Memo from the Chief Economist: Lament of a Bear | David Rosenberg

One can reasonably debate whether the stock market has risen exponentially but there is no arguing that the surge in the S&P 500 these past two years has been nothing short of extraordinary. And it has clearly gone much further than I thought it would, especially in these past twelve months, and so at this point, it is worth the time and effort to discuss and interpret the message from the market.
 

 » Smells of capitulation. «

The bottom line: Tip the hat to the bulls who have, after all, been on the right side of the trade, and provide some rationale behind this powerful surge. This is not some attempt at a mea culpa or a throwing in of any towel, as much as the lament of a bear who has come to grips with the premise that while the market has definitely been exuberant, it may not actually be altogether that irrational. Read on.

Quoted from:
David Rosenberg (December 6, 2024) - Memo from the Chief Economist: Lament of a Bear. 

 

See also:

Tom McClellan (December 6, 2024) - Presidential Cycle Effects with a New President.
Steve Miller (December 5, 2024) - S&P 500 Cycle Analysis - Time and Price Projections Update.

BlackRock Investment Institute (December 4, 2024) - Due to 'Mega Forces': No More Bust, Only Boom. Outlook 2025.

Jeffrey A. Hirsch (December 4, 2024) - December Stock Market Performance in Election Years. 

Tom DeMark (November 18, 2024) - US Stock Market Nearing a Top Similar to 1929.
Lars von Thienen (November 1, 2024) - The 41-Month Kitchin Cycle Topping Patterns in US Stocks.
Richard Smith (October 29, 2024) - Equities Endgame? Spectrum Cycle Analysis of US Indices.

D'onte Goodridge (2024) - Structural Characteristics of Bullish and Bearish Months.

Due to 'Mega Forces': No More Bust, Only Boom | BlackRock Outlook 2025

In its 2025 Global Outlook, BlackRock states that the global economy has moved beyond the cycle of 'boom and bust,' driven by a fundamental shift fueled by the rise of "mega forces." BlackRock argues that the world economy is currently undergoing a transformation shaped by five new "mega forces:" (1.) the transition to net-zero carbon emissions, (2.) geopolitical fragmentation, (3.) demographic changes, (4.) the digitization of finance, and (5.) AI.

 Finally, a world forever rosy: No more bust, only boom.

BlackRock, which oversees $11.5 trillion in assets, believes that this "economic transformation" has broken the global economy free from "historical trends" that have seen markets cycle through boom and bust for centuries. "Mega forces are reshaping economies and their long-term trajectories—it's no longer about short-term fluctuations in activity leading to expansion or recession. [...] 2024 has reinforced our view that we are not in a business cycle: AI has been a major market driver, inflation fell without a growth slowdown, and typical recession signals failed." BlackRock anticipates that stocks will benefit from this ongoing global transformation, which will require massive investments from capital markets, potentially rivaling the investments seen during the Industrial Revolution of the 19th and 20th centuries.

If Schumpeter knew: Economy now free of cycles.

 

As a result, BlackRock suggests investors should rethink their strategies, focusing on long-term opportunities, such as capitalizing on the infrastructure needed for this emerging future. "We think investors should focus more on themes and less on broad asset classes as mega forces reshape whole economies. [...] Infrastructure is at the intersection of mega forces—like AI. The AI buildout is creating a huge and immediate need for data centers. Demand for new-build green infrastructure is skyrocketing as countries and tech companies race to reduce emissions."

In the short term, BlackRock expects US stocks to continue their rally in 2025, in line with trends showing US companies outpacing global competitors over the last decade. "We see the US still standing out versus other developed markets due to stronger growth and its ability to better capitalize on mega forces. We’re increasing our overweight position in US equities and expect the AI theme to broaden." A positive US economic growth outlook for 2025, combined with Donald Trump’s tax cuts and deregulatory initiatives, could further boost the prospects for US stocks.

Meanwhile, US-China tensions are expected to intensify competition for resources, such as "copper," as both nations vie for a competitive edge in AI. New import tariffs imposed by Trump could exacerbate the situation. BlackRock also points to aging global populations, which are likely to push up labor costs and keep inflation high, a trend that could be worsened by potential new limits on immigration introduced by Trump.

Reference:
BlackRock Investment Institute (December 4, 2024) - 2025 Global Outlook. Building the transformation.

Presidential Cycle Effects with a New President | Tom McClellan

The Presidential Cycle Pattern suggests that the stock market tends to follow similar patterns during the same points in prior presidential terms. The Presidential Cycle Pattern is calculated by averaging the S&P 500 performance over 4-year chunks. Variations can include factors like whether the president is a first-term or incumbent. 

 

  1st Term Presidential Cycle Pattern November 2024 - January 2026

The chart above compares the stock market performance under new presidents versus incumbents. The green line represents new presidents, while incumbent presidents tend to have a more stable market, especially in the first year of their second term, due to a stronger economy heading into reelection. New presidents often spend their first two years facing crises inherited from their predecessors, which can dampen investor sentiment. Incumbents, by contrast, don’t typically blame the previous administration and tend to have better market conditions in their second term.

There’s also a difference in stock market behavior after an election. When a new party wins, Wall Street initially celebrates, but the enthusiasm often fades when the new president faces the reality of governing, particularly in dealing with Congress. In 2020, the market behaved differently due to massive Fed intervention, with QE4 pumping $1 trillion per month. However, this was reversed in 2022 with quantitative tightening.

  1st Term Presidential Cycle Pattern November 2024 - November 2028

By the third year of a presidential term, stock market trends tend to be positive, with few exceptions like 1931 and 1939. By the election year, early performance differences between first and second term presidents are generally evened out. 

 

Looking ahead to Trump’s presidency, the market may initially react positively to expectations of tax cuts, deregulation, and government efficiency. However, if his policies lead to a balanced budget, historically, that could be bearish for the stock market.

 

Reference:
Tom McClellan (December 05, 2024) - Presidential Cycle Effects with a New President.

 

 

 

 

S&P 500 Cycle Analysis - Time and Price Projections Update | Steve Miller

In early November, both small caps and mid caps took the lead, but they have since paused. Recently, the mega caps have regained leadership, with Apple, Google, Meta, and Microsoft all making sharp moves to the upside. This has contributed to a recent uptick in the S&P 500. On the upside, we have short term resistance levels between 6,073 and 6,176.

S&P 500 (weekly bars), six-month cycles, three-month cycles.

S&P 500 (daily bars), 20-trading day cycle trough is expected on December 7 (±3).

The next 20 trading day cycle low is expected on December 7 (±3 trading days), and the dominant cycle trough is due in late May to June of 2025. The market is clearly in a rising phase, with the weekly trend firmly up. Only a drop below the 5,700 low would shift the market from a bullish cycle structure to a bearish one. On the short-term S&P 500 chart, the current setup resembles Apple’s chart: a bullish, right-hand translation throughout nearly the entire rally.

 

Now there is this very narrow window around December 7 for a pullback. The downside base case would be between 6,025 and 5,963, followed by another move to the upside for a higher high. Overall, this remains a very bullish market during a bullish seasonal period, and fading the trend is not advisable at this time.

Reference:
Steve Miller (December 5, 2024) - US Stock Market - S&P 500 | Price Projections & Timing | Cycle and Chart Analysis. (video)

 

David Hickson (November 25, 2024) - Targets & Levels to Watch - Hurst Cycles Market Update. (video) 

 

Lulled into Permabull Paradise | Callum Thomas

“To put it simply, and probably no one wants to hear it, but this is not a good set up 

— investors and speculators alike have been lulled into permabull paradise.”

 Callum Thomas, December 4, 2024.

 

S&P 500 E-mini Futures (daily bars - December 4, 2024) - Tom DeMark's Sequential 9-13 Setup. 

Another ATH (its 56th of the year), and up for the 11th session in 12.
Its daily MACD and RSI pushed further positive.

December Stock Market Performance in Election Years | Jeff Hirsch

Trading in December is typically holiday-inspired, driven by a buying bias throughout the month. However, the first part of the month tends to be weaker due to tax-loss selling and year-end portfolio restructuring. Over the last 21 years, December’s first trading day has generally been bearish for both the S&P 500 and the Russell 2000. A modest rally through the sixth or seventh trading day often fizzles out as the month progresses. Around mid-month, however, holiday cheer tends to take over, and tax-loss selling pressure fades, pushing the indexes higher with a brief pause near the end of the month. In election years, Decembers follow a similar pattern but with significantly larger historical gains in the second half of the month, particularly for the Russell 2000.

■  A choppy first half of December before the year-end Santa Claus rally.

■ The Santa Claus rally begins on December 24 and lasts until January 3, 2025.

■ The 'January Effect' small-cap outperformance starts in mid-December.

■ See also [HERE], [HERE], [HERE], and [HERE].

 

Small caps tend to start outperforming large caps around the middle of the month, driven by the early January Effect. Our “Free Lunch” strategy is based on stocks making new 52-week lows on Quad-Witching Friday (December 20). The “Santa Claus Rally” (SCR) begins with the market open on December 24 and lasts until the second trading day of the new year. Since 1969, the average S&P 500 gain during this seven-trading-day period has been a respectable 1.3%.

This serves as our first market indicator for the New Year. Years when the SCR fails to materialize are often followed by flat or down markets. Of the last seven instances where our SCR (the last five trading days of the year and the first two trading days of the new year) did not occur, six were followed by flat years (1994, 2004, and 2015), two by severe bear markets (2000 and 2008), and one by a mild bear market that ended in February 2016. The absence of Santa this year was likely due to temporary inflation and interest rate concerns that quickly dissipated. As Yale Hirsch’s now-famous line states, “If Santa Claus should fail to call, bears may come to Broad and Wall.”

Reference:
Jeffrey A. Hirsch (December 3, 2024) - Overbought Markets Pullback During Typical Early December Weakness. 

 

See also:

Jeffrey A. Hirsch (November 6, 2024) - Presidential Election Day to Yearend Historically Bullish.

Jack Gillen (2009) - Year-End Rally, January Effect, and Trend for the Year Ahead.

Consumers have never been more interested in buying stocks. Corporate insiders have never been less interested. 

Pick your fighter. — Jason Goepfert, December 4, 2024.

South Korea: The Sad Chronicles of a US Vassal State

South Korean President Yoon Suk-yeol declared martial law on December 3, 2024. Lawmakers voted against the move, and protesters gathered outside parliament. Yoon framed the declaration as "rooting out pro-North Korean forces", but it was strongly opposed by the parliamentary speaker and even Han Dong-hoon, leader of Yoon's own party, who has clashed with the president over recent scandals. Self-coup, martial law, dictatorship? Megalomania, nut-case, loony bin? Will we hear cries from the US State Department about human rights, democracy, and sanctions, or will they remain silent since South Korea (ROK) is the best-controlled and most diligent US vassal state in Asia, still occupied since 1945 by more than 24,000 US combat troops? South Korea doesn’t even command its own military; the Pentagon does. The American occupation regime systematically destroyed traditional Korean culture and identity. Today, the country is trapped in a death spiral, with the lowest fertility rate in Asia, 350,000 abortions annually, and the highest suicide rate in the world.

 

South Korean President Yoon Suk-yeol's approval rating 

fell to a mere 19% just days before he declared martial law.

 

Maximum dishonor, submission, and degeneracy:
Yoon sings 'American Pie' at Biden's April 2023 state dinner.

 

» Martial law, to root out pro-North Korean forces. «

 

To better understand the realities in South Korea, the following list provides a brief overview of the political turmoil and challenges faced by South Koreans under US occupation since 1948:

1. Lee Seung-man (1948-1960) – The first president of South Korea; overthrown after student protests and widespread unrest.  
2. Yun Bo-seon (1960-1962) – The second president, whose term ended after a military coup.  
3. Park Chung-hee (1962-1979) – Seized power in a 1961 coup and ruled until his assassination in 1979.  
4. Choi Kyu-hah (1979-1980) – Served as president after Park’s death but was deposed by a military coup led by Chun Doo-hwan.  
5. Chun Doo-hwan (1981-1988) – Came to power through a coup, later sentenced to death (commuted to life imprisonment) after his presidency.  
6. Roh Tae-woo (1988-1993) – Former military leader and Chun’s ally, later convicted of corruption and sentenced to prison.  
7. Kim Young-sam (1993-1998) – The first civilian president in decades, he pushed for democratic reforms and prosecuted former military leaders.  
8. Kim Dae-jung (1998-2003) – A former pro-democracy activist who won the Nobel Peace Prize for his policy towards North Korea; was imprisoned and sentenced to death before becoming president.
9. Roh Moo-hyun (2003-2008) – Impeached (later reinstated), faced corruption investigations after his presidency, and tragically committed suicide.  
10. Lee Myung-bak (2008-2013) – Former businessman, arrested after his presidency on corruption charges and is serving a sentence.  
11. Park Geun-hye (2013-2016) – South Korea's first female president, impeached over a corruption scandal, and sentenced to 24 years in prison.  
12. Moon Jae-in (2017-2022) – Elected after Park’s impeachment, a former human rights lawyer who focused on engagement with North Korea and domestic reforms.  
13. Yoon Suk-yeol (2022-present) – Ran on a hardline stance on North Korea, accuses the main opposition party of sympathizing with North Korea and declared martial law on December 3, 2024, "to root out pro-North Korean forces".

   

» He can’t even do martial law properly.«

Kim Jong-un, Supreme Leader of the Democratic People's Republic of Korea (DPRK).

AAII Bull-Bear Spread Signals Bullish Outlook | Duality Research

Despite the S&P 500 at all-time highs, we have just seen the largest 2-week shift in investor sentiment in over a year, according to the latest AAII Survey.

 

 AAII bears outnumber bulls for the first time since late April. 

All that happened after that was a five month win streak. 

Ryan Detrick, November 28, 2024.

Bearish sentiment has surged to its highest level in more than a year, while bullish sentiment has dropped to its lowest point since April. As a result, the bull-bear spread has turned negative. For context, the average AAII bull-bear spread over the past 12 months has been +18.8%.

Duality Research, November 28, 2024.

 

 S&P 500 Election Year Seasonal Pattern 1949-2022. See also [HERE], [HERE], [HERE], and [HERE].

Optimism Is Off the Charts – The Great Piling In | Sven Henrich

Everybody is long. Everything is vertical.

Reference:
Sven Henrich (December 01, 2024) - NorthCast Market Update: The Great Piling In. (video)

 

 NAAIM at 98.9

The Status of the TOY Barometer at the End of November | Wayne Whaley

The way equity markets move from one year to the next often provides insight into what to expect in the following year. One of my favorite Turn of the Year (TOY) barometers is Toy2mt, which tracks the S&P 500's performance over the two months from November 19 to January 19. Historically, when the S&P shows a gain of 3% or more during this period, it has performed very well over the following 12 months (36-2 record, with an average return of 16.6%). I have found that the November component of Toy2mt (November 19-30) serves as an early indicator of what may lie ahead for Toy2mt and the year to come.

As of November 30, six of the first seven Toy2mt days were positive, and the November segment of Toy2mt stands at +1.98%, with bulls targeting a +3% Toy2mt return. Below is the performance for the following 12 months (December-November) since 1950, based on three different levels of the November 19-30 segment of Toy2mt.

 

» If I could make only one trade per year based on one indicator, it would be Toy2mt. «

[HERE], and [HERE]

When the November 19-30 period registers +1.5% or higher, it has typically been a positive signal for the following 12 months (December-November). In 2024, the November 19-30 period came in at +1.98%. It’s still early, and we will learn much more over the next seven weeks.

Wayne Whaley, November 30, 2024.

Cosmic Cluster Days | December 2024

Cosmic Cluster Days (CCDs) and financial markets do not display a consistent polarity or directional bias. However, swing directions, along with swing highs and lows—also within the 'noise channel'—may correlate with or coincide with market movements and reversals. 

 

Cosmic Cluster Day  |   Composite Line  |  Cosmic Noise Channel

○ = Full Moon | ● = New Moon

Nov 28 (Thu) | Dec 02 (Mon) | Dec 06 (Fri) | Dec 08 (Sun) | Dec 18 (Wed) | Dec 19 (Thu) | Jan 03 (Fri) | Jan 04 (Sat)

 

For previous CCDs, click [HERE]. For background on the author, the concept, and the calculation methods, click [HERE]. See also:

 

 Seasonality.

 Sensitive Degrees of the Sun. 

 Geocentric and Heliocentric Bradley Barometers.

 Planetary Declinations.

 Monthly Astro Calendar.

 Lunation Cycle.

 SoLunar Rhythm.

 Chinese 24 Solar Terms.

Trump’s Coming War on BRICS and the Global South | Pepe Escobar

The incoming Trump 2.0 administration is expected to intensify US economic and geopolitical strategies against BRICS and their growing global network. Trump's actions will likely resemble earlier colonial approaches, involving covert regime-change operations, military pressure and intervention, and economic incentives to undermine BRICS and protect US control over resources such as oil and rare earth minerals. The goal is to prevent the new, multipolar world order that reduces US hegemony. This will shape US-BRICS relations and have significant implications for the entire Global South. 

 

Trump's swampy 'realist' approach to international relations contrasts with Biden's 'liberal' approach, primarily in that Trump openly defines the national interest as global, full-spectrum American military and economic dominance, asserting that all wars, sanctions, tariffs, and 'great deals' benefiting his donor class and billionaire peers would also be acceptable to his MAGA crowd of 'hard-working Americans.'  

 

 Goodbye, America. The cheating game of YOU counterfeiters is over.

His administration will aim to sanction any country bypassing the US dollar in trade, targeting the de-dollarization trend supported by BRICS. The de-dollarization movement, gaining momentum, challenges US financial dominance, with BRICS countries increasingly using national currencies and the Petroyuan, and exploring alternative payment systems. 

Marco Rubio will attempt to overthrow the governments

of Cuba, Venezuela, and Bolivia and seize control of their resources.

 

One of the major risks of a Trump 2.0 administration will be the attempt to destabilize the growing connectivity corridors across Eurasia, which are crucial for the strategic partnerships between Russia, China, India, and Iran. These corridors are part of two key axes: a horizontal one spanning across the Heartland from China to the West, including Central Asia, West Asia, and potentially extending to Europe (BRI), and a North-South axis connecting Russia, Iran, and India through the International North-South Transport Corridor (INSTC). This development is critical to Eurasian integration. 

 

» We will coup whoever we want! Deal with it. «

 

As the United States observes these emerging networks, and it sees its influence in Eurasia waning, particularly as BRICS and associated countries assert themselves. In the long term, this shift threatens America's presence and influence, not only in Eurasia but also in Africa. Africa and Latin America remain more complex due to entrenched regimes and comprador elites that support US interests. Overall, this represents a broader bipartisan struggle by Washington against the integration of Eurasia and the Global South, which undermines the unipolar world order that the US has historically maintained.

Trump’s Coming War on BRICS — Pepe Escobar, November 28, 2024.

 

In Latin America, Venezuela, a quasi BRICS country, economically aligned with China, Russia, Türkiye, and Iran, remains a major obsession for the US, which is expected to escalate sanctions and covert actions to oust the Maduro government in order to gain access to the world's largest reserves of hydrocarbons, to gold, bauxite, iron ore, uranium, diamonds, and rare earth elements. Bolivia, which has the world's largest lithium reserves and is rich in natural gas, tin, silver, and copper, will be treated in a similar fashion by the US. Washington think tanks still consider Brazil a 'swing state,' and controlling the policies of South America's industrial giant remains central to US efforts to limit and sabotage BRICS in the region.

 

 Spotted in Caracas, October 2024.

 

However, in recent years, US attempts at assassinations, regime change, maximum pressure sanctions, hybrid wars of all sorts, and the installation of puppet leaders like Jeanine Áñez, Juan Guaidó, María Corina Machado, and Edmundo González have become increasingly unsuccessful (with Javier Milei or Daniel Noboa appearing more as temporary exceptions). And China, Russia, and Iran will not simply allow Venezuela being looted by Trump, Musk, Rubio, Prince, and other swamp creatures from South Florida.

 

» Facts have proven that the US is the biggest source of chaos in the international system [...] From Afghanistan to Iraq, 

from Ukraine to Gaza, all these crises and conflicts are the result of the self-serving double standards of the US. « 

— Jing Jianfeng, Lieutenant General of China’s People’s Liberation Army, Singapore, June 16, 2024.

 

Saudi Arabia's shift toward full BRICS membership would mark a major change in global financial power. Trump will likely apply diplomatic pressure or sanctions such as asset-freezing to prevent this, as US influence over global oil markets is already diminishing rapidly. Africa will see intensified efforts to counter mainly China’s and Russia’s investments in infrastructure and energy. Also, Trump will likely increase sanctions and, eventually, together with the French and the British, support destabilization, e.g., by terrorist jihadis, as well as blackmail, assassination, and regime-change tactics to prevent further integration of African nations with BRICS.

 

» The US is at war with the rest of the world [...] the war in Syria is a microcosm of World War 3  through proxies. «
— Syrian President Bashar Al-Assad, November 28, 2024.

 

See also:
Dmitry Skvortsov (November 25, 2024) - Trump's Plan to Ruin China.

 Scott Ritter (November 3, 2024) - The United States Exists for War.

Martin Armstrong (October 31, 2024) - BRICS Will Not Kill the Dollar—War Will.

Francisco José Fernández-Cruz Sequera (October 30, 2024) - Global MAGA-nomics. 

Jin Canrong (October 3, 2024) - The US-China Competition in Southeast Asia.
Viktor Orbán (August 28, 2024) - Facing Global System Change.

MFA of the People's Republic of China (February 20, 2023) - The US' Military Hegemony: Wanton Use of Force.