Category Blogger Martin Armstrong

May 18 2026

Medical AI Breakthroughs – The Future of Medicine


Posted originally on May 18, 2026 by Martin Armstrong |  

For years, many people dismissed artificial intelligence as little more than a threat to jobs or another speculative technology bubble. Yet beneath the political noise and media hysteria, one of the most important medical revolutions in modern history is quietly beginning to emerge. Artificial intelligence is now helping doctors detect diseases earlier, develop drugs faster, personalize treatments, and potentially save millions of lives that otherwise would have been lost under traditional medical systems.

One of the most important breakthroughs this year came from researchers at the Mayo Clinic, where a new AI system demonstrated the ability to detect pancreatic cancer up to three years earlier than doctors typically can using conventional scans. Pancreatic cancer remains one of the deadliest forms of cancer because symptoms often appear only after the disease has already advanced. The five-year survival rate in the United States remains near just 12% to 13%. The new AI model identified subtle structural abnormalities invisible to the human eye and successfully detected early-stage warning signs in roughly 73% of patients long before formal diagnosis occurred.

That is the critical point many people fail to understand about AI in medicine. The technology is not simply “thinking faster” than humans. It can analyze patterns across millions of data points that no physician could reasonably process alone. In imaging systems such as CT scans, MRIs, and X-rays, AI can detect microscopic irregularities years before symptoms emerge. Early detection changes everything because most cancers become dramatically more survivable when caught early enough. The AI hysteria skips out on the benefits the technology will bring to humanity.

We are also seeing AI dramatically accelerate drug discovery itself. Traditionally, developing a new drug could take 10 to 15 years and billions of dollars in research costs. AI systems are now capable of simulating molecular interactions, identifying promising compounds, and narrowing viable candidates in months rather than years. Researchers at St. Jude Children’s Research Hospital recently used AI-assisted genetic analysis to identify new cancer drug targets with lower risk of side effects, which could eventually improve treatments for multiple solid tumors.

Cancer treatment itself is also becoming increasingly personalized because of artificial intelligence. Instead of giving every patient identical therapies, AI systems can analyze genetic profiles, tumor mutations, immune responses, and patient histories to tailor treatments to the individual. Personalized cancer vaccines using mRNA technology are now advancing rapidly through clinical trials, particularly in melanoma and kidney cancer research.

Another major shift is taking place in robotic and AI-assisted surgery. Advanced robotic systems are beginning to combine real-time AI guidance with 3D anatomical modeling, allowing surgeons to operate with greater precision and fewer complications. Medical technology firms now openly discuss a future where surgeons may have instant access to dynamic “digital twins” of organs during operations, reducing risk and improving outcomes.

The aging Boomer population may ultimately benefit the most from these breakthroughs. AI-powered monitoring systems are already being developed that can predict cognitive decline, dementia progression, heart attacks, and fall risks before symptoms fully appear. Researchers reported that speech-analysis AI systems are now predicting Alzheimer’s progression with accuracy levels exceeding 78% in some studies.

Healthcare itself generates enormous amounts of data that humans alone struggle to fully interpret. Every scan, blood test, genetic sequence, pathology report, and patient history contains patterns. Determining how that data is collected in another topic.

What makes this so economically important is that healthier populations are more productive populations. Earlier diagnoses reduce long-term treatment costs, lower hospitalization burdens, and improve quality of life. The economic implications alone could reshape healthcare spending globally over the next decade. We have the ability to make computers work for us rather than against us. AI does not want to conquer the world as some sentient Terminator like monstronsity. The technology is there for our benefit if we know how to utilize it properly. There will be those who use AI to kill on the battlefield, and others will use it to save lives. Demonizing AI misses the mark. Technology simply helps human advancement and will be bent to accommodate human nature, which in itself could perhaps be demonized at times.

Beneath all the fear surrounding AI, there is another story unfolding. For the first time in modern history, medicine may be shifting from treating diseases after they emerge toward predicting and preventing them before they become fatal. That may ultimately become one of the most positive developments of this entire technological cycle.

Categories:AI ComputersDisease

May 18 2026

Japanese Are Feeling the Economy Collapse in Real-Time


Posted originally on May 18, 2026 by Martin Armstrong |  

costoflivingcrisis

Japan spent decades trying to convince the world that endless debt, money printing, and zero interest rates could continue indefinitely without consequences. Now ordinary Japanese citizens are beginning to feel the pressure directly as inflation rises, wages fail to keep pace, and living standards steadily deteriorate underneath the surface.

For the first time in generations, Japanese households are experiencing sustained cost-of-living stress while confidence in economic stability weakens sharply. Recent polling showed more than 80% of Japanese households now believe prices are rising faster than their incomes, while consumer confidence remains near recessionary levels despite years of government stimulus and intervention. Food inflation, utility costs, transportation expenses, and housing-related costs have all risen materially as the yen weakened dramatically against the dollar over recent years.

The psychological impact inside Japan is enormous because the country spent decades living through deflationary conditions where prices remained relatively stable. Japanese consumers became accustomed to stagnant prices and low borrowing costs. Once inflation finally arrived, the shock to household budgets was immediate.

Rice prices alone surged more than 20% year-over-year at one stage while basic food staples, imported goods, fuel, and electricity all moved sharply higher. Japan imports enormous quantities of energy and raw materials, which means yen weakness translates directly into higher consumer prices across much of the economy.

This is exactly what I warned would eventually happen once central banks lose control of sovereign debt cycles.

Japan now carries government debt exceeding 260% of GDP, the highest among major industrial economies. For years the Bank of Japan artificially suppressed interest rates and monetized government debt through massive bond purchases. The BOJ effectively became trapped because allowing rates to normalize aggressively would destabilize the government’s own financing structure.

Now Japan faces the consequences of that trap.

The yen weakened substantially because interest rate differentials between Japan and the United States widened dramatically after the Federal Reserve raised rates. That currency decline temporarily benefited exporters but crushed household purchasing power because imports became far more expensive. Ordinary Japanese families are now paying materially higher prices for necessities while real wage growth remains weak.

The younger generation feels this particularly hard. Many younger Japanese workers already struggled with stagnant wages, temporary employment contracts, and rising urban living costs before inflation accelerated. Now household budgets are increasingly consumed by food, transportation, rent, utilities, and taxes while long-term financial security becomes harder to achieve.

An aging population means fewer workers to support expanding pension obligations, healthcare systems, and government debt burdens simultaneously. The country increasingly depends on monetary intervention to stabilize the system financially, but monetary intervention itself weakens the currency and fuels imported inflation.

The media continues portraying Japan as stable because social order remains intact and unemployment is relatively low, but confidence underneath the surface is weakening steadily. Consumer spending has softened repeatedly because households are becoming more defensive financially. Savings rates are under pressure. Retailers continue raising prices gradually after decades of avoiding increases entirely.

This is why the ECM projected sovereign debt instability as the defining issue globally into this decade. Japan was always the leading example of what happens when governments attempt to indefinitely postpone economic reality through debt expansion and monetary manipulation.

Japan avoided the violent banking collapse seen elsewhere during previous crises, but the long-term consequence has been decades of economic stagnation slowly eroding national vitality underneath the surface. Inflation is now exposing those structural weaknesses directly to the population.

The Japanese people are feeling the economy weaken in real-time because daily life itself is becoming more expensive while financial security becomes harder to maintain. Once households begin losing confidence broadly in future living standards, the political and economic consequences eventually follow.

Categories:Japan

May 18 2026

Taiwan in the Crosshairs


Posted originally on May 17, 2026 by Martin Armstrong |  

Taiwanese_Dollar_Spot M 5 14 26

President Trump is recommending that chip manufacturers IMMEDIATELY move their manufacturing facilities to AMERICA. The conversations with Xi have confirmed how China will move to take over Taiwan. Chip manufacturing is essential for AI and technology in general. Taiwan is the world’s chip manufacturing center at the moment. That’s one of the main reasons China wants to take Taiwan, for it is also a geopolitical play.

Trump is saying that he would like to see everybody making chips in Taiwan come into America. He also expects that the USA will have 40% to 50% of the world chip business by the end of his term.

We saw May as a Directional Change and a Panic Cycle appears in July leading into August. Keep in mind that with the US tied up in Iran, I warned that this would be the time for a conflict over Taiwan. Macron visited China and told Xi they will NOT intervene with respect to Taiwan. The next major turning point in Taiwan is 2027.33.

May 18 2026

The Lockdowns Begin


Posted originally on May 17, 2026 by Martin Armstrong |  

Modi

From our staff on the ground, they have reported that Modi has gone through with what many were suspecting – a lockdown to save energy.  Modi has officially announced a partial lockdown asking people to work from home, commute as little as possible, and use less cooking oil too as India must save its FOREX reserves.

We will expect this to unfold in Europe eventually.

May 17 2026

Singaporeans are Feeling the Economy Grow in Real-Time


Posted originally on May 17, 2026 by Martin Armstrong |  

economicexpansion

Singapore has become one of the clearest examples of what happens when global instability pushes capital toward safe and efficient financial hubs. While much of the developed world struggles with declining middle classes, inflation pressure, weak currencies, and deteriorating public confidence, Singapore is absorbing enormous inflows of wealth, businesses, financial firms, and highly skilled workers from across Asia and the West.

People inside the country can feel the difference directly. Singapore’s economy recently expanded roughly 4–5%, outperforming many advanced economies despite global instability. Private wealth inflows surged sharply over the past several years as high-net-worth individuals relocated assets, family offices, and businesses into the city-state. Singapore now hosts more than 2,000 family offices, up from only a few hundred several years ago, making it one of the fastest-growing wealth management centers in the world.

Money is pouring into the system from everywhere. Chinese capital seeking stability, Western investors avoiding political uncertainty, technology firms restructuring operations, and multinational corporations diversifying Asian headquarters have all contributed to the surge. Banking, finance, artificial intelligence, semiconductor industries, pharmaceuticals, logistics, and high-end services continue expanding rapidly throughout the country.

Unlike many Western governments, Singapore largely focused on maintaining competitiveness rather than overburdening productive sectors with excessive bureaucracy or energy self-destruction policies.

Changi Airport continues expanding aggressively as passenger traffic rebounds strongly. Luxury real estate prices surged as wealthy migrants relocate into the country. High-end retail sales remain elevated while restaurant, tourism, and financial sectors continue benefiting from rising international inflows. Singapore’s port remains one of the busiest on earth while the country continues strengthening its role as a global trade and shipping hub.

Ordinary Singaporeans are feeling this through stronger employment conditions, rising wages in high-skilled sectors, and long-term economic stability relative to much of the world.

Median household incomes continued rising while unemployment remained relatively low around 2%. Inflation pressures emerged after the pandemic, but they remained significantly more controlled than in Britain, Canada, or large parts of Europe. The Singapore dollar also remained comparatively stable while many global currencies weakened sharply.

In much of the developed world, populations increasingly feel governments lost control over inflation, migration, debt expansion, and living costs. Singapore projects the opposite image, order, efficiency, infrastructure investment, and financial discipline.

The government also aggressively positioned Singapore as a center for technology and AI investment. Semiconductor manufacturing, digital banking, biotech, and advanced logistics industries continue attracting billions in investment. Nvidia, Google, Microsoft, Amazon, and major global financial institutions all continue expanding operations throughout the region.

Singapore benefits enormously from its geographic position as well. It sits directly at the center of Asian trade routes while remaining politically stable compared to rising tensions elsewhere in the region. As geopolitical fragmentation accelerates between the United States and China, companies increasingly want neutral and reliable regional hubs.

The city-state also avoided many of the structural mistakes visible across the West. Europe weakened industrial competitiveness through energy costs and overregulation. Canada and Britain inflated housing and debt bubbles while middle-class purchasing power deteriorated. Singapore maintained a long-term focus on attracting investment, developing infrastructure, controlling corruption, and preserving financial credibility.

None of this means life is perfect there. Housing costs remain extremely high. Competition is intense. Cost-of-living pressure still affects lower-income workers. The country depends heavily on global trade flows, meaning a severe international slowdown would still impact growth materially.

But relative to much of the developed world, Singaporeans increasingly feel they are living inside one of the few functioning economic systems left. The broader global pattern is becoming clear. Capital is abandoning politically unstable, debt-saturated, and overregulated regions while concentrating into efficient financial and commercial hubs capable of preserving stability and opportunity. Singapore has become one of the largest beneficiaries of that shift.

May 16 2026

The Old Days of Open Cry Trading


Posted originally on May 16, 2026 by Martin Armstrong |  

Silver Kilo Bar Engraved by Emerald R

COMMENT: Mr. Armstrong, I retired from Wall Street and from your favorite competitor. You earned the nickname “the legend” because you were the greatest of all traders. We always watched your plays. You would roll the dice, and you did inspire fear in everyone’s eyes. Many could not believe you had a computer that was that good. The word was always that you had more contacts than anyone else and were infallible. I just wanted to say you paid the price for your discovery, and as a subscriber to Socrates, your computer is light-years ahead of anyone else’s.

I was there as a young trader when you took on all the firms and systematically took down all the silver traders including Warren Buffett. That trade would have made a movie like the Big Short look appear as child’s play. You should hold a conference on how to trade. I would attend even being retired.

K

Silver Trade

ANSWER: Yes, that trade I will always remember. The guys on the floor warned what was going on and that I would be taking on everyone. It was a lot of fun. I used Emerald Trading on the floor. That trade was legendary. They signed those bills when it was all done.

March 1997 Silver Manipulation

I will tell you a secret. I know what you mean when I rolled the dice I could see the fear in their eyes. That was the fun of trade in the old days. I shorted that market, took them all out, covered all my shorts, and actually went long. It was clear they assumed I was still covering shorts. I told the boys on the floor then to get aggressive in bidding to show them I was now long. I heard them scream on the floor, “He’s F–king long!” They then scrambled buying everything they could taking the market up. It was such a fun time. Forget the money. It was taking on all the bankers and watching them panic. As you said, the fear in their eyes.Audio Player

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MA Original Charts

Those were the good old days. I did my charts by hand. I framed this chart up to remind me of the good old days. But everything has changed. The ticks are just flashes on a screen now. I’m not sure if I could have learned how to trade in today’s world. I could see every tick, the quantity, and the sound.

Translux Ticker Tape

I was probably the last to have a paper tape. I remember TransLux coming in saying they had to take it. With a paper tape, you never missed anything. The sound would sound like a machine gun.Audio Player

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Original Research F

I would plot tick by tick. That taught me patterns. Floor trading (also known as open outcry) for precious metals futures on the COMEX division of the CME Group technically still exists. However, it is no longer the primary method of trading. In practice, the vast majority of COMEX gold and silver futures trading has migrated to the CME Globex electronic trading platform.

Livermore 1923

Jesse Livermore’s legendary trading career began as a “board boy” in a Boston brokerage, where his job of posting prices on a large chalkboard led him to discover recurring patterns in stock movements. His early years perfectly demonstrate how systematic observation can lead to pattern recognition. At the age of 14, Livermore worked for Paine Webber, where he would listen for price quotes shouted out by the ticker boy and quickly write them on a large chalkboard covering the firm’s wall.

Jesse saw the patterns like I did from working with the data directly. On November 12th, 1923, Jesse turned bullish. Just like me, they attacked him because they did not like his forecast. The Wall Street Journal falsely accused Jesse Livermore of turning bullish on the market because he was friends with the president. The Journal accused him of trying to influence the presidential election. When the market broke out and rallied, all the other publications took swipes at the WSJ saying everyone reported Jesse’s comments “except” the WSJ.

Law John

John Law’s contribution saw supply and demand before his eyes as a trader and they said a gambler. Academic sources confirm that Law held a “demand-and-supply theory of value” and was one of the first economic writers to systematically use the concepts of demand and supply in his analysis. He applied this framework to money, introducing the term “the demand for money” and analyzing inflation within a supply-and-demand framework. His major work, Money and Trade Considered (1705), presented these revolutionary ideas well before they became common.

Ricardo David C

David Ricardo was a highly successful stock trader on the London Stock Exchange, and his practical experiences in the financial markets directly shaped his economic theories. Contemporary observers noted his “extraordinary quickness in perceiving the turns of the market” and his ability to spot “accidental difference which might arise between the relative price of different stocks.”  These skills directly parallel the quantitative trading strategies used by modern hedge funds.

Trading Tape

There is a common thread that runs through us all – TRADING. There are some things that cannot be taught. You have a “feel” for something or you do not. There is a HUGE difference between being s TRADER and an INVESTOR who buys and holds. A TRADER looks at a chart and sees instantly a bull or bear market. You are engrossed and taught by the patterns.

Armstrong 1985 IBM XT Australia

Me 1985 With an IBM XT

That is what I sought to code into Socrates. Above all, how to deal with pattern recognition.

May 15 2026

Skilled Trade Rises in Value


Posted originally on May 15, 2026 by Martin Armstrong |  

What Is a Blue-Collar Worker? (With Careers and Skills) | Indeed.com

For decades, society pushed the idea that success only came through a four-year university degree while skilled trades were treated as second-class careers. That entire model is now beginning to reverse in real-time. The economy simply cannot function without electricians, welders, plumbers, HVAC technicians, mechanics, linemen, machinists, and construction workers, yet governments and universities spent years encouraging younger generations away from those professions. What we are witnessing now is the economic consequence of that social engineering experiment.

The average age of skilled trades workers across many industries is now approaching the late-40s to early-50s. Retirements are accelerating while too few younger workers are entering the pipeline to replace them. According to estimates cited by JLL, as many as 2.1 million skilled trade positions in the United States could remain unfilled by 2030, creating potential economic losses approaching $1 trillion annually.

At the same time, demand is exploding because multiple infrastructure cycles are colliding all at once. AI data centers require enormous electrical capacity. Semiconductor factories need industrial construction workers and technicians. Power grids are being rebuilt. Manufacturing facilities are returning to North America. Renewable energy projects, pipelines, battery systems, transportation infrastructure, and industrial automation all require physical labor that cannot simply be replaced by artificial intelligence.

The result is that wages are now rising aggressively across the skilled trades. Electrician wages alone have climbed substantially over the past several years as labor shortages intensify. Recent labor data shows the median annual wage for electricians reached approximately $62,350 nationally, while the top 10% now earn over $106,000 annually.

In high-demand regions tied to AI infrastructure and energy expansion, compensation has surged even further. Some electricians and specialized technicians working on major AI data center projects are reportedly earning between $240,000 and $280,000 annually once overtime and premium project rates are included.

Construction workers tied to data center projects are now earning roughly 32% more than workers on traditional construction projects, averaging nearly $82,000 annually according to recent hiring platform data.

This is where the mainstream economic narrative completely failed. Governments assumed everything would become a digital service economy where everyone sat behind screens while production moved overseas. But once globalization fractured under sanctions, trade wars, and geopolitical instability, countries realized they could no longer rely entirely on foreign supply chains. Capital is now flowing back into domestic manufacturing, energy infrastructure, and industrial rebuilding.

The irony is that many skilled trades now pay better than white-collar office jobs requiring massive student debt. Experienced welders, industrial mechanics, elevator technicians, and plumbers are increasingly earning six-figure incomes while many university graduates struggle under student loans and face growing AI displacement risks in administrative office work.

Even major technology leaders are openly acknowledging this shift. NVIDIA CEO Jensen Huang recently stated that the AI boom will create enormous demand for electricians, plumbers, steel workers, network technicians, and construction workers because AI infrastructure requires “the largest infrastructure buildout in human history.”

Meanwhile, many white-collar entry-level jobs are becoming increasingly vulnerable to automation. Artificial intelligence may replace administrative work, but it cannot physically labor. Civilization itself still depends on physical infrastructure functioning properly. Past generations flocked to the classroom, wound up with debt, and now youth unemployment is through the roof. The economy needs blue-collar workers immediately. The labor shortage has become so severe that companies are now directly recruiting high school graduates into apprenticeship programs. Apprenticeship enrollment has risen sharply across many states after years of decline as younger workers begin realizing the trades may offer greater financial security than traditional university paths. Trump even came out and said that his administration would begin funding such programs to fill the gap.

The younger generation is starting to recognize this opportunity. A degree no longer equates to a solid financial future. Economic security may no longer come from chasing unstable corporate office jobs, but from acquiring practical skills tied directly to infrastructure, manufacturing, transportation, and energy. Those sectors cannot disappear because modern civilization depends entirely on them operating properly. I’ve noted the value of apprenticeships. Real-world experience is far more valuable than what one could learn in academia. Traders on the ground level know far more about the markets than someone who’s never had money on the line. It is something that absolutely cannot be taught in a classroom.

What we are witnessing may ultimately become one of the defining labor shifts of this decade. Capital is moving back toward tangible production. People capable of physically building and maintaining society are indispensable.

Categories:USA Current Events

May 15 2026

Europe No Longer Trusts America With Its Data


Posted May 15, 2026 by Martin Armstrong |  

AI.DataCenter

Europe is now openly discussing restricting Microsoft, Amazon, and Google from handling some of its most sensitive government data, including financial records, judicial files, and healthcare information, and this marks a major turning point in the relationship between Europe and the American technology sector.

According to reports surrounding the European Commission’s upcoming “Tech Sovereignty Package,” Brussels is preparing measures that could limit how foreign cloud providers manage sensitive public-sector workloads, specifically targeting the dominant American firms that currently control most of Europe’s digital infrastructure.

This is Europe effectively admitting that it no longer trusts the United States to control the infrastructure storing its most critical national data. There are other private corporations handling public data in Europe; privacy is NOT the concern.

For years, European governments handed enormous portions of their digital systems to American corporations because the infrastructure was cheaper, faster, and more advanced than anything Europe could build itself. Health systems, court records, tax systems, financial databases, government communications, and institutional records all migrated onto cloud systems controlled primarily by Amazon Web Services, Microsoft Azure, and Google Cloud.

The core issue revolves around the U.S. CLOUD Act, passed in 2018, which allows American authorities to compel U.S.-based companies to provide access to data regardless of whether that information is physically stored overseas. In practical terms, this means European government data sitting in a Frankfurt or Paris data center operated by an American corporation may still fall under U.S. legal jurisdiction.

That completely destroys the illusion of sovereignty. Europe spent years lecturing the world about privacy protections through GDPR while simultaneously outsourcing enormous portions of its digital infrastructure to foreign corporations operating under foreign legal systems. The contradiction was always unsustainable. Now the geopolitical environment is deteriorating and suddenly “digital sovereignty” has become an emergency priority.

American firms dominate roughly 70% of Europe’s cloud infrastructure market because Europe has failed to build competitive alternatives, focusing on regulation rather than innovation.  Now they are attempting to reverse that dependency through policy. People still think globalization is expanding when, in reality, we are watching the beginning of technological nationalism.

Whoever controls the data controls intelligence, financial systems, communications, and eventually political leverage itself. That is why governments are suddenly panicking about cloud dependence. Data is POWER, perhaps more so than gold or oil. Government knows this fact and is keen to work with Big Tech to upsurp as much data as they can.

American firms are already scrambling to adapt by creating “European sovereign cloud” structures physically and legally separated from U.S. operations. Amazon alone announced more than €7.8 billion in investment into a European sovereign cloud system based in Germany. But many European officials no longer believe structural separation is enough because the parent corporations remain American entities subject to American law.

The world economy is fragmenting into competing blocs where trust disappears and every nation attempts to secure control over capital, resources, manufacturing, and now digital infrastructure.

May 15 2026

Britain’s Consumers Are Pulling Back as War and Inflation Collide


Posted originally on May 15, 2026 by Martin Armstrong |  

Consumer Spending

The British consumer is beginning to crack under the pressure of rising costs, war fears, and collapsing confidence. New data from Barclays, which processes nearly 40% of all UK credit and debit card transactions, shows household spending fell 0.1% in April compared with a year earlier. That may sound small on the surface, but this was the first annual decline since November 2024 and the sharpest pullback in roughly 16–18 months.

What matters is where the declines are appearing. Travel spending collapsed 5.7%, airline spending plunged 8.3%, and retail sales dropped 3% year over year. Consumers are not cutting essentials first. They are cutting discretionary spending because they are preparing for harder times ahead.

The Iran war is playing a major role here because energy prices are once again feeding directly into household costs. Fuel spending in the UK surged 10.4% annually as oil prices climbed sharply amid fears surrounding the Strait of Hormuz and broader Middle East instability. The Bank of England has already warned that energy bills could rise another 16% by year-end while food prices may climb 7%.

This is exactly what I have warned about regarding war cycles and inflation. Wars are inherently inflationary because they disrupt energy flows, transportation, supply chains, and confidence simultaneously. Europe is especially vulnerable because it deliberately weakened its own energy security through Net Zero policies and dependence on external supply.

Barclays found that 72% of consumers believe the Iran conflict will worsen their cost of living, while nearly half say they feel pessimistic about non-essential spending. Once consumers begin building “savings buffers” instead of spending freely, economic momentum slows quickly. Meanwhile, the financial side of Britain’s economy is also deteriorating. UK government borrowing costs have surged to their highest levels since 1998, with 30-year gilt yields briefly approaching 5.8%. The pound has weakened while markets increasingly fear both inflation and political instability surrounding Keir Starmer’s government.

Consumers are cutting spending. Government borrowing costs are exploding higher. Energy prices are rising due to war. Businesses are facing higher labor and financing costs. Britain is particularly vulnerable because the economy has become heavily dependent on consumption and financial services, while productive industry has steadily declined. When consumers retreat, the broader economy weakens very quickly because there is no strong manufacturing base underneath to offset the slowdown.

Government continues pretending this is temporary volatility while simultaneously pursuing policies that increase structural costs. Wrong. Energy remains the foundation of the economy, yet Europe continues pushing policies that restrict cheap and reliable supply. Then when war erupts and oil prices surge, politicians act shocked that inflation returns immediately.

Consumers understand the situation far better than policymakers do. People know instinctively when conditions are deteriorating, which is why spending patterns change long before official recession declarations appear.

May 15 2026

China & War


Posted originally on May 14, 2026 by Martin Armstrong |  

China Yuan M Array 9 14 25

Array September 2025

QUESTION: Marty, I confess, I have no idea how your computer projects these events so far ahead. At the WEC you were warning about May 2026. There was a Directional Change in China for May and a Panic Cycle in August. Even the stock market you said a high in Jan/Feb, a March correction, but no crash. I can see that correlating the entire world is the only way to look ahead.

What is baffling, is that Trump meets in Beijing but brings his tech boys and this seems to be ignoring the elephant in the room, Taiwan and Iran. According to what I read, Xi warned trump we are heared into war, which is exactly what you said. The neocons keep you at a distance and believe that they will always win. They do not want your forecasts because they project that they are losers.

My question is why do you think the computer can project such things like may events a year in advance? Is this going to heat up after this trip?

Doug

China Yuan M Array 4 11 25

ANSWER: I have come to the conclusion that there are simply economic pressures within the system. Politicians do not act randomly for no reason out of thin air. The economic pressures cause them to respond and looking at history, that response is always similar when confronted with the similar events. The war cycle kicked in for 2026 and we had a Panic Cycle so this is not over just yet.

Pelosi Taiwan Trip 2022

I was told directly from sources in DC that I was correct, we would not be at war with Russia, it will be China. At this meeting, Xi has made it very clear that Taiwan is a key issue that can lead to direct war between China and the USA. That was set in motion by the Biden Administration and Nancy Pelosi flying to Taiwan to tell they to resist. As long as we had the One China policy, there was no need for an invasion. The Biden Administration and Nancy Pelosi slapped Xi in the face. Then you need to step in because it is a loss of face. Pelosi said in a statement.

 “Our congressional delegation’s visit should be seen as an unequivocal statement that America stands with Taiwan, our democratic partner, as it defends itself and its freedom.”

I do not know if any of my warnings have been taken seriously. Rubio has said he does not seek and change in the current status. But Xi is concerned about selling arm to Taiwan.

When dealing in such negotiations, you MUST put on the glasses of your opponent and see the issue from their side of things, not just yours if you hope to achieve and sort of a deal.

The closest point between the island of Taiwan and mainland China is approximately 80 miles (130 kilometers) across the Taiwan Strait, from the coast of Fujian Province to Taiwan’s northwestern shore. The closest point between Cuba and the United States is about 90 miles (145 kilometers) from Key West, Florida, to the northern coast of Cuba. There was no way the US would allow Russia to set up nukes in Cuba.

This is what Xi is concerned about. Taiwan intends to station HIMARS launchers on Penghu and Dongyin, shifting from a defensive to an offensive deterrence posture. The deployment puts Chinese coastal bases, ports, and airfields within rapid strike range, potentially delaying or deterring invasion plans. The move follows major U.S. arms sales, rising PLA activity, and Taiwan’s calls for stable U.S. support ahead of the Trump–Xi summit.

Here is a lit of weapons the United States has sold or approved a very broad range of weapons and military equipment to Taiwan over the years, especially since 2019. Major categories include:

F-16 Fighting Falcon fighter jets (including 66 new F-16V variants approved in 2019)
Air Defense Systems

NASAMS medium-range air defense systems
Stinger missile MANPADS
Patriot missile system support and upgrades
Hawk and Chaparral SAM systems historically

Anti-Ship & Coastal Defense

Harpoon missile coastal defense missiles
Harpoon repair and sustainment packages

Long-Range Strike Weapons

ATACMS ballistic missiles
Guided MLRS rockets (GMLRS) for HIMARS launchers

Anti-Tank Weapons

FGM-148 Javelin missiles
BGM-71 TOW missile systems

Artillery & Ground Systems

M109A7 Paladin self-propelled artillery
Ammunition carriers and recovery vehicles
Precision-guided artillery kits

Drones & ISR

MQ-9 Reaper drones
ALTIUS-600 and ALTIUS-700 loitering munitions/drone systems

Tactical mission networking and ISR software

Helicopters & Naval Systems
AH-1W Cobra helicopter parts/support

Earlier sales included frigates, torpedoes, and naval radar systems

Missile & Aircraft Munitions
AGM-88 HARM missiles
AIM air-to-air missiles for F-16s
Maverick air-to-ground missiles historically

The overall trend has shifted toward what the Pentagon calls “asymmetric warfare” — mobile missiles, drones, air defense, and dispersed strike systems intended to make a Chinese amphibious invasion far more costly. This is what Xi has made a pointed address.  The Question turns on if the economy is turning down into 2028, who has the incentive for confrontation as a political distraction? That tends to be Taiwan, which is taking the form of moving to an offense posture rather than defensive.

Taiwanese_Dollar Y Array 1 29 23

When we looked at this back in 2023, it appears that this would heat up between 2026 and 2027. The Panic Cycle the computer forecast for 2025 indeed picked a major shift politically. The major change in 2025 was the move away from a traditional, centralized command structure. The new “decentralized warfare” strategy empowers individual military units to act autonomously in a crisis as we have see in Iran. I believe that Taiwan adopted Iran’s strategy.

If communication links to central command are severed during a sudden attack, units are expected to execute combat missions without waiting for orders, ensuring operational continuity. The Ministry of National Defense (MND) framed this as building an “agile and resilient” military focused on “multi-domain denial” to deter enemy forces.

This is when Taiwan adopted a deliberate effort to bolster defenses on its east coast, which was a response to increased amphibious exercises from China. Thus, the navy is established a new coastal operations command on the east coast, which was intended to deploy mobile anti-ship missile launchers and radar units.

Taiwan also enacted domestic legal changes in 2025 aimed at protecting against external interference. The Executive Yuan approved amendments to national security laws that impose severe penalties (including long prison sentences) for organizing or financing activities on behalf of hostile forces. These legal changes are a defensive measure to counter perceived “foreign hostile infiltration.”

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I do not believe that Taiwan developed or deployed offensive weapons systems like ballistic missiles for striking mainland China. Therefore, I believe Taiwan looked at Iran and adopted a military restructured layered system. Thus, the Panic Cycle of 2025 saw a tactical evolution in how Taiwan defends itself—moving to decentralized control like Iran and strengthening coastal defenses. They did not adopt an offensive posture to invade China or something stupid like that.

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Taiwan is also buying more advanced weapons, extending military service, developing systems like the “T-Dome” missile shield, and training for asymmetric warfare against a possible invasion.  From Beijing’s perspective, Taiwan under President Lai Ching-te has taken a more confrontational.  Taiwan is becoming less accommodating politically toward Beijing. Our computer warns that Taiwan may be reaching a major high in the share market and economy. Hold on. It looks like Next week is a critical target.