The Chinese rating agency Dagong downgraded the US creditworthiness over the tax reform. What is really a total joke is why anyone bothers to rank any government debt whatsoever when in fact there is not a single government in the world who ever intends to pay off their debt. So why does anybody rate government debt? It is not like the USA would default. Deficits mean absolutely nothing. Obama’s first four years produced deficits that were nearly $5 trillion. Trump’s Tax Reform the Democrats claim will add $1 trillion. So why was $5 trillion OK but $1 trillion is not?

The entire rating game is a joke. Nobody will ever pay off their debts so why rate something that is impossible anyway?

QUESTION: Is the euro really going up on capital inflows or speculation leverage?

ANSWER: We are not picking up any real net capital outflows from the USA to Europe. It appears to be speculation on the currency markets in anticipation of higher interest rates coming down the line. But real capital has not begun to move and will not seriously move in until there are higher positive rates.

More concerning has been net outflows from the USA to emerging market debt. This has been a trend led by pension funds trying to earn higher yields. They need higher returns to try to cover net losses in interest income because of the lower rates. This is very dangerous for when the dollar reverses and rises into 2021, that emerging market debt will go into default. This will only further the Monetary Crisis we see coming in the 2020-2021 time period. Meanwhile, Excess Reserves at the Fed rose during 2017 up from the low in 2016. European banks have been parking cash at the Fed since 2016 to avoid the negative rates at the ECB. We need to see that rate rise at the ECB back to a positive return before the banks will return that capital.

COMMENT: Marty; I really do not know how anyone cannot recognize what you have discovered. The euro began its breakout precise on your target of the ECM on November 22 last year. You have proven beyond a doubt that there is a hidden order to everything if we care to just look.

My hat is off to you.

REPLY: Yes, the Euro broke out above the Downtrend line, then fell back to retest it on the 21st reaching 11713 when the support was 11708.  It turned back up precisely on the 22nd. These things amaze me. I try to emphasize all the time that this is not me making forecasts in so many markets. There is a hidden order that exists if we do just pay attention.

Nevertheless, on the higher up level of the ECN, that turning point was the 24th, which was that Friday. So it was a perfect fit even for the week as well.

Now, here is the Dow Jones Industrials. It too changed course and exploded after the precise target on the ECM of the week of November 24th.

Here is Crude Oil and how it responded. How markets interact at critical periods identifies the trend it will take. The whole key is to abandon personal opinion. You have to stop trying to always rationalize a move by reducing it to a single explanation

QUESTION: Mr. Armsyrong; Thank you for an eye-opening conference. Can’t wait for this year. You said 2018 was a Panic Cycle Year and that it would be unlikely to create an outside reversal in the Dow, but we should expect wild times ahead. Is this panic cycle impacting many other markets as well?

JV

ANSWER: Yes. This is the beginning of the Monetary Crisis Cycle that will go into 2021. That is probably where we will see the dollar rally break the world monetary system. This year, we should expect most markets to test BOTH sides of the game so pay attention to the Global Market Watch and the Reversals. This will tell us when the trends shift. There will be the classic fool who thinks that just because the euro finally exceed last year’s high or gold has rallied that this is it and that means the next four years will be the same.

Panic Cycles are notorious for trapping people on either the long or short side. You always have to trap the majority in order to create the slingshot to the upside of the waterfall to the downside. This is why they remain fools for they rush in based upon a few day’s price action. So far, everything is running its course. We are finally getting closer to the 125 threshold of resistance in the euro and the pound sterling has rallied with many starting to bet that BREXIT will not happen. Buying the Euro because interest rates are expected to rise with the ECB backing off of QE is just not being thought through rationally. QE has AILED to stimulate the economy after nearly 10 years, and all it has done is subsidize EU member states. Rates will rise when they start to have to sell to real buyers. Then the sentiment will shift mid-year and we will test the opposite side.

This is going to be a crazy year that seems to be divided into two trends in many markets (not all). We are going to issue the 2018 Canada Report, 2018 Gold Report, 2018 stock market report as quickly as possible. The Canda Report will be available at the Vancouver event in February. I will also be the keynote speaker this year at the Hack Miami 2018 programmer’s conference May 19-21, where I will be delivering the lecture on the future and AI Programming.