Tag Archives: #CALEXIT

Oct 2 2017

Diversification – Smart or Dumb?


Armstrong Economics Blog/Understanding Cycles

Re-Posted Oct 2, 2017 by Martin Armstrong

 

WorldIntRates-2012

QUESTION: Mr. Armstrong; Do you believe in portfolio diversification?

ANSWER: No not really. I see no point in putting money in something you know will be a loss. Diversification within a sector is one thing. But buying government bonds when rates are at a 5,000 year low and governments are in trouble around the world, I just see as really stupid.

Once you understand how our global model works, you can see the trend unfolding in a numerous instruments that therefore confirms the trading direction. For example, we warned that gold had made an important high and would crash from 2011 for at least 3 years minimum. At the same time, we warned that the Dow would breakout to new highs. Barrons reported that forecast and did not believe that we would be correct. Both the high in gold and the breakout in the Dow were connected. Each confirmed the other among a host of other relationships.

What is impossible is trying to forecast just gold or the Dow in isolation relying upon fundamentals, which always prove to be worthless. Take the Long-Term Capital Management Crisis of 1998. The problem began in Russia and investments there collapsed but you could not get out at any price. They began selling assets everywhere else in the USA to Japan. This became a liquidity crisis that spread into a contagion. You could look at all of the fundamentals that said nothing should be happening in Japan. That led to massive losses in Japan that were contrary to fundamental analysis.

Everything is interconnected. Diversification is for people who cannot forecast so they just hope to stay ahead of the game. Asset Allocation has to be done smartly. You need some cash and those who will want some bonds v equities simply need to stay short-term and away from issues that will be a problem.

Oct 2 2017

Cryptocurrencies


Armstrong Economics Blog/Armstrong Economics 101

Re-Posted Oct 2, 2017 by Martin Armstrong

QUESTION: Marty, do you think any crypto currency will survive?

ANSWER: No. We are looking at central banks and even the Chinese government is moving to create a Cryptocurrencies. There is no question that we will be looking at this is the next evolutionary step forward.

However, what I have been warning about is the public v private issue. Governments are hunting money everywhere. There is just NO POSSIBLE WAY they will allow private Cryptocurrencies  to circumvent their control and taxation.

Oct 1 2017

Taxing Income Before Your Earn It


Armstrong Economics Blog/Sovereign Debt Crisis

RE-Posted Oct 1, 2017 by Martin Armstrong

COMMENT: Hello Martin;

I trust you and the state of Florida are healthy, hurricane or not.

As to the German VAT pre-pay system, Ontario, Canada tax laws shocked me nearly 30 years ago with income tax on accounts receivable, whether collected or not.

I was 22 years old when the accountant came to review my 1st year as a proprietor. He stated that even though one of my customers had not paid his account I was to pay income tax on that amount. But the amount owing to me was nearly 20% of my annual sales! He told me if I did not receive the customers payment I could write that off next year. I said if that guy doesn’t pay there won’t be a next year.

So of course I changed my gross sales. The bastards force people to break the law.

Get used to it Germany, the gopher-ment just keep digging.

Thank you sir, this is the best education for $14.99/month. ($18.56 CAD);

RH

REPLY: Yes. This is exactly as Adam Smith wrote. Government is always the crazy spendthrift and spend money before they get it so they try to treat the people the same way. In the USA, if you make $100,000 trading and pay the tax and then lose the $100,000 the following year, you cannot write off the whole loss. Government and taxes are just unrealistic because of their greed.

Sep 30 2017

2015.75 was Just the Beginning


Armstrong Economics Blog/ECM

Re-Posted Sep 30, 2017 by Martin Armstrong

QUESTION: Hello Mr Armstrong

I have not forgotten when I saw the reportage about you on TV when you announced that in October 2015 will start the big economic collapse. do you think that that date was bit early or really there is some thing happened?

Thank you very much Mr Martin.

I’m one of your fans.
Have a nice day.
I hope to read you soon.

ANSWER: No, October 2015 was spot on. What you have to understand is this is really a complete process. That is the day Russia invaded Syria and that I said would mean that Syria would become a key focal point. Ever since we have the Refugee Crisis that has turned Europe decisively lower and changed politics – i.e. BREXIT, Barcelona, Poland, Hungary, Sweden, Netherlands all the way to Merkel and the immediate election where she has been significantly weakened.

Trump Sworn In

Then do not forget we had Trump elected, which our computer also forecast. That turning point also marked the change in trend in interest rates. The Fed raised rates for the first time after that target in 2015.

We are looking at an economic crash – not a market crash. As government implodes with the Pension Crisis, capital shifts from public assets to private. This is a process that is not instantaneous, it is an ongoing event that will worsen now into 2020 and it will not end until this Private Wave peaks in 2032.

Sep 29 2017

Britain to be Subordinate to European High Court Even After 2019


Armstrong Economics Blog/BRITAIN

Re-Posted Sep 29, 2017 by Martin Armstrong

Prime Minister Teresa May has walked into a hornet’s nest. By trying to drag out BREXIT into 2021 or beyond, the European Parliament has responded that it is set to demand that Britain will have to still be subject to all EU regulations and be subordinate to the European Court. That means trading in London will be seriously harmed by the anti-short selling policies of the EU and the ban on selling government bonds short.

Sep 29 2017

BREXIT – Trump – Now Barcelona


Armstrong Economics Blog/Politics

Re-Posted Sep 29, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; I am the who did not believe you when you came to Barcelona and said that there would be a separatist movement. The polls at that time showed only a 15% support. I still read and followed you I suppose to see if you would be wrong. I must say, your computer has shown us that the world is predictable even in politics. It got Brexit, Trump and Barcelona all correct. I suppose we will see the break up of the EU and as you said eventually the USA. Is your computer proving that the future can be determined because humans respond to the same economic conditions?

PQ

ANSWER: Yes. I find it interesting that there were a number of people who doubted that Catalonia would rise up. Everyone I did an interview with was also skeptical. The issue has been that governments are always the same. They will pursue their own self-interest no matter what. The saying POWER CORRUPTS but ABSOLUTE POWER CORRUPTS ABSOLUTELY is proven every day that passes into history. I agree with Thrasymachus, political governments are always the same in the end.

Keep in mind that there is a huge separation between those who work in departments of governments such a central banks and sovereign wealth funds. They are typically on the opposite side of the table from the politicians. When I talk about government and its self-interest, I am referring to the political side and that far too often includes the prosecution and court systems. It has been the political side that constantly changes laws to try to manipulate society and the central banks.

Sep 28 2017

The Pension Crisis Coming to a Boil


Armstrong Economics Blog/Pension Crisis

Re-Posted Sep 28, 2017 by Martin Armstrong

The BBC has come out and reported that three million savers in Britain in what is known as final-salary pension schemes only have a 50/50 chance of receiving the payouts they were promised, a study has concluded. We issued a special report on the rising Pension Crisis and it has been unfolding on schedule. The odds of those in government receiving what they were promised is probably less than 50/50 worldwide with few exceptions.

This year’s WEC we will look at how to survive this crisis now that the Year from Political Hell is coming to an eventful end as Spain sends in 16,500 troops to invade Barcelona and subjugate Catalonia proving that it is still a fascist state. The last on the list will be the Italian election and the way Germany has gone, expect more of the same.

We will address this issue in a special report for many people asking how to survive this crisis when what you thought your future would be comes crashing down. This is the crisis we face in Democracy. Government will become more Draconian as we see in Spain to retain power. To hell with human rights or even what is moral. Government will only act in its own self-interest.

Categories: Pension Crisis
Sep 27 2017

Norway – The Largest Sovereign Wealth Fund in the World


Armstrong Economics Blog/Pension Crisis

Re-Posted Sep 27, 2017 by Martin Armstrong

QUESTION: Martin,

There are several news stories this past week reporting that Norway’s P has reached $1 trillion dollars, or $190,000 per citizen. Are there some countries like Norway that will survive the coming pension crisis?

 

Thank You,

 

Alex

ANSWER: Not many. They are far and few between because Europe, Asia, and North America (USA/Canada) have only made promises rather than funding. Norway is the largest Sovereign Wealth Fund in the world.  Norway has gotten where it is because they do NOT follow the brain-dead crowd of government debt is safe. Norway’s sovereign wealth fund has been one of the earliest to shift investment from public sector bonds to equities. They have risen to the largest fund in the world for recognizing the shift from public to private sector investments. Norway is the exception to the pension crisis

Sep 27 2017

The Mifid II Directive – Changing Research Forever


Armstrong Economics Blog/Products and Services

Re-Posted Sep 27, 2017 by Martin Armstrong

 

Many Institutions are turning to our services because of Mifid II. We are starting a free trial for Institutions now because so many are asking for help because we cover the entire world, do not have any conflicts of interest, and all reports on trading instruments are entirely written by the computer without human interaction. Given the wealth of lawsuits against banks and brokers for trading opposite their own research, the demands for turning to our systems has become exponential. Two of the top 10 banks are now instructing their clients to simply turn to our services. We are now rushing out the first phase of our Institutional service to try to help in this time of regulatory chaos and need. The key – NO CONFLICTS OF INTEREST, and absolute confidentiality with respect to your portfolio.

The Mifid II EU financial market directive is to begin in 2018, and is changing everything. Financial analysts employed by banks and securities brokerage firm are likely to find themselves without jobs. Hundreds are under threat of losing their jobs due to the new regulations taking hold.  Mifid II will change research forever reducing analytical departments on a grand scale. Banks and brokers will have to explicitly reimburse their expenses for the research, which up until now, has simply been part of the trading costs. A significant part the trading costs have been attributable to the work of financial analysts. Someone has to pay for them to write investment studies and letters, and provide advice to clients – asset managers, large investors and wealthy private individuals. The problem has been that such advice is far too often tainted with conflicts of interests and that has led to major lawsuits and big awards to clients. Even back in the 1980s, the top analyst at Salomon Brothers Wall Street investment bank, would come out with some recommendation and his own firm would be on the opposite side of the trade. Those days of conflicts have come to an end.

The banks and brokerage have not charged for these services until Mifid II. Instead, they have included their research costs in the fees for executed exchange transactions. This has given customers the impression that the entire wealth of financial analysis they receive is free. This will all come to an end very abruptly in 2018.

Indeed, this research use to be provided ONLY to our institutional clients when I was a market-maker back in the 1970s to early 1980s. When I announced that I would retire, clients then insisted that they would pay for the research if I kept it going. Clients offered to pay $2,000 an hour just to be able to still talk to me about the markets. The Wall Street Journal heard about it and asked to interview some of our clients to try to understand what was going on. The journalist called me back and was amazed people were paying for research on this scale. He said clients told him they would pay $10,000 and hour. Obviously, speaking directly to clients on a per minute basis every day was grueling, but also limited to the time in a day. Back then, I dared not explain I had a computer that would analyze the world. It was just too far ahead of the technology curve.

Today, Mifid II is changing research completely and forever. So we are stepping up to meet the challenge for this is the only such system in the world that actually writes real reports and does so by analyzing the entire world. In the future, asset managers will rigorously select what they really need from external analysis and consulting. But they have to justify their budgets for research again to their customers who will have to bear these costs.

Mifid II also affects those Swiss institutes which serve clients in EU countries and Liechtenstein as members of the European Economic Area (EEA). American firms doing business in Europe will also have to comply with Mifid II. Even British firms will have to comply because BREXIT will not save them soon enough.

The downside already is that the small and medium-sized asset managers are deciding to operate with significantly less analysis and go at it on their own. There is only one solution going forward. The research has to be automated to survive. There has to be a separation between the analysis and the asset manager, broker, or banker. Only this way will secure the future.

Our Global Market Watch was designed for Institutional Clients. We can create specific version for your portfolio as well. The primary objective if to provide a quick guide to the trends globally on short-term (daily) all the way to strategic long-term (yearly) investment horizons. You can look at your entire portfolio without having to read hundreds of reports and then remember how each analyst used different style to analyze what was their specialty.

This is from our Institutional Service now available on a trial basis for Institutions. There are general sector pages such as this one on stock indexes around the world. You can quickly see the trend and even when contagions start to emerge. This is the tool that will pick up contagions that you need to quickly react to in order to survive what is coming.

You can then drill down on any single market for a detailed history of the GMW and also into the written analysis generated entirely by the computer with no conflicts of interest.

This is the way of the future. The analysis must be independent, free of human bias, and our models have the LONGEST historical record of actually being in use from the 1970s.

If you are an institutional client, it is time to take a step forward into the future. We will provide a free trial so you get up to speed and understand how to use the model because Mifid II comes into play January 2018.

Our services can be tailored to the size of your institution. We can provide access to all your departments or limit it to just a handful of employees. We have the full gambit globally from asset managers to governments looking at this Institutional service around the globe.

Full service Institutional Services can include seats at the WEC and individual board presentations in house dealing confidentially with you own specific issues. Everything always remains confidential and we provide non-disclosure agreements. You do not have to worry about us trading against your portfolio.

 

Sep 27 2017

ECB Negative Rate Experiment May Lead to the Worst Financial Crisis in Modern History


Armstrong Economics Blog/Banking Crisis

Re-Posted Sep 27, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; Your proposition that the quantity of money theory is dead seems to be a true earth shattering perspective. It certainly disproves the Austrian School and the events post 2008 support your statement.

The European Central Bank is supposed to traditionally pursue the goal of monetary stability. The Germans have followed the Austrian School of Economics religiously. However, the ECB has used monetary policy instruments attempting to create an annual depreciation of the euro of just under 2 per cent without success. Since the outbreak of the financial crisis in 2008, the function and importance of the ECB has changed fundamentally and drastically.

In order to avert a core meltdown of the global financial system, the ECB went beyond the American Federal Reserve and other major central banks, launching an extremely expansive monetary policy lowering the key interest rates to negative territory. This has never been done in history and the ECB experiment has created tremendous problems moving forward. Moving the deposit rate for commercial banks parking money at the central bank to the negative range of minus 0.4 per cent combined with began buying up large amounts of government bonds and later corporate bonds of the worst quality, has completely failed to stimulate the economy.

My question is this. Have the measures taken by the ECB resulted not in averting a crisis, but transforming it into a far greater risk and simply extended the entire deflationary process?

Thank you

GK

ANSWER: Absolutely. This entire policy has failed to create inflation and has proven that inflation is not driven purely by the quantity of money. Confidence is the critical factor. The rich can move their capital to foreign lands. However, the average person cannot move their labor or money offshore. They have withdrawn their cash from the banks to place in their safes at home reducing bank deposits. The negative interest rates have hurt the pension funds and the elderly who once upon a time were able to support their retirement upon interest income have been seriously devastated by the ECB and nobody talks about them – the real lost generation added to the unemployed youth.

The ECB has seriously hurt the European economy and is now trapped. It owns 40% of Eurozone debt and an uptick in rates will devastate its portfolio holdings and probably create the biggest loss in the history of any central bank. Meanwhile, governments have been on life support and never reformed. When the ECB cannot buy more government debt, watch how fast rates rise. We are looking at a crisis that has no historical precedent.