Armstrong Economics Blog/Dow Jones
Re-Posted Jul 23, 2019 by Martin Armstrong
COMMENT: Well, Ray Dalio was short the market, missed the rally, and lost almost 5% for the first half of the year. Obviously, they don’t use Socrates – lol.
LB
REPLY: I do not advise Bridgewater and I have no idea if they even subscribe to Socrates. But what you have to realize is that a lot of these hedge funds form their strategy based upon opinion for the broader view. When you have a portfolio of that size, you cannot simply trade it back and forth for each move. The question becomes critical as to where to draw the line to realize your broadview strategy is wrong.
I have stated many times that the trend does NOT begin to shift until you reach the Monthly Level. We saw that in Gold when it finally got through 1362.50 after nearly four years of bouncing off that number. In the case of the Dow Jones Industrials, our hedging models for institutions were long one month from the low and has remained in that position. This is just a hedging model which is either long or short. It at least tends to keep institutions on the right side of the trend for long periods of time.
Aside from the Reversal System, the Energy Model is extremely helpful in identifying the position of the market and if there is a risk of a crash or a rally. The Energy Model turned negative, demonstrating that there was no possibility of a crash as most analysts were forecasting from a gut perspective. A crash would have been possible ONLY if the Energy Model was at a peak. When it is testing the lows or a negative, it is warning that the energy in the market has already dissipated.
We are simply headed into a Monetary Crisis Cycle where the majority of people will never be able to forecast what will unfold from a personal gut perspective. This is not a time for lucky calls. We need objective time-tested analysis that is not clouded by human bias. This is when we need the global approach to let Socrates simply correlate the world to enable us to see the real trends that are in motion. The worst thing you can do is ASSUME you have missed something, as that is typically the kiss of death for investors where they inevitably buy the high or sell the low.
France & the New Digital Tax
Armstrong Economics Blog/The Hunt for Taxes
Re-Posted Jul 22, 2019 by Martin Armstrong
The French GAFA tax in an acronym for Google, Apple, Facebook and Amazon which the French government has just passed. They are imposing a 3% tax on all business in France. The US has promised retaliation. This is part of the entire problem the world faces with trade. A lot of people talk about trade wars, but they live in the past. There is something far more serious at stake and that is the digital world and how governments are hungry for taxes to the point that they are threatening the viability of the world economy going forward.
Singapore Economy Turns Down & China Exports Decline
Armstrong Economics Blog/China
Re-Posted Jul 19, 2019 by Martin Armstrong
They are calling it an unexpected contraction in Singapore’s economy which is in line with our Economic Confidence Model which bottoms in January 2020. In addition, China’s exports have also declined by 1.3% during June. Gross domestic product in export-reliant Singapore declined by a shocking 3.4% in the second quarter from the previous three months. This was the biggest decline since 2012. Everywhere we look, the world economy is following the Economic Confidence Model perfectly. As stated before, the decline would be felt OUTSIDE the USA far more so than within the domestic economy.
Of course, the blame is being laid on Trump citing his US-China trade war is having an impact on Asia, and that includes Singapore’s latest export figures. Singapore saw exports fall for a second month in a row, this time by 17.3% in the month of June compared to a year ago. The economic growth in Singapore declined by 3.4% from the previous quarter. However, the world economy has been turning down before Trump’s trade war as they are calling it. More than 10 years of Quantitative Easing has been unable to restore economic growth, but why look at trends when you can just bash Trump?
The global economy is still headed down into January 2020. Even if there was no trade war, the trend was set in motion from 2015.75. Within weeks of that turn at the peak of this cycle, Merkel began the refugee crisis which has undermined the confidence in Europe and her unilateral actions impacted all of the EU and has led to much discord. Costs of the refugee crisis have lowered economic growth and these people have not contributed to economic growth to any extent to offset the contraction. The negative interest rates have wiped out savers and force retired people back into the workforce just to stay alive. Meanwhile, governments have increased their taxation and nobody respects the fact that retired people are being forced out of their homes as taxes rise. There is no coordination and nobody will look at the whole.
Cycles, Einstein & Galileo – Geometry of Time
Armstrong Economics Blog/Forecasts
Posted Jul 19, 2019 by Martin Armstrong
QUESTION: Mr. Armstrong; It has dawned on me studying Einstein’s General Relativity, that the two of you reached the same realization from different fields. Newton’s laws of gravity were turned upside down by Einstein who rejected Newton that there was a linear formation to space. Einstein came up with the fact that space was curved and that time and space were linked so that time was not the same throughout the universe. In reading the few chapters on the Geometry of Time you handed out at I think was the 2011 WEC, your entire process is also linking the curvature and time albeit from a different observation than Einstein.
Would you elaborate?
GDM
ANSWER: According to Einstein’s theory of general relativity, massive objects warp the spacetime around them, and the effect a warp has on objects is what we call gravity. So, locally, spacetime is curved around every object with mass. However, what led Einstein to his discovery was the question of free fall. Before I had ever ready Einstein, I was probably about 12 years old and I fell out of a tree and over a cliff falling probably a couple of hundred feet. I was lucky and it was Fall so at the base of the cliff was a mountain of leaves. The leaves broke my fall but my teeth nearly came through my bottom lip. The wind was knocked out of me and my nose was bleeding. I went to my friend’s house nearby and finally got my nose to stop bleeding. I kept tasting blood. I opened my mouth and saw the injury and only then did it start to hurt. It was a good 30 minutes. I went to the hospital and they stitched me up.
Two things dawned on me that day. First, I asked why did my mouth not hurt until I saw I was insured? Secondly, when I was falling, I did not feel like a dead weight, but I felt like I was flying – weightless.
Because of that incident, I came to realize that there was some truth to the saying what you do not know, can’t hurt you. But it also gave me insight into what Einstein was talking about. In the middle of a free fall, you feel weightless as if gravity has canceled itself out. Actually, Aristotle first tried to reason that a heavy object will fall faster than a light object in a free fall. He was incorrect. Galileo was the first to actually get it right. He realized that a falling body picked up speed at a constant rate.Galileo also made the observation that in a vacuum, all bodies fall with the same acceleration. That was a truly astonishing idea. That experiment was carried out on the moon with a hammer and a feather. They both fell to the ground at the same time.
Yes, these things influenced me in seeing what I called the Geometry of Time in how and why do trends unfold and what are their durations? Was there a constant force at work, or were there patterns of time within time? This is an extremely complex subject. Far too much for a blog post. I will publish that work in 2020.
The Sum of All our Economic Fears
Armstrong Economics Blog/Monetary Reform
Re-Posted Jul 18, 2019 by Martin Armstrong
A lot of people have written in about my comments concerning how the world is completely in a state of global chaos which is why this year I will be providing a continued video update for the 2019 WEC attendees. Those looking at the arrays of many markets are also starting to notice how global markets are correlating on a worldwide basis. Never before have I witnessed such mass correlation around the world which is demonstrating that this is by no means about local issues or the rise and fall of GDP, interest rates, or inflation. We are facing a VERY serious crisis and this is part of the Monetary Crisis Cycle
Attendees of Orlando will receive a special report on the Monetary Crisis Cycle outlining the timing and what we should expect as the years unfold. It is clear that our computer is picking upo this great convergence never before witnessed in financial history. This year’s WEC we will be covering the world to reveal just how we are all connected and how to keep track of this insanity that we are going to embark upon.
This is clearly the sum of all our economic fears.
Italy Seizes Missile from Far Right Activists
Armstrong Economics Blog/Civil Unrest
Posted Jul 18, 2019 by Martin Armstrong
The tensions in Europe continue to rise as the entire refugee issue has led to a major polarization within Europe. In Italy, the BBC reported that an anti-terrorism police unit in northern Italy seized an air-to-air missile and other sophisticated weapons during raids on far-right extremist groups who were combat ready. The missiles belong to Neo-Nazi propaganda groups and they originated from the Qatari armed forces. The civil unrest that our computer has been forecasting on a global scale is here to stay and is heating up as we head into 2024.
Nigel Farage’s BREXIT Party is Now #2
Armstrong Economics Blog/BRITAIN
Posted Jul 18, 2019 by Martin Armstrong
Nigel Farage’s new Brexit Party is now the second largest in Britain. The Conservatives still topped the YouGov poll with 24% of the vote, but they were boosted by the prospect of Boris Johnson, who is a Brexit believer, as the next Tory leader. The prospects for Europe remain up in the air as Brussels still refuses to reform and is looking to punish Switzerland as an example for Britain. But trying to exclude the London markets as a place Europeans can invest will cause a major economic decline for Europe rather than London.
Agricultural Loans Declining Right on Target
Armstrong Economics Blog/Agriculture
Re-Posted Jul 18, 2019 by Martin Armstrong
One of the most fascinating observations I have made over my career has been that the banks always lend at the top and contract lending at the bottom in every market. Going into 1980, banks were calling me to ask if I wanted to borrow money. Recently, I got a phone call from my bank asking, once again, if I would be interested in a loan. This to me is merely a confirmation that we are approaching a major turning point.
When I look at lending into the agricultural sector, the big Wall Street banks are once again perfectly in line with the cycle. They peaked in loans to farmers back in 2015, and have been declining ever since going into 2020. Bank lending to the agricultural sector peaked with the ECM and we will see it bottom in 2020. Our model will be correct in forecasting the next wave, which will be a cost-push inflationary wave. As the agricultural sectors come back to life, thanks to shortages, then the bankers will be willing to lend once again. The banks are the PERFECT indicator of how not to run a business. They make decisions emotionally and always get the economy dead wrong (i.e mortgage-backed securities peaked in 2007)
WEC 2019 Orlando – Knockin’ On Heaven’s Door or the Big Fake Out?
Armstrong Economics Blog/World Economic Conference
Re-Posted Jul 17, 2019 by Martin Armstrong
This Year’s WEC is extremely important as we now approach the turn in the Economic Confidence Model come January 2020. There were two critical patterns which were possible – 2020 low and rally thereafter, or a 2020 high with respect to the share markets. Meanwhile, we face the biggest Bond Bubble in the history of civilization and the last time something like that took place, it did not end very nicely for civilization.
We are looking at such an important shift this time in the Business Cycle that those attending the WEC this year will also receive ongoing video updates as needed because things are not going to be just a walk in the park. The fact that the Dow has exceeded the 2018 high already, warns that the pattern we face is going to be plagued with a political crisis. Indeed, politics is becoming so polarized, not merely in the United States, but also in Britain, Switzerland, EU, and it is beginning to surface in Asia in Japan and Hong Kong.
The Pi target on the ECM 11/21/2018 was the start of a slingshot where we had to drop sharply, scare the longs, and then rally to new highs. The problem with this pattern is that such moves are more often not sustainable on a broader sense and can warn of trouble ahead depending on who gets sucked into the mix.
We have so many markets at critical junctures as we head into the ECM turning point, this year’s WEC is going to be a critical forecasting event. Most importantly, we have to face not just a Monetary Crisis Cycle which is becoming obvious to everyone as the British pound takes a nosedive, but everything from Energy to Agriculture is in the staging ground for the next ECM along with precious metals.
For these reasons, we have some markets preparing for false breakouts and a critical mass approaching in 2020 on such a global scale. Central Banks (some who have been attending the WEC), are now beginning to lobby the fiscal side trying to warn them of impending doom and how they CANNOT possibly prop-up the world economy this time around. There is also a debate behind the curtain about pegging interest rates (long-term) v Quantitative Easing. We also have a battle brewing over cryptocurrencies as a major push to start eliminating cash in Europe.
Because all of these things are coming together, the attendees of this year’s Orlando WEC will receive ongoing video updates because this is just such a widespread crisis that is impacting every possible corner of the global economy and the ONLY way to survive this is going to be with Socrates because there is ABSOLUTELY no precedent to which we can refer to in history.
There are people calling now for the greatest crash in history, and others are now starting to claim the Dow will test 30,000. The opinions ARE just not going to cut it in this environment. So this year’s WEC will be different, but very critical. So are we Knockin’ On Heaven’s Door or the Big Fake Out as we face the Monetary Crisis Cycle and probably the most polarized political election ever in 2020. So those attending will get ongoing updates as necessary since this is probably the most critical period we face in modern economic-political history.
The Black Hole of Debt
Armstrong Economics Blog/Pension Crisis
Re-Posted Jul 17, 2019 by Martin Armstrong
We are facing a serious collapse in government that appears to be shaping up on the horizon beginning 2021/2022. Take the city of Chicago for example. The city is buried under a mountain of city employee pension debt and it’s impossible to see how their city could possibly survive. There will be a major financial collapse because those in power are also involved in the very same pension scheme so they have no incentive to do what is required to save Chicago — implement major structural reforms.
The total amount of city, county, and state retirement debt Chicagoans are on the hook for amounts to $150 billion, according to Moody’s most recent pension data. If we look at the city’s one million plus households, that means that each household is on the hook for nearly $145,000 to cover government employee pensions. They can forget their own pensions. One-fifth of Chicagoans live in poverty and nearly half of all Chicago households make less than $50,000 a year. There is no possible way to raise taxes to cover these obligations.
Naturally, the politicians want to hunt the rich. If we then look at the households that earn $200,000 and just tax the “rich” we end up with $2 million in obligation per household. We cannot expect government officials to save the day when they too have personal pensions at stake. This story is being repeated around the nation and in Europe. Nobody is willing to address the problem because they have personal pensions on the line.
Centinel2012 