- Solar cycles appear to influence human behavior and financial markets, with major financial crises like the Great Depression and 2008 crisis occurring during peaks in solar activity. - Solar peaks are correlated with stock market peaks, while the impact on the real economy is less direct. Commodity inflation is more closely linked to solar cycles. - The 1920s saw stock market gains but a shrinking money supply, while 1929 saw a spike in money velocity just before the crash. The 2008 crisis reflected underlying corporate solvency issues rather than a liquidity problem. - Current conditions like lower Chinese copper imports and surging copper inventories suggest weaker industrial production and a stronger dollar, with disinflationary pressures in the coming months as

1. Solar Cycles Regulate Markets And Human
Activity
● This week we explore the
impact of solar cycles and
human mis judgement during
several financial crises of the
past 100 years. All began
during solar peaks and as a
consequence of a
combination of central bank
policy mistakes and
irrational exuberance by the
investment community at a
time that solar activity, as
correlated, appears to skew
rational thought.

2. Solar Cycle History
● While it is evident that
solar peaks are aligned
with stock market peaks
the correlation with the real
economy is not quite as
phased. In fact, it may be
argued that stock market
illiquidity is often followed
economic decline at some
forward time interval.

3. Solar Cycles and Inflation
● The link to commodity
inflation seems more
straight forward and
sometimes regardless of
money supply and velocity
considerations as was the
case in the 1920s
preceding the Great
Depression.

4. The Not So Roaring 20s
● Despite tremendous gains in
the stock market the U.S.
And rising commodity prices
during a second solar max
following a massive one
during WW1 Money supply
steadily diminished during
the 1920s.

5. 1929 and 2008 Comparison
● Interestingly, despite a
decline in m1 m2 during the
1920s , money velocity
spiked just before the crash.
Then, massive monetary
deceleration followed leading
to a massive deflationary
bond rally. Similar conditions
are underway now as
velocity generally remains in
a downtrend.

6. Monet Supply Vs Velocity
● Interestingly m2 money
supply increased rapidly into
2009 even as velocity slowed
Much of that liquidity
migrated first to treasury
securies and eventually to
other fixed income securities
as the search for yield was
on in an era of falling interest
rates. That phenomena
persists today.

7. Insolvency Vs Illiquidity
● This is a key distinction given
the data as indicated. The
crisis in 2008 was not a
sudden liquidity problem as it
was in 1929. It was a
solvency and likely a political
crisis given the nature of the
selloff and its timing with
respect to presidential polls.
This was a classic crisis of
confidence manifest as a
systemic meltdown.
Unfortunately Fed policy
action has left nothing “in yhe
tank”

8. Corp & Treasuries During Crisis
● In my estimation the
corporate bond sell off in
2007-2008 indicates the
crisis was a solvency
issue; not a liquidity issue.
The fed response
precludes it from
responding to a solar and
temperature induced
deflation crisis now and
going forward until the
solar minimum.

9. Swap Spreads at 2009 Lows
● It is notable that corporate
swap spreads are at
similar levels as at the
March 2009 lows in the
overall market and at the v
shaped beginning of a
tremendous bull market.

10. Corporate and Long Treasuries Now
● Corporate bond action is and
has been MUCH healthier
overall during this 19 month
sideways correction. Price
appreciation there all around.

11. All 20% declines at Solar Peaks
● For a variety of reasons all
annual 20% declines in the
total stock market have
occurred at solar maxes and
for a variety of reasons
concerning human mis
judgement. None have
occurred at solar minimums
even when ongoing deflation
occurs. Commodity inflation is
not necessary for overall equity
price appreciation. In fact, the
opposite is likely healthy for
markets with attending lower
inflation.

12. Why The Phillips Curve is Fictional

13. However!
● Not to sound contradictory
but employment rates ARE
tied to manufacturing output
and consumption and worker
productivity. Competitive
efficiencies keep interest
rates and inflation low
relative to nominal wages,
made systemically more
valuable in such conditions.
Similar to businesses,
individuals become more
valuable when they are able
efficiently retain earnings. It's
all “One”

14. Chinese Copper Imports
● On to current global
conditions. Suddenly and
following recent annual
cyclicality, China copper
imports are down; a good
proxy for industrial
production. They see winter
approaching quickly.

15. Copper Inventories spiking
● As imports diminish
inventories are surging. This
favors domestic U.S. Stocks
and a stronger dollar as
China may weaken currency
to spur exports again. Rinse,
wash repeat. U.S. Domestic
input costs can drop as
strength comes from service
sector; not so much
manufacturing exports.
Continuing diminishing low
solar induced market
behavior.

16. Post 2008 AGW Scare
● The chinese and others
essentially cornered the
commodities markets
artificially bidding up prices in
response to peak commodity
supplies from manmade
global warming. The opposite
is occurring as the sun goes
quiet and George Soros goes
to war with China and Russia
given his bad advise.

17. Crude Inventory Change
● Rig counts up. Supply
Up. Seasonal price
weakness
approaches fast. Just
sayin.

18. Urban Consumer Inflation
● Seasonal cyclical price
deflation begins anew near
and far. Given diminishing
solar into 2022 or beyond
that this won't continue with
disinflation or outright
deflation in the fall and winter
an some price firming during
Spring and early summer. It's
all about the sun and
temperature variance as
people as mammals
hibernate and slow down.

19. Treasuries Vs. S&P Yield
● With inflation easing again it
is notable that the spread
between the 10 tr note and
the S&P is about 80 basis
points. (1.57% vs 2.55%)
Assuming treasury yields
ramain that low or even fall,
with any earnings
improvement from lower
input costs and sustainable
PE multiples, the S&P would
need to appreciate about
90% to reach par at current
spreads (presuming my math
is correct)

20. Weekly Sentiment
● Weekly AAII sentiment
havedropped back to the
highs 20s. As a contrary
indicator, that's bullish. It's
remained below 40% for
months. Again, consistent
with rational subdued
thinking and low solar.

21. 50 Day Moving Average Turns
● Perhaps another bullish sign;
the 50 day moving average is
turning higher.