The Blizzard of 1899


A lot of people are claiming that the extreme cold is part of Global Warming and human-induced climate change. Well, all we need do is look to the Blizzard of 1899. That is the record cold where it snowed also all the way into the capital of Florida, Tallahassee. It was snowing also in Tallahassee this season.

February 1899 was the coldest winter on record all the way up to 2017. All of these claims are just nonsense that this extreme cold is created by Global Warming or climat6e change caused by humans. We have been there and done that before prior to the invention of automobiles and massive expansion of the Industrial Revolution. Let’s see if we break the record come February. It is even 72 degrees in Abu Dhabi.

Greenhouses Gases Are a Product of Civilization for Thousands of Years


QUESTION: Do you believe we are going into an ice age?

ANSWER: No. At best we return to a mini-ice age. There are those who argue that a decline in solar activity, which they cannot deny, will not be enough to offset the human created Global Warming. There are so many things wrong with the Global Warming theories it is even hard to figure out where to begin. Long before the Industrial Revolution, the assumption was that our planet’s atmosphere was still untainted by human-made pollutants for it was somehow pristine. That assumption is dead wrong, but nobody wants to challenge it because if there were periods of human air pollution before, then perhaps their theory that this will destroy the planet and we will all burn to a crisp, as Christine Legard said, is nonsense.

All one has to do is read the contemporary accounts from ancient Rome. The residents of ancient Rome suffered from pollution that was primarily caused by burning wood to cook and stay warm rather than fossil fuels. There was a great smoke cloud they wrote about called gravioris caeli (“heavy heaven”). Others referred to it as infamis aer (“infamous air”). Complaints about this infamis aer and its effects can be found in classical writings. “No sooner had I left behind the oppressive atmosphere of the city [Rome] and that reek of smoking cookers which pour out, along with clouds of ashes, all the poisonous fumes they’ve accumulated in their interiors whenever they’re started up, than I noticed the change in my condition,” wrote in 61AD Seneca the Younger (c. 4 BC – 65AD) the philosopher, statesman, and adviser to Emperor Nero who ordered him to commit suicide.

Moreover, there were lawsuits over air pollution in ancient Rome. The Roman courts heard civil claims over smoke pollution. The Roman jurist Titus Aristo, who was also a member of the council of Emperor Trajan. He was an author of annotations to the works of some jurists of the Augustan period, declared that a cheese shop could not discharge smoke into the buildings above it. Pollution had become so bad that the East Empire in Constantinople even enacted the first known Clean Air Act. In 535AD, then Emperor Justinian proclaimed the importance of clean air as a birthright. “By the law of nature these things are common to mankind—the air, running water, the sea.”

Further evidence that refutes the Global Warming crowd is the discovery of bubbles trapped in Greenland’s ice which revealed that humans began emitting greenhouse gases at least 2,000 years ago. Célia Sapart of Utrecht University in the Netherlands led a team of scientists from Europe and the United States in a study that charted the chemi­cal signature of methane gas in ice samples spanning 2,100 years. The methane gas naturally occurs in the atmosphere but it is considered a greenhouse gas emitted landfills, large-scale cattle ranching, natural gas pipeline leaks and land-clearing fires.

Célia Sapart employed a 1,600-foot-long ice core sample extracted from Greenland’s 1.5-mile-thick ice sheet representing 115,000 years of history. The team chemically analyzed the methane in microscopic air bubbles trapped in each ice layer. They sought to prove global warming is a modern consequence of human activity. They assumed that they would be able to prove that the warmer climate since the 1700s was caused by an increase in methane gas levels.

The found that indeed methane concentrations went up. What they proved was the fact that the rise in methane gas did not correlate with warm periods. What they ended up proving was the simple fact that the theory of greenhouse methane gas was NOT the cause and that the rise in temperature must have been caused by something else. The focused then change and the “something else” was still attributed to human activity, of course, but it was then said to have been due to metallurgy and large-scale agriculture starting around 100 BC.

Indeed, the ancient Romans did keep domesticated livestock and their passing of gas in methane gas, a byproduct of digestion and in China the rice fields include a methane-producing bacteria. So methane gas is a natural part of the planet and the assumption that we should all commit suicide to save the planet is really just nuts. So the team turned to blacksmiths who produced methane gas when they burned wood to produce metal tools or weapons. They noted in the ice core samples that as civilizations collapsed following the fall of the Roman Empire, then there was a moderate decline in methane gas emissions.They concluded that between 100 BC and AD 1600, methane emissions rose by nearly 31 million tons per year. They argue that the United States alone generates some 36 million tons of methane per year.

Célia Sapart had to admit that such emissions of methane gas were by no means enough to alter the climate. The conclusion was still that humans were altering the atmosphere on a global scale in ancient times as well. The study has proved that the assumption that it has only been only of a modern invention that human activity has produced methane gas and the world was pristine before 1800 is just a fantasy. Ice Ages and warming periods have existed well before human civilization where they began to burn wood to stay warm. All they were able to accomplish was prove that greenhouse gases have been produced for thousands of years. If anything, this study shows that the end is not necessarily near based upon greenhouse gas.

The Euro on Yearly Models – Let the Crazy Times Roll


QUESTION: Reviewing the private blog, at the end of 2016 on December 31 you wrote “When it comes to the Euro, the Major Yearly Bearish Reversal lies at 10365 and the intraday low for 2016 was 10352 closing the year at 10513. This too warns that we may not be ready to meltdown just yet.” You called for the Euro rally into the German elections but it did not reach the 125 and stopped at 120. Then for the close of 2017 you wrote on the private blog: “On our Yearly Models, we have had THREE Directional Change targets all back-to-back from 2017 to 2019. From a technical perspective, we achieved an outside reversals to the upside in the Euro making 2017 the low but closing above the 2016 high. We never quite reached our target in the 125 level, so it appears we still have time to do this here in the coming New Year.” You also wrote: The year-end signals we achieve in the Euro for the closing of 2017 will be significant for the overall tone of what is to come reflecting how fast things will develop. Our models are reflecting a sharp rise in volatility in 2018 as well.”

My question is this. With three yearly directional changes from 17 to 19, I assume this means choppiness. Your volatility models show a sharp rise in 2018 as well. Do you think we can really reach the 128 or 135-140 level by March?

HS

ANSWER: In order to create the greatest amount of chaos, you always have to swing to extremes. If we are going to really create total havoc that will bring down the monetary system as we head into 2021 and force some sort of a new Bretton Woods, the only way to do that is a dollar rally. A dollar decline means sovereign debts issued by other nations in dollars will be devalued encouraging them to issue more. The way to break the system is only a dollar rally which forced Roosevelt to devalue the dollar back in 1934 and it forced the Plaza Accord in 1985 that gave birth to the G5. The US always wants a lower dollar to reduce the trade deficit. This is Trump’s policy as well. The market will NOT be that forgiving.

A rising Euro will increase the debt burden in Europe and deflation reducing exports. Ending QE by the ECB will result in rising interest rates. But that is always a bell curve. What people constantly get wrong is the classic one-dimensional analysis. They assume whatever trend is in motion will remain in motion. Rising interest rates will always at first support a currency as should be expected with the Euro short-term. However, that will be the trend provided the confidence in government remains. If confidence collapses, then suddenly the interest rates will continue to rise exponentially and the currency will collapse along with asset values.

The high in US interest rates took place in 1899, It was 1896 when J.P. Morgan had to bail out the US Treasury because they were broke. Following America gaining control of the Philippines as part of the ending of the Spanish-American War, in 1899 the Philippines declared war against the United States requiring independence from America. The war continued until 1902 when the Philippine President Emilio Aguinaldo surrendered. In 1916, the United States granted the Philippines autonomy and promised eventual self-government, which came in 1934. In 1946, following World War II, the Philippines was granted full independence. The fact that the USA was at war with Spain led to questions of its ability to cover its finances. The USA nearly doubled the output of $20 gold coins during 1898 and 1899 to pay for expenses of the war. When confidence declined, this is when we see the highest levels of interest rates.

This is what will happen in Europe. It is all depending upon the fleeting whims of confidence. Only a complete fool thinks that a trend set for a few days will continue forever. Nevertheless, the first level is the technical resistance just below 124. Then we have 125 and 12890. These remain possible and will help to create the impression the euro will rally and the dollar will collapse. That will suck everyone in and then you have the stage set for the slingshot in the opposite direction.

We should see the flurry build once the Downtrend Line is exceeded. Then you will hear the big sucking sound bringing in all the dollar haters and we then set the stage for crazier choppy trends.

This is NOT going to be an easy people between 2018 and 2021. So hang on to your socks. This will be a very interesting time. The key is to survive it.

The Rush to the Euro with QE Ending?


QUESTION: Mr. Armstrong; You have been calling for the dollar to decline against the Euro and it should test the 125 level. Do you see the dollar continuing to decline which then breaks the back of Europe with deflation and then everything flips?

WK

ANSWER: Last year was an outside reversal to the upside meaning it made a new low since 2008 reaching 10341 and then closed above the 2016 high. That confirmed we should see a lower dollar in 2018 and our target in the 125 level has been slow in coming. There is no reversal of fortune without a closing above 140. Our minimum target was 12570 with the next forming at 12890. Thereafter, we reach the major resistance in the 135-140 zone. The technical resistance begins just shy of 124.

The Euro is rallying because the ECB is seen to be abandoning its QE program which has failed. The rush to the Euro is the assumption that with higher rates, at last money will come home. We still have a minefield of political issues. Creditors are dissatisfied with the lack of austerity in Greece as well as Italy. Our critical turning point remains March 2018.

The crisis yet to unfold is will there be buyers of European debt to take up what the ECB has been buying? This is part of our forecast with rising rates and the more they rise the worse the budget will get. There is just no way out of this crisis without serious reform. So people rushing into the Euro thinking this is a turn-around long-term for the dollar will be shown that the old saying fools rush in where wise men never go will be carved in stone.

So for now, we still await the test of 125-128.

Just How Fast Can Things Freeze?


When the weather goes against Global Warming, they flip it into volatility and claim cold is now the byproduct of Global Warming. Al Gore’s environmental group, Penn State University climate scientist Michael Mann wrote, “the unusual weather we’re seeing this winter is in no way evidence against climate change,” it’s “an example of precisely the sort of extreme winter weather we expect because of climate change.”

They offer no evidence that human have caused climate change, just constant opinion. Only they can possibly be right and dismiss any evidence that points to such rapid declines pre-1850. The frozen woolly mammoths discovered in Russia completely frozen and intact with plants still in their stomachs have long made many ponder just how fast the planet can freeze.

When woolly mammoths began to be discovered intact and frozen in Siberia back in 1772, this changed science forever. The sudden bitter cold took place long before humans were around driving cars. As always, such evidence is always ignored. This is the real inconvenient truth they cannot explain so it is best just to pretend it does not exist.

Some people have written in asking will Toronto or Chicago suddenly emerge under a sheet of ice without notice? The evidence from Siberia suggests that yes it can happen in the blink of an eye. However, there is no recorded history which we could put into the computer to answer that question in a precise manner.

This is the known record so far. This is very approximate and it is plotted in terms of millions of years. We really cannot make an accurate forecast that Chicago or Toronto would suddenly find itself under a sheet of ice in days, weeks, months, or years. What is certain overall is the trend. We are headed toward a bitterly cold period ahead. Does that mean we will see glaciers down into Spain or Texas? That may very well be the case, but we are also looking at a time frame measured in millions of years, which is not relevant to our immediate lifespan.

Taking this data and assuming 450 million years ago was a good date target, there is a 72-million-year cycle the computer has determined from this data set. Therefore, it would appear that we are headed toward the biggest glacial period in the history of the planet. However, we are probably looking at that in about 30 million years. Nevertheless, it will get colder in our lifespan and this initial bout with getting colder should be moving into 2028. You will still need heating pads and warm clothes if the power grids hold up.

The biggest problem with this cold is the fact that the environmentalists have stopped coal-generated power and they are not so fond of nuclear. Solar panels work if not covered in snow and wind turbine will freeze in place. That leaves wood and coal burning stoves. This winter in New England, found power companies struggling to provide power to meet the demands. Ironically, people like Al Gore and Michael Mann may end up responsible for killing more people than any war. Yes you can die from too much heat, but you can also die from too much cold

TIME is more than Money – It is EVERYTHING


TIME is more than just money; it’s absolutely everything and then some! Personal opinion just utterly fails because we are all human. Markets routinely do what the majority never expects. That is their function. They mutate like a virus always changing its genetic code to defeat medicine, or in this case, traders. Back on November 30th, 2017, I explained on the private blog: “We must respect that exceeding the November high now in December on a sustained basis, points to a January high. If we pull back, then January will be a low and then watch out for a sharp rally into March.”

TIME is the very fabric of the universe and probably the most misunderstood element of all. In physics, the relativity of simultaneity is the concept that baffles many. The question becomes, do two distant events actually take place simultaneously? Therefore, the question whether two spatially separated events occur at the same TIME is recognized to be far from absolute. It is “relative” depending on the observer’s reference frame. This becomes incredibly important in terms of forecasting the world markets.

To grasp what our model is really doing one must look at TIME and EVENTS more in the perspective of turning points – not specific events. Once you understand we are forecasting turning points on the TIME horizon, not specific events, you will begin to make a leap forward into a new world of understanding TIME.

Specific events on the horizon become easy for forecast based upon the trend in motion relative to TIME. When trends reach that events horizon in time, then a specific high or low is easily ascertained. Right now, we are in the throes of a major breakout and a characteristic of Vertical Markets has been what we call the Cycle Inversion process. Normally, turning points unfold in opposite pairs. So a November high would traditionally be followed by a January low. Merely exceeding the November high on a closing basis during December identified the continued rally into the next target being January 2018 warning we were (1) dealing with a Cycle Inversion, and (2) a Vertical Market that is going to be very difficult to trade for most people.

It is paramount that we understand how Vertical Markets function.

In Massachusetts – they Arrest You for failure to Renew a Dog License


Believe it or not, the town of Westminster in Massachusetts arrests people for failing to renew a dog license. The municipality issued an arrest warrant for Brian Vincent for not renewing his dog license. The town officials do not deny using the criminal procedure to collect fees. They claim that all proper procedures were followed when handling the issue of failing to renew a dog license. The police justify arresting citizens who fail to renew a pet license stating that “many years ago rabies was an issue and people in the state and the community wanted to make sure animals are registered” according to the Sentinel & Enterprise News. Once they pass something “many years ago” why give up that revenue even when the former justification vanishes.

The more governments become abusive all to get their hands on other people’s money, our most precious right, LIBERTY, is revoked for anything they can dream of. When government becomes abusive and takes the liberty of people for fines, no less non-violent offenses, it loses its ultimate authority to government historically. It simply becomes a waiting game to see how far they go which will spark the uprising as has always taken place throughout record history. The American Revolution was – No Taxation Without Representation. We no longer have a representative government or they would never act in such a manner.

COUNTERPARTY RISK



COUNTERPARTY RISK

QUESTION:  In regard to counterparty risk when purchasing exchange traded funds or notes: With European banks being under capitalised due to the excessive risk undertaken due to the EU regulations regarding bailouts, how can we measure the threat of each counterparty which has backed each ETF. Would it be safer to consider only ETFs with US counterparties, or is just another risk we have to take on board. Do we avoid these types of instruments in favour of choice companies.

JB

ANSWER: If you wish to use ETF’s, as they are extremely cheap and liquid, the large US names such as Vanguard, State Street etc. are available. We often write to hold the physical share certificate as the same as holding tangible assets but realize it is very difficult to take delivery.

The flow of capital to the US will obviously support US names at the expense of European. However, because of the size of the issue and Europe being the second largest economy on the planet, no-region will be without risk. CDS for the USA traded from 6 cents to 52 cents during the financial crisis, not because of potential default, simply because it was re-priced against every other sovereign! Simply holding US Dollars or considering a basket of currencies is another way of limiting risk from your core currency.
Please be aware that Armstrong Economics cannot provide personal guidance and all investment decisions should be undertaken using of an independent financial advisor.

Underwater Volcanoes Contribute to Warming Deep Water


 

QUESTION: Mr. Armstrong; I read you Maya Report and found it fascinating how volcanic eruptions in the ocean are polarized to where the North Pole is at that time. Now we have people trying to claim that the heat from global warming is being hidden stored deep in the oceans. It seems once more these people ignore the fact that there are underwater volcanoes erupting more so now than before. Is that a true statement?

HEJ

ANSWER: Oh yes, that is correct. There have been attempts to measure the heat generated from underwater volcanic eruptions. They attempted that off the East Pacific Rise, which is a point in the ocean floor where continents move apart. This is where magma contained in the Earth’s core to rise to the surface and spew from underwater volcanoes. This data was part of what was supplied to me to run through our model to determine the cyclical nature of how the poles flip. The volcanic activity underwater is rising and no doubt has an impact on the temperature. There have been attempts to linked volcanism to tiny shifts in the Earth’s orbit around the sun, as well, that occur every 100,000 years. These shifts may trigger ice ages and warm periods, both of which affect global sea levels. That, in turn, would increase or suppress volcanic activity it is believed.

Nevertheless, the Global Warming crowd claims the oceans are getting warmer down deep and that must be from mankind. Once more, they take the results and fit it to a predetermined conclusion.

Dormant/Extinct Volcano Erupts for First Time in Recorded History


Another dormant volcano has suddenly awakened erupting in a rather spectacular fashion, spewing lava for the first time in known history, It sent an ash cloud 2.1 kilometers into the sky. This ancient volcano on Kadovar Island, which is northeast of Papua New Guinea, has been dormant throughout hu8man history until January 5th, 2018.  It began to erupt at around noon, local time. The volcanic island is about 24 kilometers from the northern coast of mainland Papua New Guinea. Our model is also showing that there will be a rise in volcanic activity as we move into 2024. We previously warned: “If we see a series of volcanic eruptions in the VEI 6 category or greater within 2018, expect to see a very sharp turn down in temperature and Global Cooling will take on rapid change going into 2024.” It is truly fascinating how this correlates to the change in the energy output of the sun