Tag Archives: David Pristash

Feb 1 2019

Italy Falls into Recession


Armstrong Economics Blog/ECM

Re-Posted Feb 1, 2019 by Martin Armstrong

QUESTION: It is official. Italy is now in recession. Obviously, the Fed is looking outside its own economy. Your Economic Confidence Model is remarkable. I have been following you now for more than 10 years. It has always been correct. Why does the economic community and governments pretend you cannot forecast the economy? You have proven the economy can be accurately forecast.

PV, Rome

ANSWER: Yes, Italy has turned down. The Fed knew what is coming. All these pundits who claim the stock market forced the Fed to change policy have only shown their total ignorance of the true factors upon which central banks will act.

I have probably met with more central banks than anyone.  They all know the Economic Confidence Model. That is one of the primary questions I am asked by them – where does it stand now. They cannot publicly come out an say the economy will turn down now for fear that they will be blamed. Just look at the Russia-Trump nonsense. They want to pretend that Hillary would have been elected BUT FOR the release of the emails which showed he true colors. Our computer was forecasting she would lose BEFORE any emails were released. The trend was already set in motion – anti-career politicians. Just look around the world and you see the same trend. But it is easy to always blame someone else for your failure. Thus, central banks cannot forecast a decline because if it happens, they would be blamed just like the Russians right now for Hillary’s loss. The central banks can only forecast economic growth, not recessions.

As for the academic community maintaining that the business cycle cannot be forecast, this “opinion” is self-serving. To announce that the business cycle is regular means you cannot control the economy and the entire theory of Marx and Keynes is completely wrong. They kill Kondratieff because he warned the business cycle would kill communism. The economic community would not be able to put out theories to manage the economy and they would have no importance if they admitted they cannot control the business cycle. It is just self-interest.

I have been talking with central bankers for months and it has been about the decline into 2020. That is the backdrop to the Fed’s actions – not the stock market. And as for gold, it rallies because interest rates will decline when the Fed said there is less of a risk of inflation? It just seems the reasoning is never consistent.

Feb 1 2019

Professor Jordan on Climate Change – the Reality


Armstrong Economics Blog/Climate

Re-Posted Feb 1, 2019 by Martin Armstrong

 

Feb 1 2019

Hell has Actually Frozen Over


Armstrong Economics Blog/Climate

Re-Posted Feb 1, 2019 by Martin Armstrong

 

There is a town named HELL in Michigan. It has actually frozen over. There were more than 3,600 flight cancellations and more than 14,867 delays. This extreme cold weather coupled with the shutdown will mean that the 1st quarter numbers in the US economy will also turn down sharply. Temperatures dropped into the mid 40s here in Tampa and I went to the movies to see a feature and there were at best 8 people and nobody on the road even down here. Power companies have been asking even General Motors to suspend production due to extreme temperatures. While Hell freezes over, the GDP of the US economy will decline and that is very bad news for the rest of the world that depends on selling things to American consumers – especially cars.

I suppose we failed to drive our cars enough to warm things up or it must be a new secret weapon of Russia that the Democrats can investigate and somehow link to Trump.

Categories: Climate
Feb 1 2019

The Deep Freeze – Chicago is Colder than Antarctic


Armstrong Economics Blog/Uncategorized

Re-Posted Jan 31, 2019 by Martin Armstrong

 

Chicago is now even colder that Antarctica with wind-chill factors at 70 below zero. What really astonishes me is that nature is never responsible for anything. Somehow, we are always to blame. This attitude seems to be exceptionally arrogant for we are more powerful than nature and to presume so we must assume that God also does not exist – we are the new all powerful beings.

Back in 1907, they were talking about how the warmest places were in the Arctic Circle. Weather records clearly demonstrate that there are cyclical periods of cold and warm. The planet is not something that is even supposed to be the same every year. There are always fluctuations.

Now we have the Global Warming people who have been dead wrong taking credit for the deep freeze still blaming humans and they switched their label from Global Warming to Climate Change so when it is colder each year they can still claim it is cause by human activity. Therefore, they will NEVER be wrong.

The way they make their forecasts are they just ignore all the evidence that is contrary to their thinking. NASA reported that the ice sheet in Antarctica is growing not shrinking. OOPS! We have to ignore than one. They were forecasting that this winter would be warmer and milder. Of course, nobody ever brings up all the forecasts they have been dead wrong on continually.

Jan 31 2019

Economic & Real Estate Bubbles


Armstrong Economics Blog/Real Estate

Re-Posted Jan 31, 2019 by Martin Armstrong

QUESTION: I work in the construction industry in Phoenix Arizona and there has been a boom in new construction for apartments, condos massive housing tracts and all of the retail that follows this.
When I read about your worldwide property crash forecast the economic forecast for growth in our market is that that there is no end in sight for the next 6-8 years.
Are these guys whistling past the graveyard??
Thanks and keep up the good work!

JW

ANSWER: There are 8 states without an income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, and Tennessee). You are in one of them that is receiving NETpopulation growth. There are herds migrating there from California. Now that said, the real estate market will have an undying bid in those states, but that will be specific to particular regions within the state. However, the trend that will cap the real estate is clearly interest rates and banks. The greater the decline in confidence in government, the less likely it will be to find long-term mortgages. The 30-year fixed rates mortgage will eventually vanish.

During the Great Depression, real estate collapsed to 10% for there was no money available for loans whatsoever. On June 13, 1933, President Roosevelt signed the Home Owners’ Loan Act into law thereby creating the 30-year mortgage to try to give people time to buy a home that they otherwise could not afford without having the cash. This is the 86-year cycle due here in 2019. This really implies that we may see a Directional Change whereby the confidence in the future will start to decline because of political instability. Of course, we can now count on Alexandria Ocasio-Cortez to scream about taxing the rich and their property. The Democrats WILL look into creating a major tax increases and this will seriously harm the economy. We will see a collapse in capital investment resulting in money for 30-year mortgages drying up.

Hence, they always say there is no end in sight to all booms. We should still see 2019 provide a peak in new construction as capital becomes scarce to fund such projects.

 

Jan 31 2019

Nothing Can be Reduced to a Single Cause & Effect be it Markets or Nature


Armstrong Economics Blog/Climate

Re-Posted Jan 31, 2019 by Martin Armstrong

QUESTION: Dear Mr. Armstrong,

Thanks for the Socrates forecast.

Just a question. What will possibly happen to existing Tropic Belt countries like my region South East Asia when the world is turning into global cooling? Any forecast?

Regards,

SS

ANSWER: I am awaiting their data to run it through and see what comes out. This is what I mean about opinion. How can anyone forecast something without the data? What we do know is also that the Jet Stream moves up and down, so it would make sense that the Tropic Belt would also do the same. The Jet Stream has been dipping as well and creating a very diverse curve pattern. So this produced the COLDEST New Year’s Eve on record last year. This is also why you have people who want to claim it is irrelevant if people die of cold in Wales. They argue that since it is warm where they are in Canada, it must prove that Global Warming is real. They are not the brightest bulb in the box.

Then we have the Pacific Jet Stream. These people who always try to reduce any effect to a single cause should be barred from any research EVER!!! If you want to understand how interconnected our planet is then you also need to look at and study El Niño. The interconnectivity is similar to all the world financial markets, which create a level of complexity beyond most human’s ability to rationalize. Both the weather system and the financial system function on an extremely high level of complexity. The patterns and events in one place can affect life on the other side of the planet in both systems.

Hence, one person will argue it is Global Warming because they happen to be in a hot spot and others are dying in blizzard conditions. I moved to the Tampa area where hopefully the Jet Stream does not bring ice on my windshield. Nevertheless, it has been unseasonably cold here as well and it has even dipped into the 30s at night as far south as Miami.

Then we have the real simple minded people who actually believe we would drown if all the ice melted in the Arctic. They have completely forgotten about EVAPORATION. If the ice melted, that water would mix with the Atlantic and Pacific, causing them to become colder. But then the Arctic would be able to evaporate. This is how Ice Ages take place for a very long time because the water returns as snow and that is how the glaciers build.

There have been at least five major ice ages in the Earth’s history (the Huronian, Cryogenian, Andean-Saharan, Karoo Ice Age, and the current Quaternary Ice Age). Aside from these ages, the Earth seems to have been ice-free even in high latitudes. This is a historical fact that the Global Warming people ignore. Based upon the data we have gathered, there appears to be a cycle of 430 million years. This agrees with the 8.6-year frequency. The last Ice Age was the Quaternary glaciation, which was actually a series of glacial events separated by interglacial events. This began 2.58 million years ago, so at least according to our models, we have plenty of spare time left in this cycle. However, the ice caps today that the Global Warming people are screaming about are the remnants of that period. There is a bottom to the Arctic ice cap. The Antarctic ice sheet actually began to form earlier (about 34 million years ago) in the mid-Cenozoic to late Cenozoic Ice Age period. That means there have been periods that existed without ANY ice caps. We cannot blame even Egyptians for climate change since civilization did not exist back in those days.

This is my problem with the whole Global Warming nonsense being attributed to humans. I would agree if they could show me evidence that such a condition NEVER existed previously before the Industrial Revolution. To me, this is just a cycle and we should respect that the planet if a far more complex system than these idiots put out. NOTHING can ever be reduced to a single cause and effect.

 

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 29 2019

Climate Change & Commodities


Armstrong Economics Blog/Agriculture

Re-Posted Jan 29, 2019 by Martin Armstrong

QUESTION: Mr. Armstrong; I love the fact that you look at everything from a pure cyclical perspective. Al Gore who started this whole mess was not a climatologist. He was a politician. You are 100% correct that people will believe what they want to believe. There is no talking to one of this idiots. When there is a food shortage, they will be the first to advocate taking food from those who did prepare. Did wheat rise in value during the Dust Bowl because of the decline in supply? They don’t have wheat charts that go back that far on ____ system.

WP

ANSWER: You cannot forecast the future of anything in isolation. I only look at the cycles. The computer correlates absolutely everything including the weather. The correlation models show that we are heading into a colder period. This is when crops fail and the ground freezes as far down as two feet, which makes winter crops impossible. We are also heading into a solar minimum and that is when there are far more volcanic eruptions and earthquakes. All I can say is that it appears that when the ECM turns, the next wave will be back to an inflationary run and we should also see a rise in commodity prices. We have two major trends behind that: 1) weather, and 2) fiscal mismanagement resulting in currency value changes.

The Dust Bowl Rally in wheat was about 245% advance 420 to 1452. What also came into play, interestingly enough, was the devaluation of the dollar in 1934 from $20.67 for one ounce of gold to $35. That was effectively a near 70% devaluation of the dollar. We are approaching our Monetary Crisis Cycle, which will again mark the decline in purchasing power of world currencies. Just maybe we will see a very similar convergence of trends that took place during the Dust Bowl era.

Categories: Agriculture, Climate