Tag Archives: David Pristash

Aug 31 2018

The US Share Market Reality Exposed


Armstrong Economics Blog/Dow Jones

Re-Posted Aug 31, 2018 by Martin Armstrong

The US share markets are being driven up by two main factors. First, institutions have sold the market assuming there would be a major crash. In February at the lows, Goldman Sachs was forecasting that the market could plunge another 25%. In May, Goldman Sachs again was warning that the next crash will be worse because of computerized trading. Investopedia published an article last January: Why The 1929 Stock Market Crash Could Happen In 2018. Fox Business reported on October 18, 2017: Stock market crash inevitable, financial historian says. The number of forecasts that keep calling for a major crash has been truly amazing. This has been one reason why I have said that this is the Most Hated Bull Market in History! For at least the final 18 months going into the high on September 3rd, 1929, the general consensus turned bullish. People were also bearish and in fact, the Wall Street Journal even accused Jesse Livermore of turning bullish to try to influence the presidential election. Strangely reminiscent of Russian hackers in 2016. As long as the major remain bearish calling for every top to be the last one, you know we are nowhere near the high yet.

Besides the constant selling that has led to repeated short-covering, we also have the excuse that the rally is primarily being caused by massive buybacks by corporations of their own shares. They point out that corporate-buy-backs will also reach an all-time high in 2018. They present this as evidence that somehow these purchases are not legitimate. In truth, the excess cash has led companies to buy back shares which will have two interesting impacts. First, it actually creates a shortage of shares. This was one factor in creating the 1929 bubble.  Indeed, some of the last stocks to be floating going into the high of 1929 were Mausoleum companies.

Additionally, the US share market has benefited from the political-economic turmoil outside the USA – especially in Europe. Even IMF acknowledged that the European Central Bank’s pledge to buy government bonds set in motion a capital flight and the financial fragmentation of the eurozone back on October 9th, 2012.  the return of global dollar capital to the US as a result of the central bank’s interest rate hikes also contributed to the positive trend. When we look at the Dow Jones Industrials, we can easily see that it continues to make new highs in Euro. This foreign buying has absorbed domestic selling.

Aug 31 2018

The Significance of the Velocity of Money


Armstrong Economics Blog/Economics

Re-Posted Aug 31, 2018 by Martin Armstrong

QUESTION: Greetings Marty,

I have followed you since the old Money Radio days!

Can you help me understand the disparity between the declining velocity of money, the growth of the economy and what the natural consequence may be?

Thank you for your willingness to share your knowledge!

Regards,

MRM

 

ANSWER: Oh yes. Buzz Schwartz was a fantastic guy. I enjoyed doing his show there in California. The economic growth has been declining for decades as has the velocity of money, As the velocity declines, it shows that people are either saving more or they do not have disposable income after taxes to spend.  Normally, the velocity will decline and that is a sign of a recession. This is the normal reaction when people save and do not spend. However, if you are not in an economic recession/depression there is no FEAR FACTOR of what the future will bring, then the velocity declines because people really do not have the money after taxes to spend. This is one reason I keep harping on – it’s the taxes stupid!

In the USA, the velocity bottomed during the 2nd quarter of 2017 and has started to turn up with Trump lowering taxes. This is the first uptick since the decline began from the 3rd quarter of 1997 when the capital flows began to shift creating the 1997 Asian Currency Crisis. When Obama raised the tax rate from 35% to 39.6% in 2013, that began the real sharp decline.

The decline in the velocity of money and the rising burden of taxation is very alarming. That has been the worst combination which has suppressed the Euro zone economy. We see this with central banks setting targets for 3% inflation and they cannot reach that level.

Aug 30 2018

Why are Robots Changing the Future?


Armstrong Economics Blog/Economics

Re-Posted Aug 30, 2018 by Martin Armstrong

QUESTION: Do you think that robots will eliminate a lot of jobs in the future?

EH

ANSWER: Yes. But you have to understand WHY are we even turning to robots. The answer to that question is TAXES & SOCIALISM! The bottom line is rather blunt. Any routine job that can be replaced by allowing the consumer to choose their own order to be it at a fast-food store or the internet will be at risk along with jobs that are easily be defined by a mathematical or logic equation will be at risk in the future. Many companies are now limiting workers to 33 hours per week or less to simply avoid having to provide benefits and pensions.

Health reform is ABSOLUTELY vital for the future. To be able to provide REASONABLE health care at a reasonable cost DEMANDS tort reform. This is what is driving the cost of medicine really high because the doctors have to pay huge insurance fees because of the lawyers. Turn on the radio and you hear ads for lawyers all the time. They are the NUMBER ONE occupation among those in Congress so you can bet they will NEVER provide tort reform against their own industry. This idea of universal health care is a real joke. They will make comparisons to Europe, but fail to explain that doctors work for the government in most cases.

Obamacare really escalated the entire problem. What Obama pulled off was the idea that forcing the youth to buy insurance would reduce the cost for those who really needed it. There were ZERO reforms and just more bureaucracy. You cannot get the benefits without reforming the system.

Then throw in the pension crisis. This is leading to growing part-time employment and makes robots VERY attractive to replace jobs because they do not require benefits and salaries. As for universal income, here we go again. This is another ploy where we keep trying to come up with schemes that support a system that is failing. Deal with the heart of the issue and just maybe we might get somewhere.

Let’s eliminate the income tax and adopt a new system which will not make labor outrageously expensive.

Aug 30 2018

The Rumors are that Turkey Will Default


Armstrong Economics Blog/Uncategorized

Re-Posted Aug 30, 2018 by Martin Armstrong

The rumors running around is that Turkey will default as Erdogan decides to move to align with Iran and Russia and leave the West behind. While there have been speculative attacks on the Turkish economy and US tariffs and sanctions have been detrimental, the initial causes of this growing monetary problem are really all internal. Erdogan’s management of the economy has been a disaster. He has pretended to borrow too much money from foreign investors to stimulate the economy. It is true that the total debt rose to over $450 billion, about half of GDP. Turkish exports and the current account deficit rose to $50 billion. This has led to rapid inflation that has been at least an annual rate of nearly 7% on average during the last ten years. In truth, Erdogan was really trying to build the economy to fulfill his dream of reestablishing the Ottoman Empire and emerge as at least the dominant power over the Middle East.

Unfortunately, Erdogan is stubborn and he really has no way out. He wants his cake and consumes it all at the same time. The rumors running around the trading desks is that he will pull the plug and turn his back on the West. By doing so, he can then justify defaulting on the debt of the “corrupt” West who wants to subjugate Turkey will be the justification spin of things. It looks like this will remain volatile into October.

Aug 29 2018

Three Volcanoes Erupt at Same Time & New Evidence of Gamma Ray Intensity


Armstrong Economics Blog/Climate

Re-Posted Aug 29, 2018 by Martin Armstrong

 

A number of people have written in that they enjoyed the phrase I made up that we are like a pebble at the bottom of the ocean with no clue what lies above our heads. I have stressed that our computer correlated volcanoes with the decline in solar sunspot activity. What has also been strange is that further research has revealed that when we go into Solar Minimum, this is also simultaneously the maximum output of Gamma Rays. I offer no explanation as to why volcanoes tend to erupt more during solar minimum. My role here is simply to correlate everything to understand the trends set in motion behind the economy. Weather and shortage of food have been major factors in economic history setting off migrations and extinctions.

Gamma Rays are the most energetic form of light and are produced by the hottest regions of the universe. They are also produced by such violent events as supernova explosions or the destruction of atoms, and by less dramatic events, such as the decay of radioactive material in space. Things like supernova explosions (the way massive stars die), neutron stars and pulsars, and black holes are all sources of celestial gamma-rays. Interestingly very few gamma-rays actually make it through the atmosphere. Gamma-rays can strike the material and produce ‘secondary’ particles which are more penetrating and can go through the material. Consequently, the majority of the cosmic rays that actually reach the Earth’s surface are ‘secondary cosmic rays’, produced by gamma-rays. Primary cosmic rays are high energy particles (such are protons and the nuclei from iron atoms) that are moving at speeds very close to the speed of light. These primary cosmic rays are mostly deflected by the Earth’s magnetic field. If Earth didn’t have a magnetic field, there would be many more primary cosmic rays hitting the atmosphere, and many more secondary cosmic rays hitting us and penetrating .the Earth itself.

These waves are penetrating electromagnetic radiation of a kind arising from the radioactive decay of atomic nuclei. Gamma Rays are beyond X-rays and will obviously penetrate deep into the Earth. This may be pointing to the cause of an increase in volcanic activity. The Earth’s magnetic field serves to deflect most of the solar wind, whose charged particles would otherwise strip away the ozone layer that protects the Earth from harmful ultraviolet radiation. According to scientists’ best estimates, the Earth’s magnetic field is now weakening around 10 times faster than initially thought, losing approximately 5% of its strength every decade. But they don’t really know why, or what that means for our planet. This could be the precursor to the poles flipping.

 

 

Here we are in August 2018 and three volcanoes in Indonesia erupt all at the same time. The three volcanoes that are rumbling and spewing ash are Mount Sinabung (pictured here), Gamalama, and Rinjani. In fact, this year we now have 34 major volcanoes erupting worldwide compared to 12 last year and 11 back in 2015. In the Ring of Fire, we now have 6 volcanoes erupting this year with another 5 in Indonesia alone. There are now 4 erupting in South America, 5 in the Mexico/Carribean and Central America. In Africa and the Indian Ocean there are now 4 volcanoes erupting and in the Pacific Ocean, there are are another 6 erupting. In Europe, we have one in Italy erupting in the Eolian Islands – Mt Stromboli. Lastly, there is even one in Antarctica melting ice.

While we have had extreme heat in Europe, now there is early snowfall in Russia and in the Alps. Then Melbourne Australia is freezing. Meanwhile, we have Mexican farmers blaming German auto manufacturers for creating a drought. Perhaps when they figure out that this is a natural cycle they will file a lawsuit against the various churches, temples, and synagogs that represent God on Earth. Someone has to be blamed!

It certainly looks like we are headed to a commodity boom between 2020 and 2024

Aug 29 2018

Flipping of the Poles Rapid of Gradual?


Armstrong Economics Blog/Nature

Re-Posted Aug 29, 2018 by Martin Armstrong

QUESTION: Mr. Armstrong; I read your Mayan report and it was fascinating. Do you think that these strange anomalies of places that are cool experiencing hot summers and where it should be hot have been getting cool are a prelude to climate change that may be the preparation for the flipping of the poles?

EK

ANSWER: Nobody knows for sure. There are a number of scientists who are very concerned that we are overdue for the reversal of the poles. Nobody really knows the consequences since we are talking about a period beyond recorded history. One theory is that the magnetic field is what shelters us from the worse of the sun. The magnetic field has been declining in magnitude. This is what many fear is the real cause behind the appearance of climate change.

We were given the data to run it through our computer and it came up with a cycle of 720,000 years. We are clearly overdue and how do you measure that is hard to say – weeks, months, years, decades, or centuries? It has been postulated that such a flip will be devastating for our shield against harmful radiation from the sun will be diminished. Some have even raised the issue that this could be a factor in mass extinctions.

What I can say is that based upon our models, the pole flip will be rapid, not gradual. The prelude may appear gradual as we see now with a 5% decline per century. However, we will cross an invisible line and then it will flip instantaneous not gradual. It will act like a pot of boiling water. It will be no means be a linear progression.

Aug 28 2018

Zimbabwe – New President is Sworn In


Armstrong Economics Blog/Politics

RE-Posted Aug 28, 2018 by Martin Armstrong

QUESTION: Dear Mr. Armstrong,
Zimbabwe is just coming out of a very hard time. Their currency is not (at least to my knowledge) recognised internationally. What advice would you give to the Government as they try to sort out this situation? Would you consider advising them on the way forward so that they do not make any fundamental errors in the beginning. It is a lovely place, I can assure you, if you do go.
Best regards,
CH

ANSWER: I am aware of the hope which has taken hold there in Zimbabwe with the tens of thousands of people celebrating the victory of President Emmerson Mnangagwa yesterday. He really needs to restore world confidence and that is possible. He finished out Mugabe’s term but almost 20% of the white population fled and Mugabe was a Marxist. It will take some political guidance, but if he would really listen, he could actually transform your country into a powerhouse. The first and primary directive is always the rule of law. If a property can be taken, then capital will never trust such a nation. It falls into the category of Country Risk.

Overall, the economy of Zimbabwe was quite strong. From 1991 to 1996, the Zimbabwean Zanu-PF government, which was in power since independence, and its President Robert Mugabe adopted an Economic Structural Adjustment Programme (ESAP) that was really insane and we see similar policies rising in South Africa. Mugabe created an extremely serious economic change that was not unlike the drastic approach of Maximinus I of Rome. Maximinus effectively attacked the rich and paid informants who reported anyone with hidden wealth. Commerce began to collapse and it was his actions that really began the decline and fall of Rome into 268AD.

We have to be honest here that Mugabe created the hyperinflation in Zimbabwe that began in the late 1990s because of his Marxist philosophy shortly after the confiscation of private farms from white landowners towards the end of Zimbabwean involvement in the Second Congo War. During the height of inflation from 2008 to 2009, it was difficult to measure Zimbabwe’s hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. However, Zimbabwe’s peak month of inflation is estimated at 79.6 billion percent in mid-November 2008.

We would provide a set of proposals, but it would have to be confidential. If President Mnangagwa agreed, then and only then could we make them public. The risk of creating false hope in markets is not wise.

Aug 27 2018

The Bloom is Off the Ruse: Angela Merkel Again Rejects Attempts to Enforce Paris Climate Treaty…


Re-Posted from The Conservative Tree house on August 26, 2018 by

In June, 2017, while trying to keep President Trump committed to the Paris Climate Treaty, Germany’s Angela Merkel and France’s Emmanuel Macron delivered a joint statement proclaiming: “the Paris Climate Treaty is irreversible and cannot be renegotiated.”

U.S. President Trump knew the economic ramifications would handcuff the U.S. and that was the primary motive behind their demands. Rightly POTUS Trump brushed off the demands and withdrew the U.S. from the treaty, in July 2017:

Then came a predictable series of events…

A month after U.S. President Trump called out the ridiculous globalist economic agenda and withdrew the U.S. from participating, German Chancellor Angela Merkel responded on August 20th, 2017, by removing her own country from the primary treaty demands.  Five months later, January 2018, the anointed leader of far-left international political policy then withdrew entirely from the 2020 carbon emission reduction goal.

All of these moves only further evidenced that ‘climate change’, vis-a-vis the Paris Treaty, was/is an insufferable economic control policy; a ruse; a scheme manufactured by global financial elites who seek power and leverage upon the sheeple proles.  Merkel well understands that global emission control mechanisms, specifically carbon reduction schemes, are nothing more than policy tools to exfiltrate national wealth.

Today, much to the chagrin of the barking moonbats and pontificating international elites, Chancellor Merkel refuses to change her position:

(Via Reuters) […] Merkel said such calls, most recently from the European Commission’s climate chief Miguel Arias Canete, for swifter cuts to harmful carbon dioxide emissions would be counterproductive, adding that setting new goals made little sense when European countries were already struggling to meet their cuts targets.

“I’m not particularly happy about these new proposals,” she said of Canete’s call to increase from 40 to 45 percent the scale of cuts to target by 2030.

“I think we should first stick to the goals we have already set ourselves. I don’t think permanently setting ourselves new goals makes any sense.”

Merkel’s government has already faced criticism for abandoning emissions targets it had set itself for 2020 after concluding they were unachievable, while sticking to a target it had set itself for a decade later.  (read more)

In related news…. Approximately two weeks ago the mainstream media was apoplectic when Interior Secretary Ryan Zinke explained the root cause of the California wildfires.

When Secretary Zinke said the primary problem was a failure of State and Federal officials to control the fuel load and manage the forest(s), the climate nuts went bananas.  WATCH:

.

Well….

….Fast forward two weeks later, and here’s the latest plan from California Governor Moonbeam:

The Hill

✔ @thehill

California Gov. Jerry Brown considers easing logging rules to help fight fires http://hill.cm/ZcWi9K9 

Go figure!

Aug 27 2018

The Fight Behind the Curtain inside the EU


Armstrong Economics Blog/European Union

Re-Posted Aug 27, 2018 by Martin Armstrong

Italy is the third largest economy in Europe just behind France, but it is number two insofar as industrial production is concerned. The French manufacture three main brands, Peugeot, Citroen, and Renault, in the world of automobiles which are not very popular in the USA. The Italians, however, have the more recognized brands worldwide such as Ferrari, Maserati, Lamborghini, Alfa Romeo, Fiat, and Lancia. The sports car enthusiast is always torn between a Ferrari and a Lamborghini while you are beginning to see Maserati’s everywhere in the standard high-end marketplace.

From the manufacturing perspective, the Italians have been able to compete producing cars in Euro for their reputation in car production carries the day. The crisis for Italy with respect to the Euro has been the conversion of their past debt to Euro which altered the standard depreciation of debt whereby you are paying back with cheaper currency.

The idea that was floated as an alternative to leaving the Euro calling for a referendum on the country’s EU membership was the proposal which called for the introduction of so-called mini-bots – government guaranteed bills. The catch was that they were to be restricted only to Italy and can be used to pay taxes. This idea does not seem to be moving anywhere close to reality. However, it recognized that there was a problem with its debt.

Instead, the proposals have turned on reforming the ECB. There are people in the Italian government who want to alter the ECB as a direct result of Draghi’s policy of Quantitative Easing which has destroyed the European Bond Market. The Italian proposal call for the ECB’s statutes should be changed to allow the central bank to act as a lender of last resort and acquire Italian government bonds not only on the secondary market by QE, but also on the primary market buying them directly from the Italian government. In reality, this would be a direct assault on the German philosophy of austerity. There would be nothing against higher inflation if it would create more jobs. Italy is making it clear that they would prefer 7% inflation and an unemployment rate of 2% rather than 2% inflation and an unemployment rate of 7%. In reality, Italy is arguing for the same policies that were adopted by Roosevelt to end the Great Depression.

This is becoming a battle behind the curtain between austerity and reality. The question to emerge is what happens if Germany refuses to yield? Are we looking at the very issue that brings down the entire EU house of cards?