Tag Archives: Free Market

Jan 2 2018

Understanding Cycles & Dynamic Inter-connectivity


Armstrong Economics Blog/Disease

Re-Posted Jan 2, 2018 by Martin Armstrong

COMMENT: Mr. Armstrong; I really do not think the world respects your work. I read on your blog there was going to be a bad flu from Australia that would hit Britain. Then a few days later, the headline here is all about what you forecast. You really have to go public and let people support your work in a meaningful way. The world really does need to listen.

All the best from your former home.

EB

REPLY: I understand. I get a lot of emails on this subject. The world is not ready to understand cycles. All the methods of analysis are generally wrong. All the analysts who try to compete with me do so on an OPINION basis, not methodology. They offer their OPINION and pound their chest. This is not about OPINION. This is about global correlation. We all have opinions and they are never 100% perfect. There have been times my personal “opinion” has been proven wrong by Socrates. This is why I always try to make sure “opinion” is separates from a forecast.

How many times have we heard some food is bad for you and then they reverse it a decade later? The standard method of analysis is always trying to reduce everything to a single cause of action. That methodology is lethal to knowledge and the future. It blocks our advancement in every field of science like Global Warming. Let’s see, it has gotten warmer in the past 25 years so that must be because of cars. They start with that assumption and never test the data before 1850 because there were no cars then. Why bother? We know the cause is cars, they say. So look for data to prove the assumption.

This to me is absurd. You can also say everyone who has ever eaten a carrot had eventually died and that means carrots must be long-term deadly. It was assumed that illness was in the blood. So the logical conclusion was to bleed people. If they died, it was never because they took too much blood, but they did not bleed them soon enough.

I just am tired of beating my head against a brick wall. Society has to break and only then will we look to new dynamic interconnectivity that is the path to understanding. There are those in New York City who just cannot stand what I do. They refuse to consider there is a methodology at issue here and prefer to blame me the messenger claiming I have too much “influence” and that is why they are wrong. They would try to kill me if they could since they tried that one before but I survived. Why admit you may be wrong when you can blame someone else for your failures? That, unfortunately, infects a large part of humanity.

Going public is the only way to preserve this research and push it forward for posterity. I have not changed my mind. We were granted our business license in China. It took three years of investigation and that is by no means an easy accomplishment. So we now have the seal of approval from China and that will be the biggest market the other side of 2032. Now we are getting closer to going public

Jan 2 2018

Why Models Fail


Armstrong Economics Blog/Understanding Cycles

RE-Posted Jan 2, 2018 by Martin Armstrong

 

QUESTION: Mr. Armstrong; Did AIG use the Black-Scholes Model and that is what created the crisis again in 2007?

WJ

ANSWER: No. It’s my understanding that AIG developed different models, they called a “Value-at-Risk Model,” (VaR) which used a binomial-expansion-technique to start valuing their positions. I believe the original model was developed at Moody’s. However, like the Black-Scholes Model, it too lacked depth. In model development, it is extremely complex.

Virtually every model created tends to be predominately flat with a minimum of dynamic variables lacking understanding of TIME. Then the testing period lacks the database reflecting all conditions. In the case of Black-Scholes, they back-tested only with data to 1971. If I created a model with only data from 2009 forward, then it would be biased to presume a bull market is normal in the stock market.

The Value at risk (VaR) model is a measure of the risk of investments. It estimates how much a set of investments might lose, given normal market conditions, in a set time period such as a day. VaR is typically used by firms and regulators in the financial industry to gauge the number of assets needed to cover possible losses. It obviously failed in 2007-2009 because once again it was not a “normal market condition” for it fails utterly to understand CONTAGION when sound assets are sold to raise cash for other assets that collapse. The assumption of the model is its own nemesis.

For example, if a portfolio of stocks has a one-day 5% VaR of $10 million, this actually means that there is a 5% probability that the portfolio will fall in value by more than $1o million over a one-day period if there is no trading. Therefore, a loss of $1o million or more on this portfolio would be expected on 1 day out of 20 days given a 5% probability. A loss which exceeds the VaR threshold is termed a “VaR breach“.

So you can see, such models are incapable of determining TIME and as a result, they will always fail during a CONTAGION that they cannot see coming.

This is why the bulk of portfolio models fails during a financial crisis. This is also why some of the top Institutional portfolios come to our firm because they have realized that only TIME determines the success of any model and making broad assumptions of probability have ALWAYS failed. If you cannot model TIME and CONTAGION, you will be wiped out during a crisis and VaR will fail just as Black-Sholes.

 

Jan 1 2018

Iran Political Clarification


Armstrong Economics Blog/Politics

Re-Posted Jan 1, 2018 by Martin Armstrong

COMMENT: Two things:

 

“He is remembered for publicly stating that Israel should be wiped off the face of the Earth.”

 

Although he is indeed remembered in the West for ‘saying’ that, the truth is that phrase was a gross mis-translation of what he did say in Farsi. Just a simple lie. I don’t think you should be party to the perpetuation of a lie.

And, with Pahlevi, his ‘claim’ to the throne was problematic. His father was not an aristocrat and in fact was installed by the British. Real granular knowledge of history is useful, don’t you think?

 

REPLY: My piece on Iran does not support either side. I am fully aware that I am well read in Iran. The question was simply about the cycle of political change. That does not endorse the claim to the Throne under Mohammad Reza’s reign, marked the anniversary of 2,500 years of continuous Persian monarchy since the founding of the Achaemenid Empire by Cyrus the Great. That took place on the 12–16 of October back in 1971.

 

He revised the calendar making the benchmark the beginning of the First Persian Empire, measured from Cyrus the Great’s coronation. He introduced the White Revolution, which a series of economic, social and political reforms designed to transform Iran into a modern global power. He offended the religious conservatives by granting women suffrage.

 

I fully appreciate his claim to the throne is disputed and he was only the second of the House of Pahlavi and thus the conservatives dispute his heritage to the throne. That is not my concern. Like Trump, our model forecast the 2016 election back in 1985. Trump appeared and read the people’s discontent and beat 17 Republicans to their shock. It was not Trump the person, it was just being there at the right time. If it was not Trump, it would have been someone else. The cycle was turning – plain and simple.

 

There is a 26-year cycle that is quite dominant throughout Iranian history. There have been many revolutions that have often centered even on religion. The Sassanid Shâhs (Great Kings), 223/4-651 AD is a classic example. The Sassanids replaced the Hellenophile Parthian dynasty, with the program of deliberately reviving the Zoroastrian Achaemenid Persian Empire, aspiring to recover all the former provinces of the Achaemenids (Egypt, Syria, Anatolia). Zoroaster was the predecessor to Christianity and the source of the story of the Three Wise Men.

Zoroaster was a prophet whose teachings were the religious foundation of ancient Iranian-speaking peoples. This became the religion of Zoroastrianism, which is often considered to be the first world religion. It is still practiced by a tiny population. There are approximately 11,000 Zoroastrians who live in the United States, 6,000 in Canada, 5,000 in England, 2,700 in Australia and 2,200 in the Middle East. Mumbai, formerly known as Bombay, was actually the world capital of Zoroastrianism. The  Sasanian Revolution was all about restoring the old religion. The 1979 Islamic Revolution was similar in overthrowing the Shah to reestatlish an Islamic State.

From that birth of the Sasanian Kingdom in 223/224BC, the 26-year cycle brings us precisely to 2017/2018 (cycle #69 from that revolution). Hence, I am looking at this less from a political standpoint of supporting either side in Iran, where we have a lot of readers I know, but from a purely cyclical viewpoint.

I have no interest in promoting any religion for that to me is a personal choice

Dec 31 2017

What Did the Pivots Confirm or Deny for 2017?


Armstrong Economic Blog/Basic Concepts

Re-Posted Dec 31, 2017 by Martin Armstrong

QUESTION: Marty; At your training seminar you did a couple of year’s ago, you said your pivot numbers will confirm or deny a high. What was the status on the Pivots in the Dow for the close?

PS Another training session would be nice.

GD

ANSWER: The 2006 closing was 12463.15 and the Pivots were 10949.43, 10727.38, and 14234.29. We closed above two and below one leaving the market still bullish looking to higher prices. Then 2007 closed at 13264.82 and now it was below two 13836.74, 10727.38, and 14234.29. The high for that year came in at 14198.10. So we closed under two and above the lowest which indicated it was then turning bearish into 2008.

The 2017 Pivots were 21982.03, 1528.79, and 22282.07 with the closing coming in at 24719.22. Here we closed above all three Pivots indicating it is still long-term bullish. Looking at 2018, the Pivots move to 20202.77, 27434.90 and 28054.53.

We warned back in October 2014: “[W]e are looking at a rally into 2017-2018 with the Dow reaching the 25,000-28,000 level. ”

We can see that we have reached the beginning of our Pivot projections made 10 years ago for this time period. This suggests CAUTION and with our volatility models turning up and a Panic Cycle for 2018, this is not going to be a walk in the park. This will take a lot of skill to trade this one. No emotions and no preconceived expectations. We have to play this by the numbers and cycles – no choice. This is not the time for boasting opinions.

If I have time to do a training session again I will let everyone know. The seat price of $5,000 last time because it is a lot of work and we have to keep the audience in a more intimate session.

Categories: Basic Concepts
Dec 31 2017

Stunning Audacity – Clinton Tweets Support For Iranian Protests She Previously Helped Destroy…


Re-Posted from The Conservative Tree House on December 31, 2017 by

There are times when the audacity of the most political poll-testing opportunist on the planet reaches beyond stratospheric levels of comprehension.  Cue the visual:

Arguably the most consequential failure of the Hillary State Department was in 2009 when the U.S. undermined the Iranian Green Revolution. Not only did the U.S. do nothing to help the opposition against the Iranian regime, but US funding was cut for democratic organizations/programs in Iran under Clinton’s State Department. It was Hillary Clinton who supported the Mullahs in an ill-fated decision to achieve the ridiculous Iranian Nuclear Deal which she was just praising and defending three months ago.

Hello?

Meanwhile the mainstream media apparatus are refusing to even acknowledge the Iranian uprising; apparently because President Trump is supporting their cries for freedom.

Yes, if ever there was a bigger example of Trump Derangement Syndrome causing media to contort themselves into hypocritical pretzels, their reaction -or lack thereof- to these protests in Iran would stand as exhibit “A”.

(Via BBC) […] They are the biggest show of dissent since huge pro-reform rallies in 2009. There are reports of two deaths.

There were calls for the removal or death of Iran’s Supreme leader, Ayatollah Ali Khamenei, in the cities of Khoramabad, Zanjan and Ahvaz.

Iran’s Islamic Revolutions Guards Corp is a powerful force with ties to the country’s supreme leader, and is dedicated to preserving the country’s Islamic system.  (read more)

(Fox News, Stephen Miller writes) […] CNN ignored the protests completely, and the explosion on social media until a front page story reporting on not uprisings against the regime, but a pro-government rally and President Trump’s tweet in support of the protestors. If the State Department wants to send a message of solidarity to the protesters in Iran, perhaps it can send them a white truck. Yes, the question has to be asked how such an uprising of thousands against their government would be covered by western media if this were Tel Aviv. We don’t need U.S. Ambassador to the U.N. Nikki Haley defiantly raising her hand to answer that question for us.

The somewhat muted reaction to thousands of people rising up against the Iranian regime can and should be compared to the attention the Arab Spring received in 2010. The scenes coming out of Iran are just as dramatic, if not more so, than those of the Arab uprising.

A woman was caught on videotape screaming “death to Khamenei” at Iranian law enforcement officials – an action that could not only endanger her life, but the lives of her family. But nevertheless, she persisted.

Social media came to a halt when another video was shared on Twitter of a female activist, shedding her hijab and waving a makeshift flag at security forces while standing atop a container.

I’m not exactly sure why an Iranian woman would shed such a garment that we’ve been told by the political left of this country is a symbol of empowerment and feminism. But her body, her choice.

Protesters are shouting “Death to Khamenei,” “Mullahs get lost,” “No more Islamic Republic,” “Clerics return us our country.” They are not shouting “We have economic anxiety”. This is not about economic anxiety. This about revolting against a regime who has exhausted its moral good will, and no longer can lean on a sympathetic United States for more pallets of cash.  (read more)

Dec 30 2017

Cry Freedom: Iranian Protests Grow in Day #2 – Regime Forces Crack Down…


Re-Posted from The Conservative Tree House on December 30, 2017 by

It looks like the Iranian Green Revolution is back on the streets as waves of protests are happening.  In 2009 the Mullah’s brutally cracked down on the reformers and President Obama stood by.  In 2017 the reformers have an ally in the oval office as President Trump and his entire administration (specifically Rex Tillerson and Nikki Haley) openly show their support for the movement.  Stunning developments.

 

 

 

 

 

 

The U.S. Media are attempting to spin the protests as “pro-regime” and claiming the supporters are pro-Khameni and pro government.  That narrative is 100% false, yet it highlights the severity of the entire left-wing media apparatus as they attempt to prop-up the failed policies of the Obama administration.

Tens-of-thousands of Iranians have taken to the streets to express their anger, and unfortunately for the preferred media script that anger is not directed at President Trump or Saudi Arabia; but rather at the mullahs and their oppressive security forces.

The protests may have begun over economic grievances in the northeastern city of Mashhad.  However, the uprising has grown to at least 18 cities nationwide.  The slogals are no longer about corruption and economics, they are directly confronting the Islamic Republic:

“Death to [Supreme Leader Ali] Khamenei!”

“Death to Hezbollah!”

“Not Gaza, Not Lebanon, Our Life Only for Iran!”

“We Will Die to Get Our Iran Back!”

“Clerics Out of Our Country!”

President Trump Tweeted his prior statements from the U.N. General Assembly about Iran and the hopes for the people of Iran.  U.S. Ambassador to the U.N., Nikki Haley, also is transmitting support for the reformers along with Secretary of State Rex Tillerson.

The reformers and protesters face a brutal Iranian regime that spends most of its time trying to retain itself and will not hesitate to crack down, just as it did in 1999 and 2009.

Perhaps the difference now is they have the support of U.S. President Donald Trump, and it is likely our western propaganda media will not be able to hide the truth much longer.

Dec 30 2017

Russia Responds to the Trump Tax Reform


Armstrong Economics Blog/Russia

Re-Posted Dec 30, 2017 by Martin Armstrong

Russian President Vladimir Putin is also responding to the Trump Tax Reform. Putin has also taken a step to promote the repatriation of capital from abroad. He is now proposing that only a 13% tax on funds retrieved should be abolished. Additionally, he is proposing that there should once again be an amnesty for Russian companies that bring their cash home.

Russia introduced such immunity for past tax avoidance and foreign exchange offenses back in 2014 when the country faced massive capital outflows. That amnesty had been used very little proving to be ineffective. It expired in mid-2016.

Dec 30 2017

China Eliminates Taxation For Foreign Companies Investing in China


Armstrong Economics Blog/China

Re-Posted Dec 30, 2017 by Martin Armstrong

China has responded to global competition that is exploding in the wake of the Trump Tax Reform. While domestic news in the USA continues to bash the tax reform on class warfare, the rest of the world is trying to come to terms with what Trump has set in motion. China’s response is to allow foreign companies complete tax-free business on any profits they reinvest in China upping the stakes. Their position was stated by the Ministry of Finance and it is designed to “foster the growth of foreign investment, improve the quality of foreign investment, and encourage foreign investors to continuously expand their investment in China.” The tax exemption applies retroactively from January 1st, 2017 beating Trump at his own game once more. Foreign companies who have paid taxes in China for 2017 will be refunded.

Domestically, companies in China are already complaining about rising costs that are caused by raising taxes. They have warned that this could lead to production relocations. The standard corporate tax rate is 25% in China. In order to benefit from the newly announced tax rebates, foreign companies have to meet several requirements. These include direct investment in industries promoted by the government in Beijing. Also, the money must flow directly to the companies.

The tax game is now afoot. The big loser will be Europe because they are far more entangled with the socialist agenda than anyone else with New Zealand and Australia fighting for second place in the uncompetitive tax burden race to the top

Dec 29 2017

Secretary Tillerson Transmits Support for Iranian Protests….


Re-Posted from The Conservative Tree House on December 29, 2017 by

Interesting.  Visible support for a position 180° from prior administration.

“transition of government” supported by U.S.

State Dept – We are following reports of multiple peaceful protests by Iranian citizens in cities across the country. Iran’s leaders have turned a wealthy country with a rich history and culture into an economically depleted rogue state whose chief exports are violence, bloodshed, and chaos. As President Trump has said, the longest-suffering victims of Iran’s leaders are Iran’s own people.

The United States strongly condemns the arrest of peaceful protesters. We urge all nations to publicly support the Iranian people and their demands for basic rights and an end to corruption.

On June 14, 2017, Secretary Tillerson testified to Congress that he supports “those elements inside of Iran that would lead to a peaceful transition of government. Those elements are there, certainly as we know.” The Secretary today repeats his deep support for the Iranian people. (link)

Dec 29 2017

Political Protests in Iran Spread Amid Rumors of Regime Change Goals…


Re-Posted from The Conservative Tree House on December 29, 2017 by

News of spreading and morphing political protests in Iran are beginning to surface as social media accounts are now gaining MSM attention.

Openly political protests are not common in Iran ever since the 2009 ‘Green Revolution‘ was harshly put-down by security forces carrying out the instructions of the ruling Mullahs and political class.  Iranian security services are omnipresent and looming.   However, what appears to have begun as protests over prices, inflation and the lack of economic freedom, seems to have morphed into several regional political protests directly challenging the Mullahs and the reigning political class.

Back in 2009, after President Obama gave his famous Cairo speech, the message was interpreted by the Iranian reform movement, the “Greens”, as a spark toward freedom.  However, the Mullahs responded violently, Iranian security forces attacked the protestors, several were killed and hundreds jailed and President Obama stood by, watched the brutality, saying and doing nothing. 2009 was a very dark time for the reform movement.

It is too soon to tell if today’s protests are the beginning of a similar uprising, a resurgence of those previously crushed cries for freedom, but the reform movement appears to be pushing the message: this is indeed their objective.   It is a very interesting development.

(Reuters) – Demonstrators chanted anti-government slogans in several cities across Iran on Friday, Iranian news agencies and social media reports said, as price protests turned into the largest wave of demonstrations since nationwide pro-reform unrest in 2009.

Police dispersed anti-government demonstrators in the western city of Kermanshah as protests spread to Tehran and several other cities a day after rallies in the northeast, the semi-official news agency Fars said.

The outbreak of unrest reflects growing discontent over rising prices and alleged corruption, as well as concern about the Islamic Republic’s costly involvement in regional conflicts such as those in Syria and Iraq.

An official said a few protesters had been arrested in Tehran, and footage posted on social media showed a heavy police presence in the capital and some other cities.

About 300 demonstrators gathered in Kermanshah after what Fars said was a “call by the anti-revolution”. They shouted: “Political prisoners should be freed” and “Freedom or death”, and some public property was destroyed. Fars did not name any opposition groups.

The protests in Kermanshah, the main city in a region where an earthquake killed over 600 people in November, took place a day after hundreds rallied in Iran’s second largest city Mashhad to protest at high prices and shout anti-government slogans.

Videos posted on social media showed demonstrators yelling, “The people are begging, the clerics act like God”.

Fars said there were protests in the cities of Sari and Rasht in the north, Qazvin west of Tehran and Qom south of the capital, and also in Hamadan in western Iran. It said many marchers who wanted to raise economic demands left the rallies after demonstrators shouted political slogans.  (read more)

I would advise caution not to read too much into the events and accept there are tenuously connected seeds within the larger Middle-East struggles.  History is filled with the conflicting polarity between Persians and Arabs.

Iran has been on a growing question to influence the broader middle-east ideology, and Saudi coalition members are pushing back against that influence with open support for the reform agenda within Iran.  Proxies on proxies, and sub-sects on sub-sects.  A considerable challenge for those who would support increased ‘freedom’.

Viewpoint of National Council of Resistance in Iran – SEE HERE

Another Viewpoint of Resistance Supporters – SEE HERE

Reminder, proceed with caution.  There’s a great deal of misinformation.