I am willing to make a bet with you.

In four years, the unemployment rate will be much higher than the 4.6% reported today by the Department of Labor which is the lowest number in a decade.

The jobless rate may decline more initially thanks to deficit financed government reflationary programs.

However, the US will fall into a deep recession within the next three years, triggered by high inflation, rocketing interest rates, and a strong US dollar.

And while growth will rise next year and in the following year, it will be posting negative numbers by 2020. The overall net growth in the economy over the full four years will probably come in at zero.

And where will the job losses be the greatest? In the industrial rust belt states of Pennsylvania, Michigan and Indiana.

So, there is your new investment strategy.

Rape, pillage, and plunder now, but don?t forget to find a chair when the music stops playing. The big money will be made on the short side down the road.

You may have been a long-term investor until now. From here on, you have to trade or die.

Yes, my Golden Age scenario for the 2020s is still intact. But the demographic wave that will drive it doesn?t start for five more years.

The November Nonfarm Payroll Report came in dead on expectations at 178,000. The U-6 long-term structural unemployment rate also hit an eight-year low at 9.3%.

Hourly earnings fell by 0.1%.

Professional and business services jumped by 63,000, health care by 28,000, and construction by 19,000. Retail jobs declined by 8,000.

The ongoing seven-year economic recovery continues.

Of course, by the time you read this, the outcome of the Italian elections on Sunday will be known.

The country is voting on constitutional reform which may grant more power to their lower parliamentary house. Heaven knows they need it. Italy has seen 63 governments since 1945.

If reform fails, Prime Minster Matteo Renzi will resign and the Euro (FXE) will crash. If it wins, the Euro and European stock markets will rally, especially the banks.

With one of the most difficult markets in history in the rear view mirror, a lot of traders will start to wind down their activities early this year.

The stock market has gone about as far as it can on the few hints of economic policy we have received so far from the future Trump administration.

Investors won?t be able to make any major moves until they get their capital allocations and sector weightings for the New Year. So the Trump bump has pretty much run its course.

The only event to trade off of for the rest of 2016 will be the Federal Reserve meeting on December 13-14. Will it be a 25 basis point snugging now, or will Janet go for the full 50 basis points?

I expect markets to trade in narrow ranges until then.

As for the coming week?s data releases:

Monday, December 5th at 9:45 AM EST, we get the PMI Services Index.

On Tuesday, December 6th at 10:00 AM EST, we get a new update on October Factory Orders.

On Wednesday, December 7th at 10:00 EST, the Labor Department?s October JOLTS report is released, showing us the changes in job openings. This is a deep lagging report so I don?t pay it much attention.

At 10:30 AM the EIA Petroleum Status Report will give us updated inventory numbers. Will oil peak out here? Or does it have a few more dollars to run?

Thursday, December 8th, we learn the Weekly Jobless Claims at 8:30 AM EST.

On Friday, December 9th, we learn December Consumer Sentiment which will almost certainly show an uptick, now that the presidential election is over.

Keep in mind that virtually all economic indicators will be useless for the next two months, because they will only reflect spending and investment conditions prior to the November 8th presidential election and will be for a world that no longer exists.

Is the world running out of diamonds?

No, it?s worse.

The world is running out of diamond demand.

That is the only conclusion one can reach when looking at the chart below for polished diamonds for the past four years showing a 25% decline.

The diamond industry now produces 125 million carats a year, well down from 187 million ten years ago.

This is clearly not your father?s diamond market.

In the old days, you could rely on this highly concentrated form of carbon to appreciate an average of 5% a year over the long term.

Just for fun, I recently appraised the diamond I purchased for my late wife which I bought from a Hasidic Jew in an alley off of Manhattan?s West 47^th street. He kept his inventory hidden in an envelope in his sock.

How times have changed!

The two-carat, VVS1, round cut, yellow diamond that I paid $3,000 for in 1977, would fetch $39,800 today. Great trade!

However, now the rock solid investment thesis that underlay diamonds for so long is now turning to sand.

The problem is the millennial generation which fails to see the value in the sparkly rocks seen by previous generations. Their discretionary spending instead goes into the latest electronic device, game, or Tesla.

Indeed, there is far more competition for the luxury dollar than in the past.

A luxury ?glamping? safari in an African game reserve can easily set you back $30,000, the cost of an investment grade two carat diamond ring today. So will the private jet to get you there.

Kids this age are still about ten years away from when income, family formation, and spending patterns start to favor diamonds.

That leaves the current Gen Xers to support the market. However, there are only 65 million of them, compared to 85 million Millennials. Hence the softness in prices.

In 2015, global sales of diamond jewelry fell by 2% to $79 billion, the first decline in six years. Sales of rough diamonds plunged by 30% as dealers cut inventories in a soft market.

Structural changes in the industry are also having an impact.

DeBeers had a 90% world market share during the 1980s, and spent massively on advertising its product, some $200 million a year.

Now they account for only 31%, and the advertising spend has similarly withered.

Another problem is that the buyers of the very large diamonds in the Middle East have seen oil income shrink beyond imagination.

Industry analysts were shocked when the Lucara Diamond, at 1,109 carats, the largest discovered in 100 years, failed to sell at auction in June.

Government anti-corruption efforts in China have had a similar drag.

And let's face it. The diamond industry has not exactly been at the cutting edge of technology.

Stodgy marketing strategies enabled Internet start-ups like Blue Nile (NILE) to come out of nowhere and seize an important part of the retail trade. (NILE) recently announced blockbuster sales that took its stock up an eye popping 35% in a single day.

In 2011, Anglo American took control of the Oppenheimer family owned DeBeers for $5.1 billion.

Another problem can be found in the middle tier of the diamond market, the so called ?sightholders.? These are the dealers, cutters, and retailers largely based in Antwerp, Belgium (great moules mariniere there by the way).

Since the 2008 financial crisis, banks have withdrawn loans from the industry, citing secrecy and the lack of transparency. This has lead to a wave of bankruptcies of small firms and the consolidation of the rest.

Industry veterans are still optimistic about the future.

The US accounts for about half the world market, so the new frugality will be a challenge. Perhaps Trump inspired inflation will jolt this market back to life.

As standards of living steadily rise in China and India, and more western social practices are adopted, so should diamond consumption.

This could also be the greatest Millennial play of all time. If the past is any guide, Millennials DO eventually adopt their parents' spending patterns.

They just do it much later than we did, another possible outcome of the financial crisis.

To avoid a week on the sofa, you might even think about buying next year?s Valentine?s surprise early, like NOW.

The 1,109 Carat Lucara Diamond