Tag Archives: BREXIT

Jan 31 2019

Markets Cheer a Recession?


Armstrong Economics Blog/Central Banks

Re-Posted Jan 31, 2019 by Martin Armstrong

The rally in gold and the stock market together is demonstrating that eventually, we will see the alignment as it transforms from Public to Private assets. The most deranged reaction to the Federal Reserve saying they will be “patient” on any further rate moves, is just beyond all reason. But markets are not always rational – they tend to trade emotionally much of the time.

The Fed also said that it would be flexible on the path for reducing its balance sheet. The Federal Open Market Committee’s statement twice refers to “financial developments.” The actual passages Powell read the first one verbatim in his press conference

“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”

“This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”

The talking heads have so distorted reason that the markets interpreted it as complete capitulation. The two-year Treasury yield, the most sensitive coupon-bearing maturity to Fed policy, dropped like a stone 4 basis points to 2.53% percent. The yield curve steepened, as everyone expected the Fed would stop raising short-term rates. Of course, you have the pundits claiming that Powell has yielded to the correction in the stock market. They argue that Powell and other officials made their new posture clear. Additionally, Powell disclosed that the FOMC is evaluating the appropriate timing for the end of the central bank’s balance-sheet reduction and that they would be looking to finalize their plans on that issue going forward.

The pundits seem to ignore history completely. They are touting that the Fed was backed into a corner by financial-market volatility. It is just totally amazing how ignorant these people are when it comes to the global economy and the business cycle.

The Fed ALWAYS lower interest rates NOT because of the stock market, but because of an economic decline. A stock market decline by itself is no big deal. We did not even elect a single Monthly Bearish Reversal. There was no significant damage from that respect. The real issue being ignored here is the entire world is declining sharply into 2020 on an economic level. Lowering interest rates NEVERsupports a collapse in the stock market. The Fed even raised interest rates as the market was falling in 1931 because the dollar was under pressure during the Sovereign Debt Crisis.

 

 

It is so amazing how oblivious pundits are to what is unfolding around the world. Trump is correct. The USA has been the strongest economy. However, the US is starting to slow and overseas is having a very bad dream. Just look at the DAX which not only was a major crash, it closed BELOW the low of 2017. The US market has been the BEST performer. The Fed is NOT taking action based on the stock market. That is absurd.

 

The US share market has outperformed everything in terms of currency from the international perspective. While the pundits had forecast Europe as a great buy two years ago, people simply lost tons of money on that forecast and their buy of Emerging Markets.

We are now going to go down very hard economically into 2020. The Fed is under a lot of pressure from other central banks pleading with it to stop raising rates for they cannot raise rates. The ECM is in no position to stop Quantitative Easing. The Fed’s actions here have ZERO to do with the stock market. This is the culmination of the economic decline into 2020 that began in 2015.

The Fed is not going to lower rates dramatically. While rates closed at 2.5% for 2018, resistance still stands at 2.67% here in 2019 so rates have not broken out just yet. It is unlikely that the Fed will lower rates of more than 1%. That could unfold after May if the election in Europe create havoc over the future. So far everything is on target. Last year was a Directional Change and 2019 is a turning point with 2020 coming in as another Directional Change and 2021 in a Panic Cycle. So hang on tight. We are in for some really confusing good times as we conclude this business cycle into 2020. Sorry – the Fed did not lower rates to help the stock market. It lowered rates because we are in a global economic recession into 2020. All I have been hearing is complaints from central banks around the world. They can see what is unfolding.

 

Jan 30 2019

Thanks to Bankers – Student Loans Are Suppressing our Future & Destroying the Real Estate Market


Armstrong Economics Blog/Interest Rates

RE-Posted Jan 30, 2019 by Martin Armstrong

I have warned that the entire Student Loan Crisis has significantly altered the economy thanks to the Clintons courting the New York bankers making Student Loans the exception to bankruptcy. In Florida, like many other states, if you are in default on your student loans, the medical license to obtained is suspended. The Florida State Board of health has stated that some 900 healthcare workers were in danger of losing their license over the past two years because they were in default of their student loans. The board clarified it worked out repayment plans with most of those workers. It estimates the actual number of health care license suspensions is between 90 and 120 since November 2016. We may yet see the Yellow Vest Movement erupt in the United States over Student Loans.

The situation with student loans has gone from bad to worse. Bankers will try to get the parents to still co-sign for their child – DO NOT DO SUCH A THING!!!!! The degrees are worthless in most fields except health and law. The bankers have circumvented all your legal rights because the student loan is the exception to bankruptcy so they can take your house and you cannot even argue fraud.

Then there is the fact that even death does not relieve a parent of a student loan. Marcia DeOliveira-Longinetti’s son was killed, and after death, the remaining balance of his federal student loans were written off, but not by the state of  New Jersey. The state told his mother, “Your request does not meet the threshold for loan forgiveness.” What the Clintons did to students is really horrible. Even Zillow’s research, the big realtor, has reported that student debt has impacted the real estate market in many ways reducing future buyers.

FOX News reported that the U.S. Marshals Service in Houston was arresting people for failing to pay their outstanding federal student loans. Actually, Paul Aker, the subject of the Fox News report, failed to appear in court so the court sent U.S. Marshals to his home where he was arrested for a $1500 federal student loan he received in 1987. Of course, when they arrest anyone, the reason is irrelevant. Everyone is treated the same. If he ran, they would have shot him in the back and killed him on the spot and they would NEVER be prosecuted.

After seven U.S. Marshals burst into Aker’s home with guns drawn, they took him to federal court where he had to sign a payment plan for the 29-year-old school loan. Thank you, Hillary. I honestly do not know how anyone could have possibly voted for her. This is totally insane. The judge could just as easily thrown him in prison on contempt of court and not release him until he pays the $1500. It’s all about a judge’s power to act as if he still represents a king.

The Student Loan Crisis is serious. The US census showed that one-third of children over 30 were still living with their parents. This is also taking place in Britain thanks to rising taxes which lower disposable income. There are greater odds of your children living with you until they are 35. The real shocking number is that 40% of millennials are still dependent on mom and dad. The excuses seem endless. Student Loan debt can make buying a home IMPOSSIBLE! This is part of the reason real estate has been in a bear market since 2007 when we look at the average home.

realestate

The entire Student Loan Crisis has altered the real estate market significantly. While the High-End rallied into 2015 as capital was trying to get off the grid, as one friend in the real estate business put it, if prices ever got back to 2007, 50% of the State of New Jersey would go up for sale. The average market for homes has been declining overall. There are pockets where houses have risen, but these upon close inspection are the destinations where people are fleeing to from states like California, Illinois, New Jersey, New York, and Connecticut among others.

The real estate profile has another weight dragging it down – TAXES. Real Estate is IMMOVABLEand as states go broke, they keep raising property taxes. The states with NET declines in population because the smart people have been fleeing, leaving behind people who are not paying attention and become trapped because there are no buyers. One friend here in Florida moved from New Jersey and rents out his home back there because he cannot sell it. He rents it at this stage just to pay the taxes.

The states with no income taxes are a net migration seeking refuge from other places. Florida seems to get New Jersey, New York, and Connecticut. Nevada and Texas are getting those fleeing Illinois and California. Nonetheless, the overall view of real estate looks rather grim into 2032 insofar as scoring REAL gains over the depreciation in the purchasing power of a currency. Then add the rising interest rates and you will discover that bankers are no longer willing to lend money at fixed rates for 30 years.

 

Jan 30 2019

When is Printing Money Deflationary rather than Inflationary


Armstrong Economics Blog/Economics

RE-Posted Jan 30, 2019 by Martin Armstrong

QUESTION: It seems the Left Wing Progressives in the US House (opponents of Pelosi) have adopted the Money Market Theory of Prof. Stephanie Kelton of U of MO.-Kansas City to justify unlimited deficit spending of the US Govt. OK as the Govt. can finance its deficits by unlimited currency printing.

Would you please comment.

Thanks and keep up the good work.

MP.

ANSWER: Actually, there would be no issue if the government simply created money to fund its normal expenditure. Historically, that will produce very modest inflation. The crisis is when you borrow to fund that deficit spending. In 2019, interest expenditures may now exceed the cost of defense. It is far cheaper to create the money needed than borrow and keep rolling the deficits forever. Then the cumulative interest keeps rising and crowds out all other expenditures. This is what is happening.

The process underway creates DEFLATION, not INFLATION, because the governments keep raising taxes to fund the deficits and that reduces the disposable income. This is why we see riots in France. Yes, people earn more, but they are being left with an eroding disposable income base. Governments need to fund themselves so they raise taxes. But the interest expenditures keep rising and consume all other areas of spending. It becomes a self-defeating process that leads to the crash and burn.

 

Jan 26 2019

The British Press


Armstrong Economics Blog/Opinion

Re-Posted Jan 26, 2019 by Martin Armstrong
Jan 25 2019

Trump & China Trade Deal – Cyclically On Target? When Mexican Coins Traded at a Premium to America’s


Armstrong Economics Blog/America’s Economic History

Posted Jan 25, 2019 by Martin Armstrong

QUESTION: Marty; Are there any cycles dealing with the trade dispute with China that are relevant?

OP

ANSWER: Actually, yes. The United States created a two-tier monetary system in 1873 to accommodate trade with China who was on a silver standard rather than gold. The actual timing is 17 intervals if the 8.6-year frequency of the ECM, which brings us to 2019.2 (March 19th, 2019). The US began to mint two types of silver dollars. The “Trade Dollar” was used to make payments to China for their standard was different from the West. The idea was promoted by the silver miners because the price of silver began to decline due to increased mining efforts in the western United States.

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The silver miners effectively donated huge money to the Democrats to support the price of silver, which ended up nearly bankrupting the United States by 1896 and gave the Democrats the name “Silver Democrats.” It was the presidential election of 1896 in which William Jennings Bryan, the Democratic candidate for president, made his fiery speech that the cancelation of the silver mandates during the Panic of 1893 placed the United States exclusively on a gold standard. The Democrats stood against gold and sought to overvalue silver to satisfy the silver miners who were funding the Democrats back then.

The first trade dollars were struck in 1873, and the majority of the coins were sent to China. Curiously enough, as they began to flood the economy, the coins were officially demonetized in 1876 becoming the first US currency to actually be canceled. Nevertheless, the coins continued to circulate. The actual production ended in 1878. The trade dollar was re-monetized when the Coinage Act of 1965 was signed into law. The main coin in world trade had been the Spanish 8-reales. This became the basis of the American dollar. The Chinese had grown accustomed to the Spanish silver coins and this became their standard. Lacking the true ability to read Western languages, the Chinese were very sensitive to any changes in the coin’s design. Therefore, they were reluctant to accept any coin that was unfamiliar to them. The American silver dollar, 7.5 grains (0.49 g) lighter than its Spanish pillar dollars, which made them unacceptable in Asia. This was the reason for American merchants who had to trade only in Spanish coins during the 1800s which were carrying a premium to American coins.

It was in 1866 when the monetary system in Asia went into chaos. Maximilian I (1864 – 1867) was the only monarch of the Second Mexican Empire. He was a younger brother of the Austrian emperor Franz Joseph I. Maximilian traveled to Mexico and declared himself Emperor of Mexico on April 10th, 1864. He changed the monetary system from reales to peso. The historic 8 reales suddenly became 1 peso in 1866 with his portrait in the European tradition. This altered the Mexican pieces that were recognized in trade to a premium over even the US dollar. Therefore, starting in 1866, this design change caused widespread nonacceptance of the Mexican coins in China. This simple design change altered the coin which had been accepted throughout Asia as the standard.

This is the backdrop to how the Financial Capital of the World slipped through the reign of power from the Spanish to America. Most people have no idea that Mexican coinage was more valuable than America’s prior to 1866.

Categories: America’s Ec
Jan 24 2019

Merkel & Macron Signing Treaty to Create a European Army


Armstrong Economics Blog/European Union

Re-Posted Jan 24, 2019 by Martin Armstrong

Merkel and Macron, two politicians who cannot muster even a majority of their people for support, signed a Franco-German friendship treaty which has allowed them to boast that this is the first step to creating a European Army. There is a mad rush behind the curtain to create a European Army, not to protect Europe from Putin, but to protect the government in Brussels from the people they rule. They are very much aware that the best way to secure power is to have a foreign army.

Nike-Riot

In Constantinople during the Byzantine Empire, Emperor Justinian faced the same issue as Macron — a rising discontent. The local lack of support from both the police and military of the Emperor embolden the people to rise up. They went as far as to declare a new emperor, Hypatius. Justinian was about to flee the city for his life when his wife stopped him. She pointed to an army outside the city which was not made up of local Greeks. He ordered the army to enter the city to protect him. They slaughtered what we would call today the Yellow Vests, killing some 30,000 protesters.

This lesson of the Nika Revolt (January 13, 532 AD) is perhaps not openly discussed in public circles, but it is WELL KNOWN behind the curtain. This is why they need a European Army for Greeks would have no problem killing Germans when ordered and Germans would have not problem killing Italians when ordered. The key to maintaining order is always to use police/troops that are NEVER local.

Hopefully, that political ploy will fail before it can really come into play

Jan 23 2019

Reversals v Technical Analysis


Armstrong Economics Blog/Training Tools

Re-Posted Jan 23, 2019 by Martin Armstrong

QUESTION: Hello Mr. Armstrong, Thank you for your services and commitment to society! I read your Blog daily and the wealth of information you provide is breathtaking. My question, is it possible to add a service to the GMW, where we can draw our personalized trendlines and where Socrates would provide us our Reversals based on our chart drawings, similar to what you provided to those that were on the Beta version of Socrates? This would be a fantastic added service that can be charged on a per month or yearly basis. I have had a difficult time finding on the internet a charting system that is simple and straightforward as your Socrates system.

Also, if you need future assistance with the “medical” Socrates, I would be honored to assist freely. I have over 25+ years in the medical field and can relate 100% what you went through with your mom during her last days here on earth. Your situation is very common and that was one of the main reason I left the medical field and searched for another career. The medical industry is very corrupt from the CEO’s, pharmaceutical companies, physician all the way down to the nurses, therapist, x-ray tech and so on. We need to change our system. Currently, hospitals are places to avoid, they are a revolving door and once you are admitted to the hospital, there is no way out.

Thank you for your time.

K

ANSWER: The Reversals are not generated from technical analysis. They are based entirely upon physics with very complex formulas. Therefore, technical analysis can provide visual confirmation and target objectives. Timing is the dominant factor, for if you run out of time before a Directional Change, then the Reversals will confirm or deny a change in that directional trend.

Jan 21 2019

Panic Cycles v Waterfall Events


Armstrong Economics Blog/Training Tools

Re-Posted Jan 21, 2019 by Martin Armstrong

COMMENT: Hi There,
I suggest you do an article on the terminology you use.For example I noted that on your commentary on centamin Egypt you use the term waterfall pattern. You also you use the term panic cycle.An article on these words and their meaning would be helpful.
Thanks

S

REPLY: We do have terminology is the Glossary on this site. The Waterfall Event is a term I coined to describe what I discovered in the study of the rise and fall of empires, nations, and city-states. This differs from a Panic Cycle which reflects just a short-term increase in volatility, which can exceed the previous session high and penetrate the previous session low or make a big move in one direction.  They do not imply the destruction of the system being observed or an individual market.

I have encountered the Waterfall Events such as the collapse of Venice to the 1931 Sovereign DebtCrisis where the foreign government bonds listed on the New York Stock Exchange simple defaulted and went to zero. Thus, the Waterfall is a sharp collapse that will unfold in a market with a decline of generally greater than 50%.

 

Jan 21 2019

Italy’s Silvio Berlusconi to Run for EU Seat


Armstrong Economics Blog/European Union

Re-Posted Jan 21, 2019 by Martin Armstrong

Silvio Berlusconi announced his candidacy for European elections in May due to a “sense of responsibility.” Indeed, this may be the best thing that ever happened. The EU pulled off a coup secretly behind the scenes to drive him from office because he wanted to take Italy out of the euro to save his country. Our deep sources all confirmed the EU intervened in the Italian elections to remove Berlusconi, which was effectively a coup back in 2013.

Southern Europe has been seriously disrupted from joining the euro. They were forced to convert their past debts to euros and then the euro doubled in value, causing their real world national debts to double in terms of international value. Is it any wonder their economies have been in a death spiral? Unemployment among the youth has reached 60% in some regions, and they are now known as “The Lost Generation.”

The May elections for the EU are looking like a lot more anti-EU and people will be taking up seats in Brussels.

Categor
Jan 20 2019

The Difference between 2020 and 2032


Armstrong Economics Blog/ECM

Re-Posted Jan 20, 2019 by Martin Armstrong

QUESTION: Hi Martin,

My girlfriend brought up a point about your work during coffee this morning. Basically, she’s confused about the two dates you often mention, 2020 and 2032. She wants to know which date (2020, 2032) you expect the markets move into crises mode due to the lack of confidence in government. I tried to explain but my insight wasn’t good enough.

Could you explain in a future blog the difference between these dates and what you (Socrates) expect to happen during these points in time?

Thanks,
J

ANSWER: The 2032 date is the conclusion of this Private Wave. That is when the power of the West will begin to shift to China for the next cycle that begins thereafter. The 2020 date is when the confidence begins to noticeably begin to turn down for the AVERAGE person.  You can “feel” it in the air already. What the Democrats have done is simply unbelievable. Sure the people who hate Trump cheer. But they fail to understand the system. Whatever they do to the Republicans sets the stage for what will be considered “normal” for the Republicans to do to the Democrats if power shifts.

I have explained that the Democratic victory in the House was really a disaster for this has allowed nothing but the next two years to be confrontation as we are witnessing on the funding of the wall which is only $5.7 billion. In Fiscal Year 2019, the federal budget will be $4.407 trillion. The U.S. government estimates it will receive $3.422 trillion in revenue. That creates a $985 billion deficit for October 1st, 2018 through September 30, 2019. Not only is this less than a single week’s interest payment of $6.7 billion, it is .001% of the annual budget. It is so meaningless it illustrates my point. The Democrats think all they have to do is demonize Trump and OPPOSE absolutely everything he proposes to win the White House in 2020.

We will be running the computer models on the 2020 election. But preliminary indications show that we will see a sharp rise in violence. Neither side will accept the results.

Categories: ECM