Spanish Stock Market Reflects The Bearish Outlook for Spain


The one thing I have always said, markets never lie. The fact that Spain is showing that its government is still fascist is reflected in the performance of the share market. Spain has never exceeded its 2007 high and it is warning that a lower closing for 2017 may just see this market collapse into 2020. We will be looking at Spain closely at the WEC. This chart has been screaming – all is not well in the European project.

Dow High or Low


QUESTION: Hi Martin,

I am confused with the Dow Jones Index, could the index explode up through 23,000 to 40,000 from here or does there need a downward move then explode up through 23,00 (a sling shot).  Could you tell us what you see for the next 6 to 9 months.  Probably the most important investment for us all!
Thank you for all your help!
KC
ANSWER: The cycle is in the basing mode. Therefore, it need not drop sharply. Remaining within the channel is perfectly fine. A Slingshot would be more powerful to retest the bottom of the channel.  The explosion to the upside is still not yet unfolding and we need to be concerned about 2018 and the year-end closing. We will issue a special report to deal with that issue.
Part of the basing is concluding this year from political hell. The German elections are the 24th. Keep in mind that AfD will gain seats for the first time. Merkel has NEVER won a majority and she relies upon the FDP to hold power. The more the FDP declines and seats are taken by the AfD, the more chaos will unfold.

Central Banks Investing in Equities


QUESTION: There is a new trend that central banks are investing in the stock markets Is this true? What is the impact of this move?

ANSWER: Yes. The reason has been rather straight forward. The only game in town has been US government bonds. Many have seen this as a problem the defeats diversification. Consequently, there has been a major effort to attempt to diversify into the private sector when there has been such uncertainty in the public sector. Behind the Curtain many are simply asking of Europe: What the hell is going on? This has been a “euro crisis” that simply never seems to end. What has happened to Greece, Portugal, Italy, Spain, Holland and now even France. Many outside of Europe are simply asking has Europe just lost its mind? Hence, there has been a move to diversify out of government debt by central banks themselves.

Louvre Accord v Plaza Accord


QUESTION: I notice you often cite the *Plaza Accord* when on the topic of central bank currency manipulation. That accord was signed in 1985 with an aim to devalue the USD. Could you write a little on the *Louvre Accord” signed just two years later, in 1987, with an aim to reverse the unwanted effects of the *Plaza Accord*. Thanks – cheers,

TGM

ANSWER: The Louvre Accord was an agreement, signed on February 22, 1987 in Paris, that aimed to stabilize the international currency markets and halt the continued decline of the US Dollar caused by the Plaza Accord. The agreement was signed by France, West Germany, Japan, Canada, the United States and the United Kingdom. Italy declined to sign the agreement.

The G7 meeting of central bankers and finance ministers in Paris announced that the dollar was now “consistent with economic fundamentals.” The announced that they would only intervene when required to ensure foreign exchange stability. The objective was then to manage the floating currency system. Democrats gained control of Congress in 1986 and immediately called for protectionist measures. The dollar depreciation agreed to in 1985 at the Plaza Accord, failed to really improve the trade perspective. In 1986, the trade deficit actually rose to approximately $166 billion with exports at about $370 billion and imports at about $520 billion. The object of manipulating currency to try to create jobs and alter trade flows proved to be completely false.

My concerns warning that volatility would increase made back in 1985 were materializing. What they did not understand was the lowering the dollar in value also led to a shift in capital flows and the selling of US assets. Foreigners were suffering loses by financing U.S. trade through purchasing United States Treasury bonds in an attempt to ease the trade deficit criticism. We were advising Japanese to buy gold on the New York COMEX, export it, and then resell which would also make it appear that the US exports were increasing. However, the lower dollar was then resulting in the importation of inflation into their own nations.

We can see that first of all the dollar had already begun a decline prior to the Plaza Accord in August 1985. By the time we arrived at the  Louvre Accord, you can also see that the dollar continued to decline. The attempt to manipulate the foreign exchange markets proved to beyond the capacity of the G5 which had been expanded to G7 and today is now G20. We can see the capital flow data between the USA and Japan began to move in early 1984 establishing the trend that nobody seemed to pay attention to at that moment.

The price action of the dollar clearly proves that the central banks lacked the power to truly influence the markets. The trend had begun prior to the Plaza Accord and it continued to decline following the Louvre Accord.

Understanding Cycles


Cycle targets that we provide are TURNING POINTS. This means an event normally takes place at that time be it a high or low. If ideally something should produce a low but does not and produces a high, it is typically extending the cycle to the next TURNING POINT. It looks at this time that the next important turning point is the week at the start of Sept. There is of course the Fed meeting. But then there is trouble among debt ridden nations and then there is Iran.

Keep in mind that for some strange reason, geopolitical events tend to also happen in the Aug/Sept time frame. Besides war, there was even 911. On 28 June 1914, Archduke Franz Ferdinand of Austria was assassinated. World War I began officially 28 July 1914 and lasted until 11 November 1918. It was August when things really got underway. World War II began when Germany attacked Poland on September 1, 1939. Most stock market crash events take place after highs in early Sept such as 9/3/1929. Even the 1987 Crash 10/19/1987.What it is about this time of the year who knows. Where December is the time to be jolly, Sept is the time for chaos. Never look for a particular event high/low. It is a TURNING POINT that sometimes can invert and produce the opposite largely because everything is connected. It is always an action/reaction.

Dark Age v Renaissance


QUESTION: Hi Martin,

Thank you for everything that you do.  Concerning the post, The Long-Term Cycle of Monetary Crisis, you describe the corruption of power that leads to monetary crisis and the subsequent reform: the thread that repeats throughout history.

I was wondering if you could contrast this with the periods of history where there is a renaissance/age of enlightenment, and the common tread there (is it the people revolting, which is the only way that corruption of power is defeated?).

Many Thanks Again,

Danny

ANSWER: Oh yes. This is part of the Cycle of Civilization but now you are at the 309+ year level where major change begins to appear. The big one comes on the Sixth Wave of the 309.6 Year level. This is the only reason I do what I do. I have written many times that when this wave peaks in 2032, when we come to a crossroads. We either regress contracting into authoritarianism, then break-up into a fragmented feudal type system of local tribes basically, or we can perhaps crash and burn, but then see the light and we make a major technological leap forward.

Even at each 51.6 year wave culmination there is a major structural reset. It is my HOPE that if we reach a level of understanding how and why things work, then we have a shot and perhaps pushing back and we can make do what Neil Armstrong said upon landing on the moon: “That’s one small step for man, one giant leap for mankind.

This is the third set of the Sixth Wave. This is why I say if it was just me, I am ready- Beam Me Up Scotty. I have my posterity to think about. So I am trying to do what I can. I bumped into cycles in the middle of the night. They found me. I never approached this as a theory to go out and prove. Most major discoveries in science have been by accident.

The Renaissance really began when Constantinople fell to the Turks. Then the scholars fled to the West bringing the known with them in 1453. Note the year. They began schools and started to teach people all the knowledge they had forgotten. There were some who were starting to reintroduce mathematics like Fibonacci (c. 1175 – c. 1250) during the 13th century. But it was the schools that opened following the fall of Constantinople that brought educate back to Europe. Hence, Columbus was exposed to that knowledge and he realized the Earth was round. He set sail in 1492.

The full Age of Enlightenment truly began with the confrontation that cycles existed. It all began with the discovery in 1772 of a frozen intact woolly rhinoceros . Then intact woolly-mammoth followed in Siberia. Suddenly people were stunned. This meant that you could be frozen with food still in you mouth. This inspired tremendous investigation into gravity to the cyclical nature of comets.

The Dark Age is the fragmentation of society reverting back to where we see nations breaking up unto regions and then all the way back to city states. The  Renaissance is typically inspired by the rediscovery of lost knowledge. This is really an extensive subject. I have written a book on this entire topic documenting everything from math and science to political rise and fall. I am hiring more editors to try to get out several books that have been backlogged for way too long.

New Zealand & the Hunt for Taxes


QUESTION:  Hi Martin,

Firstly I appreciate your insight into world events. I don’t see anyone else coming even close to what you do.

In New Zealand we are facing an election and taxation is a big topic. Labour on the left has appointed a new, young, female leader who has wide appeal. She is hedging on Labour’s taxation policy but it’s known they favour capital gains taxes – business, property, inheritance, you name it. I saw an article that Illinois is experiencing massive flight of wealth due to taxes. Will people run out of options for places to go or is the world in general headed towards mass taxation?

Thanks for your time.

PJ

ANSWER: Yes,  Jacinda Ardern is a desperate attempt to raise Marxism to its former glory. The Labour Party fell to below 30% in the polls so they put a young girl up front to gain votes. It is also true that Illinois is a complete disaster. I wrote about how they should just dissolve the state because they cannot even go bankrupt on their government pensions. It is true that every five minutes someone leaves Illinois. The most recent poll revealed that 47% of people in Illinois wanted to leave the state. Property values will collapse in Illinois because there is a mass exodus and no buyers unless they are oblivious to what is taking place. This is how Rome fell from a population of 1 million to 15,000. People just walked away from their property.

Marxism has destroyed the world economy and caused the deaths of countless millions of people all for a theory that has never worked. We are facing the darkest hours in this collapse of socialism. Make no mistake, there are plenty of people who have been brainwashed to believe it is the rich causing this rather than the greed of politicians. It is the government pensions in Illinois that has destroyed the State. They prefer to say the rich do not pay their fair share but government always needs more and more. So that “share” never ends until it reaches 100%.

This will come to a head most likely in violence and it is highly likely it will erupt in civil unrest and even war over the course of the next few years. Unfortunately, this is the Crash & Burn. It is just not sustainable. Economic growth declines and the standard of living for everyone collapses. It is just how we give birth to the next era.

Can Our Model Forecast Private Companies & Industries?


 

QUESTION: Hello. I am a business consultant working for a global consulting company and have a client that is in the transportation sector that would benefit from your research. I have been advising the client with regard to their business and IT strategy, however would also like to introduce them to Armstrong and possibly subscribe to your services.

A few questions first:
1) Are your models customizable to facilitate forecasting of domestic fuels consumption?
2) If yes, what is required to initiate a discussion around this type of service?
3) Would it be possible to speak to a person regarding your standard services and any custom modeling?
Kind Regards,
KR

ANSWER: Yes. We are re-instituting on the Institutional Level the ability to input even the sales of any company and the model will then provide the full forecast with timing and price projections. Therefore, it can be tailored to any company and industry.

Where has the Outflows from the US$ Gone for the Past Year?


QUESTION: Re: Am i certain about the Strong Dollar?

Hi Marty, great blog posts and response. I think after reading this blog posts, the question on everyone’s mind is, what is causing the outflow of capital from the USD? And where is capital concentrating in right now? Is it the Euro? The Bunds? Gold?
And when do you see the outflow will stop and reverse?
Thank you
Regards
Rm
ANSWER: There has been outflows to Emerging Market debt by pension funds in the States for the past year. They have been trying to compensate for the lower interest rate returns by going more risky. We have been call on this issue more than once.
Then there has been the expectation that the ECB will end QE and Europe will boom. We can see that the DAX for the past year has risen in dollar terms. We have seen a tremendous outflow into the European share markets, but not so much into the debt issues.
Gold has been minimal because that is the retail side, not a target for institutional money. They need income, not storage fees. They will participate in gold stocks, but not stockpile bullion.

The 5 Factors Behind Capital Flows


QUESTION: Hi Martin,

Well from myself and your family we thank you for sticking with us in this time as you have mentioned you could be doing other thing for yourself but like a brother you are sticking with us even when you know we will rise and repeat most likely, but in the same but different we hold hope for humanity. My question is can we get a large movement in confidence in currency without any major move in the physical instrument. Can the US dollar not have a hard drop before going back up on the basis that the confidence was effected more than the instrument it does not look like a linear relationship but more ying and yang where the ratio can be anywhere at any time but together are complete.Thanks Brother
Peace Out
LP

ANSWER: The driving forces behind capital flows center upon CONFIDENCE that manifests within five critical areas. Each area provides one major component which in turn has subdivisions. The 1987 Crash in the stock market took place because the G5 kept saying they wanted the dollar down by 40% to help trade. The morons failed to realize that if you lower the dollar by 40% to make you exports cheap to sell more, you simultaneously cheapen all assets. The Japanese had bought 33% of the US National Debt to try to easy trade friction, but then faced with a 40% loss on currency, they sold. This inexperience of those in government is just beyound contemplation. What the Plaza Accord was doing was trying to lower the value of the dollar to reduce the cost of American labour in international terms. This was the lethal combination of FOREX and LABOUR manipulation.
  1. FOREX
  2. LABOUR
  3. INFLATION
  4. SECURITY
  5. TAXATION

INFLATION is actually the major component of interest rates. The future value of money must incorporate a profit over the inflation rate in order to make a loan feasible. TAXATION is critical for capital will move like water to the place that is most advantageous for a real rate of return. You cannot tax investment at 90% and expect people to take a risk.

SECURITY is both economic (rule of law) as well as war. For example, capital fled to the USA from around the world during World War I and II. Therefore, economic justification does not always come into play when SECURITY issues rise to the top. The dollar is also the reserve currency because capital is not yet comfortable parking in Russian or Chinese debt and they are in US debt.