Tag Archives: ECM

Aug 29 2019

Brexit Maneuvering – Boris Johnson Requests Queen Suspend Parliament, Queen Elizabeth Agrees – Brexit Opposition Plan Thwarted, For Now…


Re-Posted from The Conservative tree house on August 28, 2019 by 

Internal British opposition leader Jeremy Corbyn was developing a plan to stop the U.K from leaving the European Union through legislation aimed at blocking any Brexit without a pre-existing deal.  Additionally, Corbyn was proposing calling a vote of ‘no confidence’ in a scheme aimed at weakening Prime Minister Boris Johnson’s no-deal brexit.

To thwart that opposition plan, PM Boris Johnson asked Queen Elizabeth to suspend Parliament, thereby cancelling the legislative time Corbyn would have to form his anti-Brexit law and scheme. Britain’s Queen Elizabeth II agreed to suspend Parliament.

In addition, Prime Minister Johnson has significantly diminished the ‘no-confidence’ scheme by stating if Corbyn follows through PM Johnson would continue to proceed with the Brexit process, and call for a snap election immediately following the October 31st ‘no deal’ exit from the EU.   The globalist opposition is going bananas.

LONDON – […] The controversy here lies solely in the timing of the move. Britain is on track to leave the European Union on Oct. 31 and anti-Brexit lawmakers were working frantically to try and thwart the departure via the House of Commons — with plans in motion to try and pass legislation to tie the hands of Johnson’s government when Parliament returns from recess on Sept. 3rd.

Specifically, lawmakers were trying to ensure that Britain is not allowed to leave without a formal withdrawal agreement with the E.U., similar to the kind that May secured with E.U. leaders but failed to get through Parliament — leading ultimately to her resignation in June. Johnson has said he would prefer to leave with a deal, but is prepared to leave without one if E.U. leaders won’t meet British demands.

Tuesday’s announcement torpedoes those opposition plans to tie the government’s hands, icing Parliament for the majority of the remainder of the time left before Oct. 31. Speaker John Bercow, who has made no secret of his anti-Brexit sympathies, called the move a “constitutional outrage.” (link)

With so many prior lies, delays and stall tactics by British leadership beholden to the ideology of multinational influence, there were/are many people concerned about whether Prime Minister Johnson could actually be trusted to deliver on the Brexit referendum supported by the majority of the British voters.

Today’s strong moves by the prime minister seem to dissuade some of those fears.  What Great Britain needs is a strong leader who will stand in the gap against relentless leftist opposition and deliver what the people of Britain have voted for.

Today, despite his prior orientation toward fence-sitting weasel-speak, Johnson provides some cautious optimism that he might just be the strong leader the British deserve.

Prime Minister Boris Johnson sent the following letter to members of the House of Commons:

The Daily Mail has more.

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Aug 28 2019

Private v Public Rate


Armstrong Economics Blog/Interest Rates

Re-Posted Aug 28, 2019 by Martin Armstrong

QUESTION: I am a bit confused. You have forecast that interest rates will rise but official rates will decline. Exactly how does this materialize?

Thank you

GF

ANSWER: People seem to look at just the official interest rates set by the central bank and assume what I am saying is wrong. They have to look at what is really going on in interest rates. We have witnessed the greatest gap between official rates and private rates in history. While deposit rates are virtually zero, car loans which are secured, are at about 4.5% in the United States (up to 9.5% outside the USA). The Bank of America, N.A. prime rate was 5.25% as of August 1st, 2019.

In 1981, the Fed’s Discount Rate for banks was 14% at the peak back in 1981. The Prime Rate peaked at 21.5% at that time. This meant that the Prime Rate was 53.5% above the Fed’s Discount Rate. In August 2019, the Fed’s Discount Rate is 2.75% and the Prime Rate is 5.25% or a 90% markup. The spread between public and private rates has nearly doubled.

Official rates can be manipulated by the central bank for it can control the short-term rates, but not the long-term without instituting some form of capital controls. But they close the free markets in government bonds.

The spread on the private rates v official rates has doubled! I am nor forecasting the superficial trend in manipulated rates by central banks, but the real world rates in the private world. I have stated numerous times, the bankers have NOT passed on the lower interest rates to the people. The spreads have doubled – not declined nor did they even stay the same. If the spread was the same as it was in 1981, then the Prime Rate should be 4.2% instead of 5.25% and a secured car loan should be 3.4% instead of 4.5%.

Categories: I
Aug 28 2019

Is the Thai Baht Finally Ready to Decline Against the Dollar?


Armstrong Economics Blog/Thailand

Re-Posted Aug 28, 2019 by Martin Armstrong

QUESTION: The Thai baht has been very strong for some time now. It doesn’t seem to be affected by the China – US trade war. Is the Thai baht a safe haven in your opinion?

MW

ANSWER: Thailand has been benefiting from the China-US trade war as manufacturing has been moving to Thailand from China. Thailand’s automotive industry has contributed to 12% of the GDP with more than 1.94 million vehicles produced. Thailand is now ranked as the largest automotive producer in Southeast Asia and 12th in the world. Many people now call it the “Automotive Hub of Asia.”

On top of that, you have countless Americans who have gone to Thailand to retire on their visa program. Americans can even open bank accounts in Thailand, unlike in Europe. Many have moved out of Bangkok to the southern region in Cho Brui.

People from Cambodia, Laos, and Myanmar, also known as Burma, often move to Thailand to find work. The Thai economy has been stable and a magnet for foreigners. The culture is one of the friendliest in Southeast Asia, more akin to Japan than Hong Kong. The Thai even take their shoes off at the door as do the Japanese.

As far as the currency is concerned, July fell and bounced off of an important Monthly Bearish Reversal for the dollar. As long as the July low holds, the dollar may now begin to rise simply because of the tensions in Asia as a whole.

Aug 28 2019

Life & How it Evolves


Armstrong Economics Blog/Opinion

Re-Posted Aug 27, 2019 by Martin Armstrong

QUESTION: Martin;
What was the tipping point in your investing infancy that flung you to believe you could invest for others?

If so can you tell us the trade? And did you mortgage your house for it?
For it appears that the best in the business made it on their own first.

Apprehensive at this point in time;

RH

ANSWER: No. There was no trade. I was very young and was really trading bullion as a dealer in the cash markets prior to 1975. One of my clients was a senior executive at a major New York bank. The floating exchange rate system began in August 1971. There were no courses to take. He knew I understood how to trade and called me in to look at a foreign exchange loss involving the Italian lira. After that, institutions with FX problems would call me more or less saying get that guy that helped the other bank.

That is why by 1985 I was called by Congress for the G5. I was regarded as one of the top forecasters in foreign exchange. I realized that I was called into a dog and pony show where they had already made up their minds to create the G5 and just wanted experts to testify to pretend they relied on someone other than themselves. I protested and wrote to the president warning that lowering the dollar by 40% would cause a panic in 2 years because the Japanese would sell US assets since they would lose a fortune after buying 1/3rd of the US national debt.

The White House had to respond. I suppose that opened the door to governments. Ever since I have been called into just about every single major international event from China to Europe and the Middle East.

As far as trading was concerned, people were soliciting me all the time. I declined to manage money for individuals. Post-1985, I managed money only on an institutional level. I also tended to specialize in crisis management whereas I would be called in to manage a particular market crisis and get them out of some crazy trade.

DeutscheBank-1

I was asked by Deutsche Bank to manage a public fund that would be a hedge fund but onshore in Australia, which would be the first regulated hedge fund. I also manage funds for Magnum.

The London Financial Times had reported on our forecast in 1998. The computer projected the collapse and I took major short positions and more more than 60% in a single month. I was then named Hedge Fund Manager of the Year.

The banks lost big on that and from then on it was outright war. They do their best to try to slander me all the time in desperate hopes somebody will listen. As Nigel Farage said at our WEC in Rome, we have become the alternative to Davos.

Categories: Opinion
Aug 28 2019

A Nose for Trading


Armstrong Economics Blog/ECM

Re-Posted Aug 28, 2019 by Martin Armstrong

QUESTION: I realize my opinion is of little consequence; but I find something interesting and needed to share. After doing a lot of backtesting using many criteria over many stocks my unqualified opinion is that no fixed criteria can be used analyze stock charts over time and many stocks.

I worked with a well respected radiologist in digital imaging. In the early days of digital imaging he perform studies on what resolution and how much time was required to accurately diagnosis a digital image. He told me it came down to a very experienced person would look at an image and get an “impression” of it and not so much looking for #1, #2… etc.

From 20 years of looking at many thousands of stock charts I understand this. As a human I will never be able to write a program that will capture all the nuances my mind will in an instant look at an image. I assume Socrates writes its’ own using an immense amount of data that continually changes. Maybe Socrates can write a program to diagnosis medical images – correct a lot of mistakes.

Bruce

ANSWER: You are absolutely correct. We call it having a “nose” for trading. There is no single algorithm that you can devise or cycle that will predict every turn in a market. The reason for this is because such analysis is attempting to be employed in total isolation. Everything is connected. The Economic Confidence Model has called every turning point in the global economy, right down to the economic decline currently into January 2020.

What you must understand is that this is a global business cycle and you must view it in that fashion. For each wave, the focus shifts. One wave will be a commodity is the hot investment. The next might be real estate, This may be followed by stocks or bonds. Then the focus will shift also around the globe so the “hot” market becomes Japan, then Southeast Asia, then Europe, then America.

Then there is the major trend insofar as the sentiment. We have all witnessed bullish news unfolds yet the market responds in a bearish mode. This is because there is also an oscillating trend to how we interpret events. Just recently, the Fed lowered rate at the top of the stock market in July 2019. The market crashed instead of rallying with lower rates. The interpretation suddenly shifted and people saw it as anticipation of an economic crisis to come.

Nevertheless, the world economy turns with the cycle; some are making highs while others are makings lows. At the same time, we have the rise and fall of nations economically. This is why I say it cannot be forecast by looking at the trend of a single market in motion. While you can do technical analysis on any market, you should never lose track of the entire process. It is the global trend that will swamp a local market and a financial contagion will impact everything during a liquidity crisis. That is what happened in 1998 with the Long-Term Capital Management crisis. The problem was a loss in Russian bonds which could not be liquidated. To cover the losses, they began selling everything else to raise money. Even the Japanese yen rallied with the dollar falling from 147 to 103 in just weeks.

Global Market Watch: DJIND-D

Socrates is monitoring everything so it looks for things differently than a human analyst. Here is the Global Market Watch on the Dow Jones Industrials. It is entirely pattern-recognition. This is a different method of analysis altogether, demonstrating that a computer can have a “nose” for changes by studying the patterns in far more detail than a human. This allows Socrates to look just at the patterns and get that sixth-sense.

Aug 27 2019

The Bond Bubble & the WEC


Armstrong Economics Blog/Bonds

Re-Posted Aug 26, 2019 by Martin Armstrong

QUESTION: Marty, you have said this is the historic bond bubble of all times with interest rates at a 5,000 year low. Will you elaborate on the bond bubble at the WEC? It seems like this may be the granddaddy of all shorts.

RK

ANSWER: We have an Institutional Report on the Bond Bubble. We have a lot of pension funds and institutional clients where that is the main focus. Nevertheless, we cannot lay out the future of all markets without diving into the Bond Bubble. It is this which will influence the Monetary Crisis Cycle and dictate the trend in share markets as well as commodities.

Categories: Bonds
Aug 27 2019

The Biggest Bubble in Modern Financial History


Armstrong Economics Blog/Interest Rates

Re-Posted Aug 26, 2019 by Martin Armstrong

QUESTION: You said before you were advising corporates to issue long-term bonds and lock in the low rates. Even the US Treasury seems to be following your advice and are looking at issuing 50 and 100-year bonds. Do you give governments the same advice?

DK

ANSWER: If asked, of course, I advise to issue long-term debt NOW at these absurd low rates. I also advise individuals to lock in fixed-rate mortgages.

Germany just tried to issue negative interest 30-year bonds with a total offering of 2bn€ of which they only sold 824million were purchased. This is showing that this whole theory of negative interest rates as seen its day. The US is now even considering issuing 50-year and 100-years bonds as interest rates plummet.

I have reviewed the buyers of these negative bonds which now amount to $15 trillion outstanding globally. What is actually taking place in the market is really dominated by punters rather than investors. In other words, the people have been buying them to flip assuming rates would just go lower.

The crisis on the horizon is MASSIVE!!!! These punters are going to get caught as they did with the Russian bonds when they collapsed in 1998 which led to the Long-Term Capital Market crisis. This is a game of musical chairs. Nobody thinks twice as long as rates decline. But the appetite for negative yields does NOT exist insofar as people actually investing in them.

Yields have dipped negative on short-term 30 days paper during panics. The 30-day TBills went negative several times from December 2008 onward. The reason was clear. Capital feared the banks so they were willing to park money at a slightly negative rate.

This also corresponds to capital parking in blue-chip equities which created the peak in the PE ratio at the bottom of the crisis.

The trend looks to be getting ready to change when the ECM turns. BUYER BEWARE!!!!
We may yet see the biggest bubble in the modern history of finance explode far worse than the 2007-2009 debacle.

Categories:
Aug 27 2019

Advising Trump


Armstrong Economics Blog/Politics

Re-Posted Aug 26, 2019 by Martin Armstrong

QUESTION: Mr. Armstrong; you deny advising Trump. Yet you are the only person who had forecast that the US was holding up the rest of the world economy which he also now says. You also said Trump was making a mistake with China, and at the G7 he admitted he may have made a mistake. You previously advocated cutting payroll taxes and has come out and said that is a possibility.

Is it all just a coincidence that he has turned to all of your recommendations? You had Nigel Farage speak for free at the WEC and he is friends with Trump. He wasn’t paid. So he volunteered. Rumor has it you have been advising Asian leaders and you did an interview from there admitting you had clients on both sides of the China issue. You have your finger in the mix. Just admit you advise Trump.

JN

ANSWER: I do not advise President Trump. I do not deny that there are people in his administration and Washington who are well aware of our computer. Yes, Nigel publicly admitted we were the only ones to forecast a BREXIT victory and Trump. Politicians take notice of such forecasts.

If the Trump administration has articulated our forecasts, I cannot say for sure. They may throw them into the pot, shake it rather than sir like James Bond, and then articulate what comes out.

Once again, I am NOT advising Trump directly. If he is being told what our computer is forecasting by others I cannot confirm or deny. I have not had any specific conversations to that effect so far.