We have another insane police tactic designed to again strip us of our right and clothing. The police in Rotterdam can now stop and question you based on if you are wearing expensive clothing. You have to prove you bought it and had the money to do so that was legal (paid taxes on it) or else they can strip you of your clothes. You are presumed to be guilty and have to now prove you had taxable income to buy your clothes. This is just going way too far. This is the next step in the hunt for taxes.

COMMENT: Mr. Armstrong; I have followed you since the 1980s. I have never known you to ever miss an event like today. Thank you for showing the world how everything really is connected. Your system is truly amazing.

DK

REPLY: It is very gratifying that people are becoming students of the market. If we grasp this simple understanding, then we can change the world from politics to eliminating frauds like Global Warming.

Thank everyone for the flood of emails regarding this move. Perhaps one day we will force the world to look before it is too late.

I will be doing an update on the Private Blog this weekend. This is what a Panic Cycle Year is all about. This was a good panic in a very long time. That will help clean out the recent bull analysts so they can return to their bearish outlook once again. As I have made clear so many times, stock rise with higher rates – they do not decline. The trend changes based on time. Fashions change also based on time. We reach a magical point and grow tired of the present situation and just want change for the sake of change. Welcome to humanity. The crack today was based on time regardless of the news.

Before socialism, higher rates were interpreted as bullish because it demonstrated that there was STILL demand to borrow. Rates decline during deflation, depression, and recession BECAUSE people are not interested in borrowing or expanding – they hoard for a rainy day waiting for the sun to shine once again. Perhaps I should teach a class for central bankers like Draghi. Let’s just begin with history rather than fictional theory.

Inevitably, all things must come to an end.  Our entire problem with government is we have ZERO accountability and ZERO qualification standards to even run for office. The Democrats have put forth blacks and women, not because of their abilities, but simply because they want to score votes. The latest proposal was to put Oprah Winfrey up for president. She is black and a woman. This is the qualification requirement? This is like going to Jay Leno for brain surgery. This is why we are in such a crisis. Oprah may be a nice person, but that does not qualify her to make a decision in international relations no less economics.

We impose no qualifications to be a politician. Anyone can run for office. We are in serious trouble because we elect people who have no idea what is going on and just assume everything has been working so why change it? I have warned that the Central Banks in quantitative Easing set the stage for the next crisis. The excessive low-interest rates for nearly 10 years has undermined the pension system while all governments have borrowed like crazy never considering what happens if rates rise?

In Britain, two out of three pension funds are in the deficit. In total, some 3,710 pension schemes are in deficit according to the Pension Protection Fund watchdog. The entire Ponzi Scheme of pension is falling apart. We need crisis management right NOW and there isn’t a hope in hell of moving to such a position of a Crisis Manager. Millions of workers around the world who believed in government are going to see their futures wiped out.

There is going to have to be a NEW Cabinet position with dictatorial powers as a crisis manager. If we continue to ignore this issue, we are headed into a very serious Monetary Crisis and there is NOBODY in office that even understands the threat. So individually, we must ride this wave and to survive, we simply have to comprehend the nature of the crisis. The idiots who are in power will try to raise taxes to fill a deficit for one month. They are not addressing the crisis. This cannot be fixed by raising taxes. We need real CRISIS MANAGEMENT skills and soon

Many have asked for some clarification on the Reversal System and how we use it to ascertain changes in real trend. As stated previously, trend change ONLY on the Monthly Level of time. The Daily and Weekly levels are the noise. This is where most people lose their money trading because a correction may appear to be a change in trend but it will suck them into a false move. Only at the Monthly level can we determine the true character of a market be it bearish or bullish.

We can see that there were periods in the Dow that provided brief corrections. The challenge was to determine if those corrections change the trend. On our model, we can draw lines in the sand that if crossed provide the identification that the trend is actually changing. Trend is changed by electing all FOUR Monthly Bearish Reversals. What is typical is the fact that we elect the first two and hold the third. This is a strong correction which typically moves the majority to assume the trend has changed when it has not.

In the case of Gold, why have we been optimistic that gold will turn around and rally when the Monetary Crisis Cycle begins? When we look at the Monthly Reversals, gold has pushed through the first THREE reversals yet stopped before the fourth both on the upside and downside. From the major high, we elected the first three Monthly Bearish but not the fourth at $903. This is why a dip below $1,000 remains possible but unlikely to elect that reversal. Such a move would be enough to trap the majority and set the stage for a rally that is at last not believed as we have seen in the Dow.

Then from the 2015 low, gold rallied and again moved through the first three Monthly Bullish Reversals stopping at the fourth. We have the perfect balance that is often the character of markets – equal opportunity for each side.

The major TREND is determined ONLY at the Monthly Level. Electing all FOUR Monthly Reversals to change a trend from bullish to bearish or bearish to bullish is by no means an easy accomplishment. Never get fooled by short-term moves on the Daily and Weekly level. So many people immediately call for a change in trend based upon just a few days price action. These are the people who are easily separated from the money rather quickly and will blame everyone else but themselves.

QUESTION: Powell is from the Carlyle Group which people say you advised. Do you know Powell? What do you think of his agenda? Will you be advising him?

PD

ANSWER: No, I never met Jerome Powell. Our contacts with the Carlyle Group I am not at liberty to confirm or deny with regard to any client. I can say I have never been called to a board meeting at the Carlyle Group and keep in mind it was formed only in 1987. It is more of a politically connected private equity fund. If Powell and I met that may have been at some political event in Washington but I was always introduced to countless people at such events. So if we did shake hands, neither of us probably remembers. I remember meeting Paul Volcker at such an event, but he towers over everyone at 6’7″. You can’t miss him.

Now to move beyond the rumors, the Senate voted 84-13 to approve Jerome Powell who is a 64-year-old lawyer to make him the Chair of the Fed for the next four years beginning early next month. What is significant here is the vote was better than Yellen received. She was appointed with a vote of 56-26 in 2013, and it was a 70-30 vote when Ben Bernanke was named to a second term. So Powell has captured the most support recently. As stipulated in the Banking Act of 1935, the Chairman and Vice Chairman of the Board are chosen by the President from among the sitting Governors and must be confirmed by the Senate. So there was no possibility of an outsider coming in. William Martin was the longest serving chair, holding the position from 1951 to 1970.

According to the U.S. Senate Historical Office,  the first Senate confirmation vote on a Fed nominee was back in 1978 for G. William Miller which was by unanimous consent. The 1983 confirmation vote on Paul Volcker was 84-16, when he had the most “no” votes ever recorded against a Fed chairman up to that time.

1. G. William Miller  1978 unanimous consent
2. Paul C. Volcker 1979 98-0
3. Paul C. Volcker  1983 84-16
4. Alan Greenspan 1987 91-2
5. Alan Greenspan 1992 unanimous consent
6. Alan Greenspan 1996 91-7
7. Alan Greenspan 2000 89-4
8. Alan Greenspan  2004 voice vote
9. Ben Bernanke 2006 voice vote
10. Ben Bernanke 2010 70-30
11. Janet Yellen 2014 56-26
12. Jerome Powell 2018 84-13

Powell has been regarded as conservative and central in his economic beliefs. Powell will move the Fed down a steady course toward gradually higher interest rates and a smaller balance sheet. This was already set in motion by Yellen. My sources do express that there has been internal questioning at the Fed whether Trump’s tax cuts will impact inflation given they do expect this to be more of an economic stimulus than any central bank to date has been able to create with Quantitative easing.

The real issue is how far will Powell go to accommodate the Trump administration to roll back some post-crisis financial regulations. Keep in mind that Goldman Sachs has three strategic people now in place controlling the agenda.

The potential for financial deregulation advocated by the Goldman Sachs controlled Trump administration dominated the opposition to Powell. While Powell was a former executive at the Carlyle Group, his credentials for a Fed chair position are rooted in his understanding of markets despite being a lawyer by training. Those that say Powell is not qualified because he was not an economist by training are off the mark. A trained economist deals in theory, not reality. Just look at Larry Summers became a professor of economics at Harvard University in 1983. He is the father of negative interest rates and supported the repeal of Glass Stegall. Summers was directly responsible for the 2007-2009 crash for the whole mortgage-backed securities scam would not have been possible without the repeal of Glass Steagall. Summers is also going to be blamed for the Pension Crisis thanks to his negative interest rate theory which after 10 years has left Europe still in deflation. So thank God Powell is not an economist.

Senator Elizabeth Warren, the extreme leftist crazy person who does not understand what she thinks she does, voted against Powell saying: “We need a Fed chair who can stand up to Wall Street … That person is not Governor Powell.” Of course, California’s Democratic Senator Dianne Feinstein also joined the no vote. That should be no surprise.

The 12 votes against Powell included both Democrats and some conservative Republicans. While Powell was largely uncontroversial pick given his monetary policy views were closely aligned with Yellen‘s, his service on the Fed’s board since 2012 has shown he is supportive of the consensus forged by Yellen for gradual interest rate increases and reducing the balance sheet holding of debt.

Powell has never dissented on a monetary policy decision during his nearly six years at the Fed. Nevertheless, the recently released transcripts of the Fed’s deliberations during 2012 revealed that he was not comfortable at the time with the Fed’s massive bond-buying program. Indeed, even in the USA, interest rates remain very low closer to a 5,000-year low in the context of a 4.1% unemployment rate, with the inflation-adjusted basis of the economy as it is still lingering around zero proving the whole QE really failed and Summer’s negative rates have merely set the stage for the next crisis.

The Fed raised interest rates three times last year and they have implied that they will probably raise them three times more this year. That may be too slow, but we will see. The government debts will explode and that will be the next crisis.