Well well, here it is....

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis in October, the same increase as in each of the previous 3 months, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.6 percent before seasonal adjustment.

The index for shelter rose 0.4 percent in October, accounting for over half of the monthly all items increase. The food index also increased over the month, rising 0.2 percent as the food at home index increased 0.1 percent and the food away from home index rose 0.2 percent. The energy index was unchanged over the month, after declining 1.9 percent in September.

The index for all items less food and energy rose 0.3 percent in October, as it did in August and September. Indexes that increased in October include shelter, used cars and trucks, airline fares, medical care, and recreation. The indexes for apparel, communication, and household furnishings and operations were among those that decreased over the month.

The all items index rose 2.6 percent for the 12 months ending October, after rising 2.4 percent over the 12 months ending September. The all items less food and energy index rose 3.3 percent over the last 12 months. The energy index decreased 4.9 percent for the 12 months ending October. The food index increased 2.1 percent over the last year.

That bolded and particularly the bolded and underlined text is the important one, and is why I included the text of that entire section.

But for the energy index coming down core would be smoking hot, likely close to 4% or double the claimed "target" and within one percent of wage increases which in turn means that any idea that consumers can "earn" their way out of the inflation hole is fantasy-land nonsense.

Yet this premise is absolutely key to the idea that we can "keep" the sort of pricing that is in the marketplace (and thus the sort of stock and other asset prices) that are currently present.  On the number release the market decided 20 handles on the /ES futures must be added.

A caution: All the energy decrease was in gasoline and fuel oil (diesel, along with home heating use.)  Both natural gas and electricity were up on a 12 month basis, the latter more than the former, which strongly implies that policy decisions are largely responsible.  Electricity prices going up 4.5% on the year are a serious inflation risk as electrical power goes into literally everything -- its not just your light bill, it is also the light bill of every store, every warehouse, distribution terminal and manufacturing facility.  This is precisely the sort of "sticky" inflation influence that cannot be absorbed.

Oh, and car insurance?  Up 14% annualized.  You don't need to buy that (if you own a car), right?

CNBC is talking about inflation being "sticky": Yeah, that would be due to electricity costs among other mandatory spending such as health care and shelter.

PS: The PPI is now out as well and, well.... it is confirming this view with almost-exactly the lead time that I expected and worse, well, here's the quote:

Over 80 percent of the broad-based increase in October can be attributed to a 9.9-percent jump in the index for unprocessed energy materials.

Here it comes....

Remember "a permanently high plateau"?

Of course you don't; you weren't alive when it was spoken.

I've recently written on the yield curve.  What most people commenting in that thread failed to recognize (and our various folks in the investing and money business, including Powell) is that these swings are a Kondratiev cycle and there is no nation in recorded history that has managed to evade them.

Tamper with them, try to get around them, make excuses for them, yes.

Actually change them?  No.

As I pen this the market has been on an absolute tear since election day.  The irony is that many of Trump's policy pronouncements, such as removing EV mandates from carmakers (whether explicitly or by setting fuel standards to a level impossible to attain under the laws of thermodynamics any other way, as the Biden path in fact did) means Tesla no longer has a government-driven sales quota.

Now that's not to say that people won't want to buy Tesla vehicles standing on their own in a field of vehicle choices.  The obviously have but Tesla has benefited mightily in cash flow from those "credits" that others have had to buy (from Tesla) for the last several years which has been reflected in both the price of Tesla vehicles (downward) and Tesla's P&L statement (upward.).  That cash flow, if the mandates are removed, will disappear and the cost of them in the price of fuel-powered vehicles will also disappear while at the same time the subsidy in favor Tesla car prices will also go away.  In other words all other things being equal Tesla vehicles become more expensive and fuel-powered vehicles becomes less expensive because the forced payment from other companies to Tesla disappears.

How will all this balance out?  I have no idea but it is flat-out nuts to believe that it will be accretive to Tesla's earnings and thus should be reasonably-reflected in a higher stock price.  Yet that is exactly what has happened.

May I remind everyone that removing deficit spending by whatever means it occurs is good in the longer-term, particularly from an inflation standpoint (since all inflation is in fact caused by creation of credit) but a large part of the last several years' stock market price rise has been driven by that inflationary impulse.

Perhaps the market is telling us that despite all the bluster and claims nothing will be done about any of that and yet somehow we'll evade the march higher of interest rates over the next couple of decades, and evade the already-occurred turn in that cycle.  I've heard a couple of podcasts asserting that in fact rates will continue to come down from here, implying that we're headed back to a 2% long term bond.

No we're not.

Yes, there will be periods in the next twenty or thirty years when rates will fall but the general trend for the next two to four decades, with the median expectation of three decades of time, is upward.

The firms that will fare best in that world are the ones who have no operating leverage (that is, debt) on their balance sheets because you can't be involuntarily exposed to higher financing costs if you have no debt.  You don't have to deal with a ratchet job that isn't present and every firm is different in this regard in terms of its exposure.  A key element any investor in a firm should be looking at right now is the amount of debt on the firm's books compared with its free, unlevered cash flow -- that is, can the firm pay it off if necessary from operating income rather than roll it over or are they stuck with whatever rate environment they are presented when that time comes?  As an example Nvidia has an operating cash flow of about $49 billion with $10 billion out in debt.  Push comes to shove they could pay that off and survive.  It would hit their operating earnings severely but it could be done.

Now look at a firm such as Moderna.  You'd think they're mostly ok because the only have $1.3 billion in debt. The problem is that their operating cash flow is negative so they can't pay it off if necessary.  Whatever the market deals them in terms of a rollover rate they have no choice and must accept it.

How about Tesla?  Their gross operating cash flow is $14.5 billion but they have nearly $13 billion in debt.  While in theory they could pay all that off it would ruin their cash flow for that year.  Nonetheless they'd probably survive such a crunch, although not easily.

How about Amazon?  $112 billion in cash flow but $159 billion in outstanding debt.

Oh by the way this analysis has to extend to suppliers you can't replace easily too.  In the 1990s this was a huge problem as Internet access evolved; the DSL folks were all wildly levered and existing on Wall Street "another shovel of cash please" money, unable to generate free cash flow.

They all blew up when that dried up and if you were dependent on them you blew up too as your customers got cut off.

The usual answer to this sort of analysis is that the firm has plenty of time to figure it out and/or increase their operating cash flows before the debt must be either rolled or paid.  In a generally-declining rate environment this is almost-always true because tomorrow its cheaper to finance something that it is today, everyone knows this and therefore the odds of a dislocation and squeeze are small.

In a generally-rising environment the exact opposite is true: Everyone knows the price will be higher to roll over the debt tomorrow and thus the risk of a squeeze and bankruptcy rises vertically as the debt outstanding .vs. actual cash flow (not including leverage) goes up.

Read balance sheets and key financial statistics folks.  One of the greatest risks in a concentrated market like today's is that an utterly enormous amount of the index price (and thus ETF prices) is concentrated in just a handful of firms, and its very easy to just buy the ETF based on its current price change without looking at all at the concentration of risk or what those firms' balance sheets look like.

Self-rescue.

How many times do you need to see it before you believe it?

People don't take these threats seriously and then they get either seriously harmed or die.  The good news is that technology and warning have both seriously improved in the last 100 years; those who are killed by a natural disaster are down huge, 90% or more, over the last 100 years.

Hurricanes, for example, were many times detected only on approach and thus by the time you knew there was serious trouble coming it was too late to do much in advance.  There were a huge number of them that nobody knows about at all because other than a hapless ship that wandered too close nobody ever saw the "fish spinners."  Today we have satellites and thus anything incipient is known when it starts; this is an enormously good thing.

But there are many disasters that give little or no warning.  That it was going to rain a lot in the path of Helene was known; that a cold front was going to drop the sort of moisture it did in front of it into many of the mountain areas was not accurately forecast nor could it be.  But -- that it was raining heavily in the two days previous was certainly something you could take note of.  The "set up" for what happened is very similar to what occurred in 1916 -- and so was the outcome.  Similarly we can tell when there's a risk of tornadoes in a given area today but not exactly where one will form or strike.  Earthquakes are, with few exceptions, 100% no-warning events.  You can determine you live in a seismic zone (e.g. New Madrid, San Andreas, etc.) but there is no way to know when the event will occur.

Many people believe that a "100 year flood" only happens every 100 years.  False, but even if it was true how long ago was 1916?  Uh, yeah.  No, a "100 year flood" means that there is a one percent chance each year and each trial, that is, each year, is independent just as is a coin toss and thus that one year did or did not have a flood has no bearing on whether the next year will.  To be more-accurate (I fat-fingered this originally, so this is corrected) you have a 99% chance per-year it won't flood.  So if you live in a place that has a "100 year flood" risk over a 30 year mortgage there is a 73.97% chance you will not get flooded -- and a 26% chance you will.  If you do get flooded in year 10 the risk of it happening again over the next 20 is about 18%.

That's right -- you have a one in four risk of getting hosed over 30 years of living somewhere under that threat and if you do get hit in year ten you have an approximately one in five-and-a-half risk of getting nailed again over the next 20 years if you stay!

By the way if you're in a place considered a five hundred year flood area the odds aren't much better; its 99.8% likely per year you will not flood but cumulatively, over 30 years you still have about a six percent risk of getting screwed.  You probably think you are almost-certainly safe because 1 in 500 would put such events at least five human lives apart and thus "it ain't gonna happen."  You're wrong.

These are mathematical facts.

Second, when and if it happens the help, whatever it, will go to the highest-density places first.  It has to because all resources are finite and thus the correct move is always to help the most people fastest and first.  This is the way triage is and its not cruel or anything of the sort; it is simply doing the best for the most you can with what you have available.  But do not mistake the fact that those resources will go there means you want to be there; if there are one million people in an area you're one in a million and if only 100,000 can be helped you have a 1 in 10 chance of getting that assistance.  90% of the time you still go without and while the more-isolated place might not get any help for two weeks if you're in the 90% it doesn't matter, does it?

Concentrate your efforts on the basics of human need because in a disaster that's what matters most and expect even in a population area to be able to self-provide for at least a week.  The first and most-basic human need is air; if you can't breathe it you're dead.  Fires and toxins are real risks, but they're also ones that when it comes to breathable air your best option is to run at the first hint of trouble no matter where you are.

Second is drinkable water.  Assuming you are not inordinately stressed you might make three days.  You're probably worthless in two days and children are more susceptible to serious dehydration because their skin area is larger on a percentage basis, so they typically cannot make it past two days and are effectively useless in one day.  Do not expect help to reach you under any circumstance until roughly that amount of time and perhaps more.  Even with "local" relief that ignores exhortations to not go help personally (like here after Helene) it still will take that long because until people can get in there that's just how it is.

Any allegedly "fresh" water source after a disaster has to be presumed contaminated and unsafe unless you have the means to treat it, and there are chemical contamination risks that cannot be reasonably mitigated in a disaster situation at all with water at ground level.  If you have a traditional hot water heater and your home or other residence is physically intact you have somewhere around 50 gallons of usable water in it.  It should still be filtered with a Sawyer and/or treated with Aquamira drops (yes, buy both well in advance!) before consumption, particularly after a few days, but it will not be full of contaminants because it was full of clean water when the system went down.  Keep a short hose around for this purpose and make sure you turn off the electrical or gas feed so once you start using it when water is restored it does not "dry fire."  If you do not have any source of stored water (e.g. you have a tankless system and didn't fill anything in advance) then bottled water is your next and last resort.  Everyone needs to be prepared to deal with this all the time; even if you're on a private well if there's no power the pump won't work (more on that in a minute.)

Third is personal shelter from elements, which includes clothing and similar.  Enough to be out of the wind and elements (e.g. rain, etc.) is frequently enough but not always.  Being wet, particularly in wind, can nail you with hypothermia even in moderately cool temperatures and in colder temperatures it is rapidly deadly.  Some of this is beyond your control and if your housing is destroyed in adverse circumstances securing from that problem is, after immediate threats (e.g. incoming flash flooding) your first priority.  Tools of some description, all the way down to a pocket knife, make a difference -- perhaps a really big difference.  Having some preparation against this (e.g. a shell rain jacket, disposable space blankets, etc.) is inexpensive and everyone should have at least some elements of that available at any time.

The last utter essential is personal protection.  It would be nice if people didn't try to take advantage but some will.  Remember that the option to accept a "lesser injury" does not exist when there is no prompt medical care available, and there won't be in this situation.  Exactly what you choose to do in this regard is a personal choice and I won't go into it on this side of the blog but it is critical to remember that any significant injury can trivially wind up being fatal if you can't get medical attention for a day or two.

The rest is very situational but these first points are not.

Expect communications by "ordinary means" to be unavailable.  This time around Starlink worked when nothing else did -- if you had power available.  No power?  You're still screwed.  And don't kid yourself as to the requirements either; those units require quite a bit of juice, about 100 watts which is non-trivial.

Note that in an actual emergency where ordinary communications (e.g. your cellphone) are unavailable any means of transmission, on any frequency, is legal to summon aid to prevent the imminent loss of either life or property.  One of the cheapest means of doing this is any of the HAM-capable Beofeng radios -- the model 5RM is one of the better options, but hardly the only one, they are entirely portable and can charge over USB.  They are not, however, waterproof -- there are major-manufacturer ones (e.g. ICOM) that are up to and including being submersible but they're a lot more expensive.  Note that while listening is always legal without any sort of license at all it is illegal (and the FCC means it) to transmit on Ham bands without at least (for these) a Technicians license -- however in an actual emergency where serious and imminent threat to life or property exists and regular communications are unavailable it is lawful to use anything you can manage to talk to anyone on any frequency.  

§ 97.403 Safety of life and protection of property.
No provision of these rules prevents the use by an amateur station of any means of radiocommunication at its disposal to provide essential communication needs in connection with the immediate safety of human life and immediate protection of property when normal communication systems are not available.
§ 97.405 Station in distress.
(a) No provision of these rules prevents the use by an amateur station in distress of any means at its disposal to attract attention, make known its condition and location, and obtain assistance.
(b) No provision of these rules prevents the use by a station, in the exceptional circumstances described in paragraph (a) of this section, of any means of radiocommunications at its disposal to assist a station in distress.

In advance look up the local repeaters in your area and program them in.  Repeaters are typically located up high, have decent power and someone who is competent operating and maintaining them.  You can listen lawfully any time you want; if you can hear a repeater you can probably get to it, and the Hams that operate them will put a lot of effort into getting those back on the air expeditiously because they are one of the key means of communications in emergencies.  Also program in 146.520Mhz as a last-ditch; that is the universal North American (US and Canada) simplex (non-repeater) calling frequency and if there are Hams in the area with a radio on standby in an emergency if you're in range they will likely be able to hear and talk with you.  The best strategy with one of these in an actual emergency, after one attempt to reach the local repeaters, is to check once an hour on the hour listening for others; remember that once the battery is depleted the radio is worthless without a charge and it takes a lot more power to transmit than receive.  Don't waste the power you have in the unit if there is no charging source.

This is a literal $30 piece of equipment that can save your life; if you have an EPIRB/PLB that works in extreme emergencies as well but they're expensive and these are not plus once you set off an EPIRB/PLB it is "used" as the battery will be depleted and since it sends coordinates you have to stay put once you set it off or they go where you no longer are.  Just be aware of the limitations of whatever backups you have but do have one or more.

Another thing to know: Starlink is working on direct to phone links.  How far away that is for general use (they're testing with T-Mobile now) I do not know, but for low-bandwidth (e.g. text message) applications in the next few years this probably will be available and again is a life-saving thing if and when it enters operation.  The hardware is not cheap for "regular" and "mini" "full" Starlink kits (~$600 or so) and the bad news with them is that at present they cannot self-provision, so in an emergency you can't turn it on if you have one stored at your location.  Starlink may eventually fix this (and should, as it makes "terminal sitting in box" a VERY useful emergency communications device) but as of right now with no way to get to the Internet separately on a non-active unit you can't activate it.

Carbon-based fuels and all that run on them are your friend in such a circumstance.  Generators, chainsaws, heavy equipment and similar all run on carbon fuels.  Note that gasoline should be rotated at least once a year if stabilized and non-ethanol and yes, you do not want ethanol in the fuel if at all possible for this use.  If you're even modestly away from civilization or could be cut off from power for any extended period of time two 5 gallon cans you rotate at least once a year (put them in your car and go get new fills) is an excellent emergency investment, assuming your residence survives.  Those of us who have lived in Florida know darn well that those gas cans can be life-savers when a hurricane destroys the power feed to your area.  That little generator will keep your refer and a few lights going.  Consider the inverter models if you don't have one already and are only after real emergency use (e.g. the refer and a few lights, or your fuel-driven furnace controls and blower) -- they sip fuel compared to the older "straight" models under light loads; a refrigerator cycles on and off and modern LED lights consume almost nothing power-wise.  Instead of close to a gallon an hour these will often run anywhere from three to eight hours on a gallon of fuel.  Any generator needs to be exercised, with a load on it, every couple of months for 20 minutes or so because you must know it will start if you need it.

If you're on a well without prior planning your pump will not work on a backup generator; the starting current requirements are too high.  You can put a soft starter in and if you have a 240V capable generator you should as with one a modest generator will run your well pump.  Without a soft starter look at the label on the pump motor for "LRA" (locked-rotor amps) as that's what the generator has to be able to deliver without tripping on a "surge" basis or it will not start it.  Microair makes a suitable unit (they have both 120V and 240V units available; there are other brands for RV use that will work for 120V pumps but most well pumps are 240V.)

In colder climates pay attention to your heat source(s) and a backup for whatever you use for heat is not a suggestion.  Heat pumps are worthless without utility power; they simply draw too much power to run reasonably on a backup generator, except perhaps on a natural-gas fueled whole-house unit.  A gas or propane furnace will run on a small generator if you have a transfer switch for it which is quite inexpensive and you should put one of those in for that specific reason even if you don't have a larger generator and transfer switch (which are expensive) setup.

Note that just now the media is full of stories about "full time" and "in major area" response on the ground.  Its been over a week since the storm hit and had cleared off and just now we're seeing reports of government helicopters, larger aircraft and similar supplies for relief -- up until now it has all been private parties doing it because they want to help those in the area and government relief, with few exceptions, has been, like in so many other cases, absent.

In short expect that even in a heavily-populated area you are on your own for a week and had better be able to deal with that.  In a less-populated (or rural) area it will likely be two weeks or more before you have anything approaching reasonable access to relief efforts, and thus you need to be prepared for two week to a month of being cut off.  If you live somewhere that access can be seriously damaged (e.g. there is only a single mountainside secondary road that reaches your location) you need to be contemplating how you'll deal with that if the road is seriously compromised or destroyed and either have a plan to deal with it or be prepared to bug out if there's any possibility of it happening -- even if the odds are very low.

Take this seriously folks and realize that you cannot outrun either a mudslide/flash flood or storm surge.  Surge is something you have some warning with as hurricanes are well-forecast but flash floods are in many cases akin to tornadoes and while the conditions that can lead to them are usually forecast the event itself often occurs with very little warning.  Both move at speeds that are wildly faster (double or more!) than you can run and in any vehicle if you encounter even one obstruction trying to flee it will overtake and kill you.  The only sane option is to not be there, but if you're trapped where there's no good way out then you have to be able to deal with whatever happened until you can either cut your way out or relief can get to you and in the first days to a week or so the most-likely people to be able to and who will help you are private individuals who live in the area -- not the government in any form whether federal, state or local.

Now after you've read all this above and let it soak in for a bit go into your bathroom or kitchen and do an assessment of your medicine cabinet.

What happens if everything in that cabinet is gone and you can't get more?  If you can do something about that and don't all the above may well mean exactly nothing.

Next take off all your clothes and find a mirror in your house.  Have a good look and don't lie to yourself.

If you have to hike 5 miles over rough terrain to get water and haul enough back for a couple of days for the people in your household can you do it?  Incidentally that requirement is roughly a gallon per person, per day and each gallon masses 8lbs so you're talking about "rucking" 35-40lbs (with the pack) on the five-mile return if there are four people in your household.  If you have to do it, and can't, you will die.  Or if you need to do the same thing with 3-4 gallons of gas for a generator (you do have one, right?) to run your well pump for a few days and keep the refer operating -- can you?

... and it does not matter what the topic is.

I've written on this before but I believe it bears repeating: You can choose the basis of evaluation for virtually anything but if the outcome matters to you then there is only one acceptable decision, and that is engineering-based.

Engineering takes the current circumstances as the "baseline" and refuses to accept any path which cannot be proved to make it better, and further expects that if you represent it will be better and it isn't you lose all the money you made and if harm comes to others you go to prison.

No exceptions are allowed.

If the bridge has a sign on it that says "10 ton weight limit" provided your vehicle does not mass more than ten tons it must be safe to drive across said bridge no matter how many other vehicles are on the bridge.  The sign didn't say "one vehicle only", it said "10 ton weight limit."  The engineer who specified that has certified that provided the materials were not fraudulently sourced and that the bridge was assembled according to his stamped plans it is safe for you to drive over it with a vehicle that masses no more than ten tons.

Period.

We must apply this to all matters of public policy, particularly when we consider same to be more than a suggestion.  The NEC works this way; you can run 20 amps on 12 gauge non-metallic wire (e.g. type NM, usually called "Romex") in a house.  If the breaker is not larger than 20 amps the wire will not overheat and catch your house on fire provided it is actually the specified 12 gauge and made out of copper.  Every wire downstream from that breaker which connects between things must be 12 gauge for this reason; the breaker protects the wire and the engineering standard says that this combination will produce a safe -- that is, the wire will not overheat and catch your house on fire -- outcome.  (Yes, this is a bit simplified and the tables have "but for" limitations, but its generally the case.)

Note that while this table was developed using engineering any runt with a pair of lineman's pliers and some wire staples can run cable without being able to do the calculations to independently determine this.  A table is sufficient for an electrician wiring your house; he does not have to understand the math, only the rules which are clearly on the table.

Now it may be the case that in certain circumstances you may not find the performance acceptable but provided you follow that "engineering" rule in a typical residence per the table it is safe.

The standard against one judges in this paradigm is always the status quo; that is, a bridge must not fall down because while you may find it inconvenient (or even unacceptable) to not be able to cross the river without it (absent either a boat or swimming) you won't fall from height and possibly be crushed by the debris without the bridge existing, and obviously a person now under the bridge and subject to having tons of concrete and steel fall on him can't have that happen if its not there.  That is, the status quo is that you are safe from being crushed from above or dropped from height and thus that status quo must not be violated by building the bridge.  If you cannot assure that and, if it that standard is violated someone will be punished for it appropriately, including being asset-stripped, thrown in prison or even executed then you must not build the bridge.  Period.

We must apply this to the status quo when it comes to energy, medicine, appliances and everything else -- and insist that our governments do so without exception.  Further, for those who make said policy or act on it if they violate this stricture they must be held personally accountable for all of the damage that occurs without exception -- no "waivers" or "immunity" may ever be permitted in that regard.

Want a real goal for 2024 in terms of enforcing a change in our so-called "social contract"?

Now you have one.

Go on back and read the original if you'd like as I score along from last year's prognostications....

• The virus "response" is collapsing and will continue to: DING DING DING!  There are still a handful of people screaming at the top of their lungs and making a spectacle of themselves much like a 2 year old that has been told they cannot have another candy, but the uptake on the latest shots is what it is and the sales job has failed.  What's astounding are the people who are trying to re-write history, especially those who threatened others and now try to claim they didn't, or try to claim they did not prognosticate that we would go through a "winter of being dead" if we didn't comply.  Well, we didn't comply and we're not dead, and now here are in winter again.  I'll leave the rest for the -NAD side of the blog.
  
  
• That collapse and the increases it brings in cost will accelerate the detonation of the federal budget via CMS.  DING!  Over two trillion was spent there last fiscal year ending September 30th and its not stopping either; through November, which is one sixth of the fiscal year (two months) the current total is $306 billion .vs. $291 billion last year.  While that is "only" a 5% increase thus far if you think we can keep paying that, uh, no.
  
  
• Other schemes peddled as "medical advice" will be increasingly explored.  I'm going to call that a "push" and bring it forward, although I could probably take credit for it -- specifically with regard to certain medications.  But its not clear that I will "win" that argument thus far, so we'll see.
  
  
• Severe dislocations due to mandates through industry.  POINT!  Its literally all over the place from various firms screaming about "back to the office" to pilot shortages to severe military recruiting problems and, not surprisingly, nursing.  All of these had one thing in common -- they all had mandates and some of them (like the military) have now tried to say "oh, come back please, we didn't mean it."  Uh huh.
  
  
• Cost-shifting in "online shopping" will crack.  MISS. It is what it is but the prediction I made as a part of it, which was that the "order today, have tomorrow" game is getting screwed with in a big way, appears to be verifying -- at least in my experience albeit with a few exceptions.  I'd say that "time to get it to 'ya", if you're not paying specifically for speed, is up somewhere around 30%.  Nonetheless the prediction was it would blow up in people's faces and it did not, so no point for me.
  
  
• The market is not done going down.   MISS.  Surprisingly so too for me, but it is what it is.
  
  
• The Omnibus insures inflation is not over either.  POINT.  Oh I know, last few months "core" is coming in supposedly but let's cut the crap folks -- roughly double the Fed's "primary gauge" isn't "normalized" and reality is what it is.  
  
  
• Rates are not done going up.  POINT.  The IRX started at 4.32 (roughly) and is now at 5.2.  That's almost a full point higher.  The TNX is basically flat, but the curve inversion is worse, and not by a little (in fact on the TNX-IRX it is three times worse), than it was on 12/31/2022.
  
  
• Business is going to have to return to employees being functional.  MISS.  I expected a crap ton of firings and while they're starting now December alone doesn't count.  I can't take credit for it when its six months+ late, although look before because I'm carrying that one forward.
  
  
• DEI and ESG will be increasingly recognized as DIE.  NEAR MISS, but I get the point over Harvard, MIT and UPenn among others.  This one's not over either.
  
  
• Russia isn't going to be "beaten" and the Ukraine support will vanish.  Point.  The vanishing is happening (no supplemental yet eh?) and Russia definitely hasn't been beaten.  The war's not over yet but anyone who thinks Z's troops were going to stomp Putin (with our assistance or otherwise) has been sadly wrong, and plenty of Ukrainians are dead as a consequence.
  
  
• The impact of the Omnibus will be historic, and nasty.  MISS.  Some of the most-egregious provisions are still in there but not yet recognized, and thus while some have been (and even reversed, such as the near-total ban on drilling) not enough for me to take credit for it, so nope.
  
  
• Green energy is headed for the dustbin and firms are in trouble.  POINT!  Ford, GM and similar are all running away from EVs.  So is virtually everyone else, although there's still a brave face on it coming from various quarters.  It doesn't work thermodynamically and the cars are piling up on lots among other things.  
  
  
• DeSantis will either take the RNC pole position or blow up.  The latter -- POINT.  You have to chuckle when Haley is nearly beating him, and she is.  DeSantis is losing by thirty points or more to Trump.  I'd say that's "blown up."
  
  
• Political shifts are going to increase in ugliness.  POINT!  Comity?  What's that?
  
  
• Economic and political disparities in areas between "red" and "blue" are going to produce actual fractures in supply lines and cooperation.  POINT!  Blue cities screaming about "migrants" that they refuse to get behind blocking at the border, proving without question that their "support" was in fact nothing more than a desire to screw other states?  Well.... yeah.  Among other things.
  
  
• Illegal immigration forces policy changes.  Nope.  Not yet.  There are signs of it, including rumblings about calling up the Guard and putting down crossings by "whatever means must be used" but thus far other than the fencing that Texas put up (and they won a court challenge on Biden's people cutting them too) it hasn't folded back on the government yet, but no point for me.
  
  
• Housing is nowhere near done going down.  POINT.  We ain't there gentlemen; the market continues to remain locked, although I am seeing plenty of price-cuts here it doesn't matter as they're not moving.  This is going to be a huge story forward and will be below once again.
  
  
• Auto prices, specifically used cars, are going to collapse.  MISS but just barely.  The various "feelers" at the auction level say I might be off by a month or two and it IS starting, along with the incentives coming back on new vehicles.  Nonetheless its no point for me, but I'm going to carry that one forward into next year as well.

So how's this look.... I count twelve points, 1 push and six misses for a hit rate of 12/19 = 63%.  Not bad.

On to 2024!

Let's do the two pull-forwards first and then the rest:

• Car prices - kaboom!  Its starting already, and some of the biggest collapses are going to come in the EV area.  Simply put those who want them bought them and nobody else wants them.  You can't get around the charge time and distance requirements and it matters not what you mandate; people do not want them, especially when the credits expire and suddenly they cost wildly more than a gas-powered vehicle.
  
  
• Businesses will be forced to cut those who do not produce.  The inflation squeeze is not over and the "RIP" meme stuff sounds great but only works when labor is in control of the equation.  The tide is turning on this folks, and with the below on the economy if you're one of those people who has played that game you're first to get a pink slip.
  
  
• The "great congressional reset" put forward by the current speaker, that is returning to regular order with his extensions expiring, are going to amuse -- and fail.  We'll see if he has the rocks to stand firm when the other bills fail to be completed by the end of January.  He said "no more extensions and CRs" but when he said that originally I disbelieved, said so in public and still do.  Therefore my prediction (for the point) is that no return to regular order, which means there will be at least one and possibly several more "extensions", "Omnibus" and "CRs", which in turn brands the GOP as a pack of liars.
  
  
• Silly season, otherwise known as the federal elections for November, will bring multiple surprises -- and upsets.  What this means is that to get the point either (1) someone other than Trump or Biden has to actually win (whether by oddity or being knocked out) or (2) a serious third-party challenge must actually get onto the ballot or some state-led action (e.g. barring Trump from the ballot successfully) has to occur and throw the result from what it would otherwise be.  If either Trump or Biden wins I do not get the point.
  
  
• Congress will not materially reign in spending and a secondary inflationary spike will start to hit before the end of the year.  It is what it is and right now Congress is driving a roughly eight percent inflation rate.  Oh, you think its 4% right now?  Uh, no it isn't; short-term absorption can temper what would otherwise show up but can't stop it, and that short-term stuff goes away.  Specifically there is a drawdown on excess reserves that is almost gone and will soon be gone, and there's nothing The Fed or anyone else can do about that.  It is serving as a buffer right now but that is ending, and soon.  The usual pipeline delay is still there -- which means coming into the elections things get quite interesting.
  
  
• There will not be four, five or six rate cuts.  No point if there are four or more.  Less than four and.... ding!
  
  
• There will be at least a 10% drawdown from the closing market price of the SPX on 12/31, and I get two points for a 20% or greater one.  If the market goes up in the early part of the year its not 10% from there, its 10% from the 12/31 price.  Yes, this means I might by buying some PUTs and no, that's not investment advice although I do consider them "on sale" at the moment with the VIX trading around 13.
  
  
• Housing begins to crack in a serious form.  It is too early, and this year will remain too early.  If you have to move then do so, because selling a bubble and buying one is a net zero, but for the love of God do not take on leverage to acquire real estate in any form at this time.  You're asking for it straight up the chute.  It will be years before a reasonable bottom comes -- best guess is three to five years out.
  
  
• AirBNB and similar are done.  Yes, there will still be short-term rentals and places like the Smokies are not going to have them disappear by any means, but the salad days are over and all these firms and their "hosts" are in for some serious financial trouble. $200 a day for a stay and close to that base price again in fees and such, including exorbitant cleaning fees and "expectations" (e.g. "you do the laundry and take out the trash or get fined") are going to disappear as people increasingly decide that a hotel is a better deal (and a lot of the time -- it is!)  Anyone who bought one of these with leverage (e.g. has a note on it) is going to get ruined and the recent practice in places like Sevier County of assessing all said properties are commercial (they are) and subjecting them to commercial property tax and other rates should and this year will expand.  This in turn means both the revenue and expense sides of the balance sheet for these sorts of properties are going to get squeezed against the owners; anyone in them with leverage is exposed to being financially destroyed.
  
  
• A serious revolt begins as regards illegal immigrants (or "migrants" if you prefer.)  This probably does not involve mass-violence although it might.  It does involve economic revolt in all respects, particularly when it comes to those places that are Democrat-controlled (e.g. cities and similar) and it will come from those who already are trying to claw their way up, meaning already-present Black and Hispanic Americans.  Given the upcoming elections this has every possibility of not just shaping state and local elections but national outcomes as well.  This is and will remain all about economics - when all is said and done people vote their wallet and that not only never has changed it never will change.  This is the biggest threat to Democrat office-holders in November by far; their "open border and handout" policy was crafted in a way to screw Red states and areas but that was always intellectually bankrupt, particularly while Democrat-heavy places extolled their "sanctuary" status.  Now they have to deliver on their promise and to do it they must take from those who elect them which is not very popular with said electorate (big shock, right?)
  
  
• The Middle East conflict will not be settled; it will instead expand and become a serious problem.  I'm not all that good at prognosticating the twists and turns of military insanity, but if you think there's any indication that its going to calm down over the next year may I recommend a psychiatrist -- you need one.  Significant disruption to international trade is already occurring and is likely to expand and we, in America, have ceded our authority and capacity to absorb it on an inflation front, having squandered that in the little adventure over in Ukraine.  This is already leading to wild increases in container transport prices and it just takes one sunk ship for insurance to become essentially unobtainable for commercial trade.  This is not WWI or WWII where even with armed military escort transports were routinely sunk.  We lack the capacity, given the ridiculous increase in ocean-bound shipping, to provide such protection (leaky though it would be) even if we wanted to.  In short essentially all global trade relies on the lack of military action by belligerents in any focused sort of way on said trade routes and we simply cannot escort same and thus secure it.  At the same time we can "see" everything (and so can everyone else) in the satellite age so the premise of "surprise" across oceans is for all intents and purposes void as well.
  
  
• America will walk away from Ukraine; while nobody will have "won" Ukraine will have to sue for peace on essentially the terms Russia wanted originally.  You can't take and hold ground without boots being there and Ukraine simply has fewer boots available -- and plenty of theirs have run away rather than enlist and fight.  This was utterly predictable from the outset; Ukraine is not and has never been a cohesive society.  I pointed this out originally when this dust-up started -- there are four "rough" factions within the nation and they all hate each other sufficiently to be willing to slaughter the others, given even a weak excuse.  Its been that way for a thousand years and is why the USSR basically allowed them to be "autonomous."  Nonetheless whether we or anyone else likes it the Russians have their naval port and will not give it up and unless you're willing to fight a nuclear war over it you're crazy to try.
  
  
• We will be forced to deal with the realities of the medical and pharmaceutical business -- and it will start this year.  It won't be over and done this year by any means, but the hiding of the sausage is simply untenable at this point and while there is still lots of hand-waving the capacity to absorb it and drive more spending into the health care field on worthless and even harmful actions has now gone so far it threatens the fiscal survival of the nation.  The people who refuse to adapt to this and get their own health in order -- which I've been talking about for the last ten years in volume -- are going to have a very bad time of it.  Don't be one of them.
  
  
• DEI will have a rough year.  By December the winds of change will be everywhere.  Harvard's issue with Gay is the tip of a very large iceberg.  That onion will get peeled and Harvard will be essentially forced to do it by firms that, if they don't, will start boycotting their graduates.  There are already winds of this afoot in regards to Harvard's Law School and that is going to spread.  Right now these places are all saying "its not about Harvard's students" but that's false; it is very much about their students and what they become while there, whether they entered the college with that point of view or not.  This is not limited by any means to three universities and a few fields either; if you look at all the cyber break-ins over the last few years in very large, and allegedly-capable companies it should be immediately-obvious that the basic problem is that competence is absent in places where it shouldn't be.  That's the fundamental problem with "DEI" when you get down to it; you are hiring, admitting, promoting, passing and generally advancing on metrics other than competence.  This is only possible without getting destroyed by competitors when you can force others to do it too which is why the Ivys getting involved in this has been successful for this long and so has it been in "industry."  It may have taken the Israeli/Palestinian issue to force this abject fraud onto the front page but now that it has it won't go away and the notice that it does and will lead to bad outcomes across industries will get noticed.  This is not a one year thing but my bet (for the point) is that this is the year in which it gains enough currency to be "a thing" and the pendulum shift becomes unmistakable.
  
  
• The big "R" (Recession) will be evident, although possibly not yet declared, in 2024.  Note that the NBER is frequently six months or more behind on that, so anything that officially turns down from June onward is unlikely to be officially declared by the end of the year.  I will take the point if its evident whether formally declared or not, but will not take it if its nebulous or not in evident bloom by the end of December '24 (in other words, I won't cheat.)

As always I reserve the right to amend and add things from now until 12:01 AM January 1st at which point it is what it is and we go forward with the scoring from there.