to upper right, which is good, but it was less profitable during the past 12 months because it generates most of its outperformance when markets correct, and there has not been any meaningful stock market correction during the past year.  Still, it is doing its job while making another 20% in profit in just 12 months (similar to the gains on our gold-bullion trust holding).

 

From CNBC as reported in the October 29, 2021 issue of The Week:  “The wealthiest 10% of Americans now own 89% of all U.S. stocks held by households, a record high.  The top 1% of all Americans gained more than $6.5-trillion in the stock market since the Covid-19 pandemic began, while the bottom 90% made $1.2-trillion, according to the latest data from the Federal Reserve.”   

 

On Tuesday October 19th, the stock market suddenly became very strong again.  Very strong.  We had predicted a September pullback and MarketCycle used the opportunity to add to account positions with new client money; we did so on the exact day of the pullback bottom and the stock market has marched straight up from that day to today.  MarketCycle recently sent out a private Client Market Update with a list of our near-term predictions and they all proved to be correct except for our call for bitcoin to move lower.  Bitcoin rose instead when it got wind of the news that a new bitcoin ETF (BITO) had been approved by the SEC and was about to come out (and 8 similar ETFs are in the works).  A chart of bitcoin will be presented further below.

I have to use several services to gather and assemble all of the information that I need each day, but I usually present StockCharts in my blogs because the charts are so clean.  In March of 2020 (when we were still at point “A” on the chart below) I drew the new upper trend channel line (indicated by “B“) of where I thought that the stock bull market was headed; at the time this line was just sitting all alone out in chart-space.  I wrote repeatedly about this by saying that the S&P-500 would soon head up to between 4500 and 4600, depending on how rapidly it moved higher; it ultimately hit 4550 before pulling back (right in the middle of my prediction range) and the S&P-500 re-touched this 4550 number again on Thursday October 21st and then closed at a new record high.  If my predictions remain on track, we will have over 1000 new record highs over the next 8 years.  And we should expect the S&P-500 to hit 4700 before the Spring of 2022.

So, the S&P-500 will likely churn higher, moving along the bottom side of the “B” line shown below for the next couple of years.  It did the same thing in 2013 & 2014.  The bull charges ahead!

 

The all important S&P-500 Advance/Decline Price Line (which shows the breadth of market participation… it reveals whether a market is running on all cylinders), as it has done since March of 2009, it is still saying that we are in a Secular stock bull market.  The S&P-500 is superimposed as a grey line:

 

In the near-term, all U.S. stock indexes remain above their individual short-term trendlines (blue dashed lines below).  A trendline is just a line, usually at around 45 degrees, that indicates market direction and once established the markets tend to want to touch the line repeatedly.  Small cap stocks (labeled as $RUT below) are showing weakness but this is only natural as we now leave the early-cycle and enter the mid-cycle portion of the current market cycle.  The pundits on the financial sites are out promoting “cheap” small-cap stocks, but sometimes certain stocks (or even entire categories of stocks) are cheap for a reason.

 

Market strength:  The United States continues to lead in strength relative to all other regions of the globe.  The U.K. is also surprisingly strong.  The most recent stock bull market started in late March of 2020 and it still has a long way to go before it reaches the end of this market cycle.  We have left the early-cycle and are entering the mid-cycle where stocks will continue to plow ahead, but in a slightly slower and more choppy manner.  $3.5-trillion is still sitting on the sidelines in the United States; it is waiting to go into the markets or to be spent in the economy.  Low interest rates plus strong cash levels = stocks to go higher.

Market weakness:  The only major countries showing measurable current economic distress are:  Canada, Luxembourgh, China, Argentina and Brazil.

 

Fixed-rate bonds often move in the opposite direction of stocks.  The main reason that bonds are held in investment portfolios is because they usually go up when stocks go down.  The most likely near-term direction for bonds is lower and perhaps down to the red dashed line on this next chart.  So, they will likely move down as stocks move higher.  Generalized fixed-rate bond weakness will likely persist for the next 15-ish years.  Roughly speaking, for each & every 1% rise in bond yields, the value of your fixed-rate bonds will go down by 10%.  Ouch.  We are just now coming out of the biggest bond bubble in the history of the universe; it was 40 years in the making.

 

Inflation means that the prices of everything that we consume, both goods and services, are heading higher.  Inflation is caused by supply chain disruptions and/or by money printing.  14% of all of the USDollars ever printed were created during the past 12 months.  The good news is that wages also generally head higher during inflationary periods (although automation and robotics will ultimately keep a lid on the wage gains of real people).  MarketCycle’s system of indicators were the first that I know of to pick up on the current inflation story.  We saw it way back in March of 2020 and now it is the only story that anyone is talking about.  Our indicators tell us that inflation persists.  Although we may be wrong about this, over the longer term MarketCycle expects (roughly) three temporary inflation spikes, perhaps spaced two years apart, before inflation then just steadily grinds higher during the 2030’s.  We are experiencing the first inflation spike right now. 

 

Two great books on inflation & deflation:

1. Inflation Matters… by Pete Comley (Pete is a great guy that lives in the U.K. and he is a reader of this blog)
2. The Great Devaluation… by Adam Baratta

 

High inflation and falling bonds:  People that hold the typical 60%-stock/40%-bond portfolios (60/40 is the most common portfolio mix) or that simply hold a template of mixed assets (such as the ones that companies like Wells Fargo put out) or that invest in “can’t fail index ETFs & mutual funds” are all going to get punished going forward and for the next several decades.  Starting right now is the time that alpha-level professional help will really pay for itself.  My prediction is that the S&P-500 will no longer lead; you can no longer just “buy the market.”  Going forward, sector and factor selection for outperformance becomes of the utmost importance.

 

Interest rates?  MarketCycle has discovered how to accelerate the same data that the Federal Reserve looks at so that we know, ahead of them, what their next move will be.  Our indicators just changed to show that the Fed could now raise rates at any time.  The likely path would be to start with visible tapering in November, although they have already been secretly tapering for months.  Certainly there will be rate increases in early 2022, if not by late 2021.

 

Bitcoin is getting closer to forming a new price top.  Parabolic tops always correct rapidly once they start.  Nothing can go straight up forever and the faster & higher it rises now, the faster & lower it will fall in the future.  IMO, it should head lower sooner rather than later, perhaps down to 27,500 and this would be a greater than 50% loss, but it could drop down to any of the red dashed lines shown below, including all of the way down to 7000.  Charting bitcoin is problematic; this is an ‘asset’ that is actually only a ‘digit’ saved in one’s computer, so it ultimately could go as high or as low as the majority of (mostly young) traders imagine.  It is not really a usable currency and it will likely never be one simply because it is way, way too volatile and therefore offers no stability; currencies must hold a relatively stable value.

 

Bitcoin is an asset that consists of nothing tangible when almost every other investment asset represents something real and tangible, stocks are partial ownership in a corporation and gold can be held in one’s hand, but if bitcoin dropped to $7000 again I would be a buyer (or perhaps buy ethereum).  Cathie Wood of ARK Investments optimistically believes that “bitcoin will go to $500,000 in 5 years.”  The much respected Jamie Diamond of JPMorgan pessimistically called it “a fraud worse than the tulip mania of the early 17th century.”  Warren Buffett says that “it has no unique value at all.”  Donald Trump says that “it is built on a foundation of thin air.”  Elon Musk and Bill Gates both believe that Internet mining for bitcoin is destroying the environment because of the truly gigantic energy requirements involved in the process.  But the financially savvy Ashton Kutcher recently stated that “a revolution is taking place.”   

The IRS is cracking down on cryptocurrency profits and many people are going to be receiving heart-stopping letters in the mail.  They warned us but nobody listened.  And if President Biden replaces Federal Reserve Chairman Jerome Powell (who dislikes bitcoin) with Janet Yellen (who hates bitcoin), she may outlaw or regulate its use and then institute an official Federal Reserve cryptocurrency; according to Ray Dalio, recently retired CEO of the world’s largest hedge fund, there is a decent chance of this actually happening.  Confusing, ain’t it.

 

And now for some levity:

 

 

That’s it; thanks for reading!

Please remember that MarketCycle has only one focus:  We carefully manage people’s investment accounts, positioning the portfolio for where we are in the market cycle (early, middle, late, recession) and constantly watching for increasing risk levels and moving to hedge (protect) accounts when risk levels rise.  We have clients all across the globe.  We’re here to help you, the process is easy, and our fee is remarkably low considering how correct our predictions and positioning are (I always say that we pay for ourselves).  The first 3 months are free.  There is a CONTACT TAB on our website.  Let us help you.

We have a second (paid member) website, MarketCycle Wealth REPORT, that offers weekly advice and it is available via the link on this webpage.  We now have a new REPORT section specifically for European and U.K. subscribers.

 

 

MARKET CYCLE  —  DUAL MOMENTUM  —  TREND FOLLOWING  —  LOW VOLATILITY  —  HEDGE FUND

We live in a world where everyone is absolutely certain about their facts and everyone is an authority on any topic that is even remotely of interest.  Consequently, some people will be offended by the following material.  We currently live in a world where there will be, today, ten fist fights in the aisles of commercial airplanes over whether one should wear a mask or not in crowded conditions.  So, I would ask that if you do not believe this information or if you do not agree with what I am presenting here, then please just ignore it.  Whether I succeed or fail, my goal is to present facts merely as facts and as FAQs.  I know that this is not ‘investing’ material but please just look at this as a ‘blog extra’ where I am, once again, just presenting my point of view on a topic and yes, I already know that my point of view is often controversial and contrarian and sometimes wrong.

My ultimate goal is to present this as a sort of public service, although it may not be read or believed by enough people to be of any help.  Parts of this article may make it sound as if I am against vaccines but I assure you that I am not.  In fact, I believe that the vaccines used against the majority of viruses (DNA viruses) are one of the best things that medicine does (along with emergency care, extreme acute care and plastic surgery).

I still read, on average, 15 peer reviewed medical articles per week.  And this posting represents a large body of research narrowed down to just 12 (printed) pages.  If you take it one sentence at a time, you will understand it.  You may not agree with it, but you will understand it.

From Scientific American, July 1, 2021:  “The popular move right now is to declare that we must follow the science.  But science is a process of learning and discovery, and sometimes we learn that what we thought was right is actually wrong.  We can’t even agree on what the ‘scientific method’ actually is.  Science is not simple and neither is the natural world.”

 

Print & PDF functions are at the bottom of the webpage and please feel free to share via the [+] button that is also at the bottom of the webpage.  Or send the link or send a PDF out to your friends via email.  And when you click on the ‘print’ function, it then also gives you a very easy & clear & simple ’email’ function.  Printing this article will allow you to read at your leisure and then, if you think that it may be of benefit, hand it off to a friend or stranger.

So, please PRINT this out…  and please SHARE.

 

COVID FAQs:

• What is Covid-19?  Covid-19 is a (deep lung) coronavirus, which is a type of virus that only infects mammals and it rarely jumps species.  The human common-cold is also a (sinus) coronavirus.  It is called a ‘corona’ virus because it wears a ‘crown’ of spikes (as shown above).  Covid-19 is a coronavirus that infected human mammals starting in 2019.  Whether this strain escaped from a lab or from a wet-market (that sells bats as ‘food’ out of filthy stalls), it likely jumped from bats to humans because there is a 96% similarity.  Recent documents slipped out of the Wuhan Lab suggest that Covid-19 may have been accidently released from the Chinese lab (Google:  ‘Wuhan Scientists Planned to Release Coronavirus Into Cave Bats 18 Months Before Outbreak’).   Regardless, the Covid-19 coronavirus, along with the longstanding common-cold coronavirus, is now a human mammal virus.  Viruses in general are not living things, they are pure genetic material contained in a capsule.  When they inject themselves into a living cell, their genetic material takes over control of the cell and they become both different and ‘alive’ with the ability to reproduce.  Like a horror movie, their surprisingly intelligent goal seems to be to reproduce in a host that they do not kill so that the host can be reused all over again at a later date.  With RNA viruses, mutations are how they ultimately pull that off and that is explained further below.

 

• When will it all end?  At this point, Covid-19 will likely always infect humans, much like the flu will always infect humans despite yearly vaccinations that are obviously not very effective.  (Quite literally, as I sat here typing that prior sentence, a friend and client phoned to tell me that her already fully vaccinated family now has active Covid infections.  The family doctor prescribed antibiotics which has exactly zero effect on viruses; antibiotics kill bacteria, not viruses.)  We will eventually begin to ignore Covid-19 just like we began to ignore the flu after the disastrous 1918 Spanish Flu pandemic.  Although we may eventually find a way to kill both the flu and the corona viruses, we are nowhere close to doing that now… it would take an out-of-the-box quantum leap in science to pull it off.  I just read a peer reviewed research paper where it stated that more and more scientists are now suggesting that we may be continually vaccinating and wearing masks and avoiding gatherings for the rest of our lives.  The head of Moderna (on September 17th) stated that we may not require yearly shots and later the same day stated that vaccine immunity appears to only last for a few months so we will need ongoing Moderna shots and then one week later said, quite hopefully, that Moderna will wipe out Covid within the next 12 months.  Possibly someone keeps correcting his viewpoint.  I remember Warren Buffett’s quote:  “Never ask a barber if you need a haircut.”

 

• Why will it always infect humans?  There was a possibility that it could have been stopped if people had reacted aggressively at the very beginning with a global in-home quarantine and in-home masks for perhaps only a few weeks.  Now, despite any heroic vaccine attempts, it will be next to impossible to ever eliminate Covid-19.  Today it is everywhere and it is continually mutating and migrating in order to assure its survival.   Most viruses are stable double-stranded DNA viruses that do not mutate easily.  DNA viruses include measles, mumps, diphtheria, smallpox, polio; most of the viruses that can infect humans are DNA versions.  Vaccines work well on these DNA viruses because DNA viruses normally do not mutate.  Vaccines work like a lock and key.  But if the lock is changed, the key will no longer work.  The flu and coronaviruses are unstable single-strand RNA viruses that mutate often because they have great difficulty correcting for any errors of reproduction.  You could think of it in these terms: Single strand RNA viruses do not have a back up copy (double strand) to rely on.  If the lock (virus) is altered enough, then it is almost impossible to have a key (vaccine) that continues to fit.

 

• Do vaccines stop people from getting viruses?  No, Covid-19 can and will still get into your body whether you got a vaccine or not; the theory is that the vaccine (or prior natural immunity) helps you to fight it off quickly and more easily and usually without symptoms.

 

 

• Is there anything that worries you about vaccines?  Yes, definitely.  With an ever higher percentage of people getting vaccinated, there is an increasing chance that there is a higher selection pressure on the part of the virus to aggressively mutate in order to alter the spike protein that the new mRNA vaccines are designed to effect.  And if it accomplishes this, then there is also a chance that the new Covid-19 variant starts to exacerbate the Covid-19 infections via a phenomenon known as ‘antibody-dependent-enhancement’ where certain antibodies stick to the virus spikes incorrectly and actually end up contributing to the infection.  This means that the vaccine could end up making the virus much, much more contagious (but not more lethal… the most likely pathway will be for the virus to become less and less deadly regardless of any variation).

 

• We are now being told that we will need ongoing “boosters” into the future.  If the virus mutates several times per year, then how will the labs know what the future mutations will look like so that they can make a new updated vaccine that will work against any mutation that defeats the mRNA vaccine?  They won’t know what a future version will look like in advance because labs are not psychic.  Right now, a “Covid-booster” is just a third shot of the same thing.  While theoretically it is better than the ‘old style’ vaccine, the new mRNA vaccine (Pfizer & Moderna) for an RNA virus will help until it no longer has any ability to help.  There are a dozen new variants circulating around the globe.  Researchers are suggesting that the new MU-variant coming up from South America (and already in every state in the U.S.) is not stopped at all by the current vaccine that the government is starting to mandate.  The idea behind the mRNA vaccine was that it would give more lasting immunity against a mutating RNA virus since it deals entirely with the ‘spike protein’, but it already appears to do nothing of the sort.

 

• I was told that if I already had Covid, that I still need the vaccine.  Why, if both produce immunity?  The “vaccine is better” promotion comes from the vaccine manufacturers and from the Center for Disease Control (CDC) and Dr. Fauci, but the reputable National Institute of Health (NIH) states quite the opposite.  Regardless, the very clear science is that the immunity from receiving the jab or from contracting Covid naturally are exactly the same.  Exactly the same.  However, strong immunity from either method likely lasts for no more than the following 8 months (according to NIH studies).  It is important to note that the vast majority of people that contract Covid will naturally present with zero symptoms, so one could have natural immunity right now without even knowing it, and this could apply to hundreds-of-millions of people across the globe, so this complicates the equation.  I do understand that “natural vs vaccine” is a very difficult choice to make when dealing with something like Covid-19 that has the potential to cause death.  On some deep subconscious level I have to admit that I do wonder what happens if we constantly and endlessly inject ourselves with Covid concoctions, especially in the light that no long-term studies of the effect of the mRNA vaccine on humans has ever been done.  It is simply a fact that we are all mRNA vaccine test subjects.  Yes we are.  A law was pushed through that no vaccine manufacturer (or government agency) can be sued during the next three years (until 2025).  A surprising number of doctors anecdotally report auto-immune patients going from very mild to bad after taking the mRNA vaccines; perhaps 80% of the population is already auto-immune and most common diseases are actually auto-immune illnesses and the (cytokine) tie-in with Covid deaths is clear, extremely important and seldom discussed (more below)… so it is sort of a ‘catch-22’.  I’m sorry to say that the current “scientific” answer to this potential worsening of auto-immune conditions (post-vaccine) is to add high blood pressure drugs to the long list of drugs that the patient is already on.

 

• It sounds like you are against vaccines?  Absolutely not.  In my opinion, the theory around vaccine use is brilliant and I am NOT saying to avoid the Covid-19 vaccine.  In theory, the mRNA vaccine is great.  Past public backlash has forced the labs to gradually remove some of the worst toxic elements from some of their vaccines, so injecting vaccines has gotten safer with time, but many still contain thimerosal-mercury, formaldehyde, aluminum and/or MSG that can all damage brain & nerve tissue, so there is still work to be done to make them even less toxic.  I’ve studied a lot of Latin and medical terminology and even I can’t pronounce half of the ingredients in today’s vaccines.  And trust me on this, a vaccine really doesn’t need to have mercury in it (mercury causes extreme health problems in almost all organ systems even at very low levels) and the connection between aluminum and Alzheimer’s is very well established (aluminum is a heavy metal when in the human body and it has an affinity for brain tissue… aluminum accumulating in brain tissue is mostly caused by spending a lifetime drinking phosphoric acid loaded soft drinks from aluminum cans and from cooking in aluminum pots).   Anyway, vaccines absolutely do work on DNA viruses, which includes most viruses, and they obviously will work against RNA viruses until the virus mutates beyond the vaccine’s ability to help.  The problem is that once a lab finds a new variant (mutation) that sidesteps the vaccine and does all of the work to get the vaccine up to running speed and delivered to the public and then administered, the virus may have further mutated.  And while the new mRNA vaccine (Pfizer and Moderna) had difficulty in passing any animal studies because it was shown to cause liver & kidney injury in too many test subjects (Johnson & Johnson’s ‘old-style’ vaccine has caused severe but rare nerve damage in some current patients), my personal gut feeling is that these vaccines are relatively safe for the majority of people to inject, which is good since it is now being mandated around much of the globe.  From a risk assessment viewpoint and looking at a world population of almost 9-billion people, one’s current risk of dying from either Covid-19 or from the vaccine are extremely low.

 

• What is the path of future outbreaks?  All past pandemics involving RNA viruses (if not eradicated in the first few weeks) have eventually moved on to becoming a permanent part of the human experience, but more localized and less widespread and much less lethal; I assume that the same will occur with Covid-19.  Of course the vaccine manufacturers will take credit for it, but it will actually just be the natural progression.  DNA viruses like smallpox, measles and polio remained strong over time (since they do not mutate, they cannot become weaker) and that is why vaccines were so important for these DNA viruses (and we are fortunate that vaccines do work well with non-mutating DNA viruses).  The only DNA virus ever eradicated by vaccines was smallpox.

 

 

• Do masks help to stop the spread from one individual to another?  Yes, if they are tight enough to the face.  It is not the thickness, it is the tightness.  Social distancing will also help as will not touching your face with unwashed hands.  Personally, I don’t often wear a mask, but if I were in tight quarters, as on a commercial airplane, I would most certainly wear a mask.  In my opinion, these actions will not eliminate Covid-19 from the planet, it is too late for that.

 

• How can I cheaply test at home to see if I currently have or have recently already had Covid-19?  On September 21st, Orasure (a great company) announced that they have developed a quick, in home, saliva test for detecting recent antibody production (with the help of $300-million taxpayer dollars, but Orasure will keep the profits).  It will be on the market sooner rather than later.  Their other products are already sold in many pharmacies like CVS (and also sold globally) so there can be a fast and easy release through already established supply lines.

 

• Does Ivermectin horse dewormer help against Covid-19?  No, Ivermectin is not an anti-viral and it has a list of side effects as long as your arm.  Covid-19 is not a parasite, it is a virus.  But I’ve spent much of my life around horses and it works great in deworming horses and trust me on this, horses must be wormed.  If you’ve ever seen foot long worms as fat around as your finger pass from a horse, you won’t ever forget the sight.

 

• What are monoclonal antibodies?  These are antibodies cloned in a lab and injected into your body rather than being produced naturally by your body.  This treatment is approved by the FDA and it is currently being promoted by hospital administers.  (I have great respect for nurses… there is a reason why so many nurses refuse treatment of this type when they personally become sick.)  Let me just say this about monoclonal antibodies:  The known side effects of these ‘lab antibodies’ are dizziness, headaches, allergies, diarrhea, constipation, cough, fever, itching, back pain, fatigue, insomnia, anaphylactic shock, autoimmune thyroiditis, hypothyroidism, hepatitis, anemia, decrease in white blood cells, inflamed and swollen mouth, colitis, gastrointestinal perforation, severe destruction of the intestines, internal bleeding, blood clots, heart failure, cancer and death.  In their infinite wisdom, the powers-that-be ordered that this special monoclonal treatment be reserved for those who are the most sick or elderly amongst us.  Why am I cynical about this?  Roughly speaking, for every drug or procedure or device that is approved by the FDA, another previously approved one is pulled from the market because, oops, it actually can permanently and severely injure you or even kill you.  But they just keep on doing it.

 

• Isn’t the virus as deadly now as it was at the beginning?  No, not even close.  This following chart shows the progression of both ‘cases’ and ‘deaths’ during the three waves that we’ve experienced.  At the beginning, in early 2020, there were few cases but high death numbers and that was not good because it meant that the virus was very deadly.  One year later the case and death numbers were moving in sync, meaning that death numbers as a percentage of total cases had actually dropped.  (Of note, the high early 2021 case numbers accomplished the majority of their drop before vaccines were widely available so vaccines had little to do with the fall in case numbers or deaths.)  More recently, in mid 2021, case numbers jumped much higher again but deaths remained quite LOW which means that deaths as a percentage of cases had dropped significantly.  High case numbers and low death numbers means that the virus has become more contagious but much less lethal.  Since the vast majority of Covid-19 cases present with zero symptoms, the recent gap between high cases and low deaths may be even wider.  This drop in death numbers is good news.  This chart also shows that recent Covid-19 case & death numbers may have peaked and already begun their descent.

 

Daily Covid-19 death numbers for the U.S are shown via the gyrating dark purple line below and it is shown to be lower than or equal to most other routine sources of human death.  (Chart is courtesy of Statista and it is shown to July 1st of 2021, which is the last date that data is available for all causes of death.)  Covid-19 fatalities spiked slightly higher in August and September of this year, appear to be peaking now, and will likely be back to July levels (below) by sometime before the end of the year.

 

• What is an auto-immune disease?  [I’ve chosen to hyphenate the word auto-immune in order to emphasize the meaning of the word.  “Auto” means self… you attack yourself.]  Research suggests that 80% of all health problems in the United States (and globally) are actually auto-immune diseases.  An auto-immune disease is where the body’s own immune system attacks its own bodily tissues, often at the person’s weakest genetic link.  The research is absolutely clear; it is caused by your own health choices and there are (seldom used) blood tests that can pin down the cause and the relatively simple cure.  Auto-immune diseases run the gamut:  Alzheimer’s, tinnitus, fibromyalgia, MS, lupus, Parkinson’s, psoriasis, eczema, celiac, vitiligo, thyroiditis, Crohn’s, rheumatoid arthritis (osteoarthritis is not auto-immune, it is ‘wear-and-tear,’ often caused by chronically misaligned bony anatomy or sometimes from overused joints), scleroderma, asthma, etc, etc, etc.  True Functional Medicine practitioners (they can be life changing, but also very rare and difficult to find and many falsely claim the title) are the specialists that deal with this “cause/cure” scenario.  In a world where health has been replaced with pharmaceuticals, these doctors rarely prescribe drugs.  There are 100 commonly recognized auto-immune diseases which means that there are actually around 500.  The odds are that your personal manifesting illness is actually an auto-immune problem; you might have one even if later-stage symptoms or disease processes are not currently presenting.  Some early, pre-diagnosis symptoms:  Stiff?  Injure easily?  Restless sleep?  Itchy skin?  Rash or redness, especially on your face?  Stomach or bowel irritation?  Constipation or chronic loose stools?  Excessive gas production after eating beans?  Chronic phlegm in your throat that is worse at night or in the morning hours?  On-and-off runny nose?  Headaches?  Chronic fatigue (and “Long Covid?)?  Autism that “runs in families”?  Thought process forgetful or not entirely clear?  

 

• How do auto-immune diseases affect Covid-19 patients?  Auto-immune patients produce too many cytokines as part of their illness.  Obese people also produce too many cytokines, at a 10x greater rate.  Cytokines are sort of like little stupid, non-specific destructive missiles, sent out by the immune system, that are designed to kill anything that might need to be killed plus anything else that ‘gets in the way’ or that is in the general area (like lung tissue).  Covid-19 is a virus that sets up shop in the distal air sacs of the lungs, where you breathe and exchange carbon dioxide for oxygen.  Auto-immune patients (and obese people) send in truly gigantic amounts of these cytokines in an attempt to kill the (inflammation causing) coronaviruses with the unfortunate result that the excessive cytokines end up destroying the air sacs themselves, and then the person cannot breathe.  If you cannot breathe, you die.  The coronavirus usually does not kill the patient, the patient’s own immune system kills them via cytokine overproduction and resultant lung destruction.  Very clear research shows us that it was this excessive cytokine storm that killed almost 50-million people during the 1918 Spanish Flu pandemic.  Between auto-immune conditions and obesity, a lot of people are at risk of over-reacting to a Covid-19 infection.

 

• Do vaccines stop this excessive cytokine production?  No, not at all.

 

• Is there any easily available medicine that does temporarily halt the excessive cytokine production?  Yes.  As I started saying 1.5 years ago, Dexamethasone is an anti-cytokine steroid that is common, cheap, relatively safe and extremely effective.  The only side effects for usage of under two weeks are temporary stomach cramps and a temporary irritated state of mind in some rare cases.  When President Trump went to the hospital with Covid-19, he was much worse than the American people were told.  Some very smart doctors there gave him Dexamethasone and he improved so fast that he was released almost immediately.  But your doctor will not automatically give it to you.  Should you be bad enough to have to enter a hospital, you will likely have to request him/her to discuss it with you.  As I type, Pfizer, who makes Dexamethasone, is in the process of relabeling it as a “strong non-vaccine Covid treatment,” but with a much higher price tag (and a different name for the exact same thing).

 

• Is there anything safe & natural that can be taken as a Covid prophylactic?  Yes.  Natural curcumin supplementation halts excessive cytokine production and it can be taken safely by most people on a daily basis if used as directed.  This is sold everywhere including Amazon, WholeFoods and in most decent supermarkets and health food stores.  I personally take it along with high potency vegan DHA/EPA (Deva brand) and natural D-3 (not D-2!) from vegan sources (NOW brand, taken as directed).  And this may sound too simple to be true, but zinc lozenges sweetened with natural xylitol will often knock out any oncoming viral (or bacterial) respiratory infection if taken immediately before bedtime as soon as any symptoms develop. There is a reason why so many water purifier companies add zinc to their filters and why companies like Tom’s of Maine add xylitol sweetener to their natural anti-microbe mouthwash and toothpaste.  Zinc should only be taken in higher doses when feeling sick because if taken on an ongoing daily basis, it will eventually kill off even the good intestinal bacterial flora.

 

• Where can I learn more about Functional Medicine?  Most illnesses being self-inflicted auto-immune diseases means that most human diseases are preventable and correctable.  Yes, that’s correct.  Research tells us that humans have the ability to live for 125 years and to be healthy and vibrant and active until the very end, but it takes the proper choices and actions along the way.

If you want to know more than your doctor:  The few textbooks that are available are too difficult for lay people to get through, but there are five easy to read books, all written by Functional Medicine doctors, that the subscribers to this blog might find interesting (please read in this order):

1. The Autoimmune Solution… by Dr. Amy Myers
2. The Autoimmune Fix… by Dr. Tom O’Bryan
3. The Wahls Protocol… by Dr. Terry Wahls (read the first half)
4. The Scientific Approach to Intermittent Fasting… by Dr. Michael Vanderschelden
5. Why Isn’t My Brain Working?… by Dr. Datis Kharrazian

 

 

REVIEW… AND CONDENSED SUMMARY FOR LAZY READERS: 

1. Covid-19 is a coronavirus which is a type of mutating RNA virus that is found in mammals with each mammal having their own version, but it can sometimes jump species.  The common cold is also a coronavirus.
2. Although Covid-19 could have been eradicated at the very beginning when it first jumped from bats to humans, at this stage it is likely never going away. 
3. Vaccines & masks will not eradicate Covid-19 from the planet; the mRNA vaccine will help only until the RNA virus mutates beyond the vaccine’s ability to help. 
4. If you have had Covid-19 within the past 8 months, a vaccine is of no additional benefit until 8 months after the date of first contracting the virus (but that won’t matter if every single place that you want to go to and everything that you want to do mandates a continually updated vaccine card). 
5. The death rate is much lower than most people believe, with the vast majority of deaths having occurred during the first wave spike in early 2020. 
6. The risk level is much lower than most people believe; you are currently (or soon will be again) more likely to be killed by your car than by Covid-19. 
7. It is patients with auto-immune diseases that are much more likely to die from Covid-19; auto-immune diseases represent roughly 80% of all global illnesses and if you personally have a manifesting illness, it is likely to be a mislabeled or misunderstood auto-immune condition. 
8. Auto-immune patients (and overweight people) produce too many cytokines. 
9. Immune system cytokines are what actually kills the majority of Covid-19 patients by destroying the breathing sacs (alveoli).  If you can’t breathe, you can’t live. 
10. If you are really sick with Covid-19 and in the hospital, consider asking for Dexamethasone, which is an anti-cytokine drug with few side-effects if taken for no more than two weeks.
11. There are natural preventatives (that help to reduce the overproduction of cytokines) that can be taken as part of a daily health regiment (listed above), but it is important to find out why you are auto-immune in order to fix the cause of the condition.  Merely masking symptoms with drugs allows the auto-immune illness to progress and worsen over time.  If you do not understand this, then picture having a rotting tooth but just taking aspirin so that you do not feel the pain.  The aspirin literally does nothing to fix the actual CAUSE of your pain but it does allow the rot to continue.

 

 

BRIEF MARKET SUMMARY:  On September 20th, with the market down almost 900 points, I sent a rushed client Market Update email to clients stating that the market had JUST bottomed and that it would move higher at the end of day and then proceed higher over the next few days to fill the chart gap, sending the S&P-500 to at least 4450.  This was exactly correct.  Even my clients don’t understand how difficult it is to do this.  I used the drop to enter new client money into portfolio positions so that this new money also captured the three day major upside.  Our earlier projection to reach the 4600 area was also exactly correct and I said that the market might then take a pause and become volatile.  Guess what?  Also correct.  I then said that the volatility was likely not over but that the recent bottom was likely in.  We’ll see.  Now I’m saying that the S&P-500 naturally wants to meander up to 4700 by the end of the year (or early in 2022).  I’m not psychic… I’m just open to listening to what MarketCycle’s proprietary system of indicators is trying to tell me.

So, we remain in the early stages of a new multi-year cyclical bull market for stocks (that began in late March of 2020) within the confines of a prolonged (18 year?) secular bull market that began in late October of 2011, peaking in perhaps 2029.  As I keep saying, this is the stock bull market of our lifetimes.  And commodity & gold prices will be the next bull market, peaking in perhaps 2037.

 

Thank you for reading.  I’m sorry if anyone was offended by the material presented in this article; there certainly are strong opinions out there.

 

Consider becoming a client.  It does’t cost; it pays.  It’s simple to do and time’s a wastin’.  There is a contact tab on the banner of our website and I reply to all emails same day.

 

 

MARKET CYCLE  —  TREND FOLLOWING  —  DUAL MOMENTUM  —  LOW VOLATILITY  —  HEDGE FUND