QUESTION: Marty, I was there at your 1987 conference on the weekend of the crash. I was amazed, with many others, that you were able to say the futures would drop 10,000bp and bottom with the ECM and then make new highs. I don’t have to say many did not believe that forecast. What is the difference you see this time since it does feel different?

Your loyal follower on this quest for knowledge.

PGD

ANSWER: The 1987 Crash took place on the day of the ECM on October 19, 1987. So we have the low on the turning point, which confirmed that we should make new highs by the next turning point 1989.95.

The cause was termination from the foreign exchange markets set in motion by the stupidity of the G5 in trying to manipulate the dollar lower for trade AFTER they sold 1/3 of the US national debt to the Japanese.

By attempting to manipulate the dollar lower to gain trade benefits, they fail to understand that foreign investment in the US would also be repelled. You cannot lower the value of a currency by 40% to help trade without causing losses to foreign investors. So the 1987 Crash was currency driven and not economic. When Rubin was trying the same stupid nonsense in 1997, 10 years later, that is when I warned them this was a stupid idea that created the 1987 Crash. They responded, but more importantly, they backed off.

This time we have brain-dead epidemiologists who are as corrupt as a $3 bill and should be thrown in prison for the global damage they have done deliberately without regard to the people. They have sold their souls to the Bill & Melinda Gates Foundation, which should be investigated for covert activities. The economic patterns are distinctly different and reflect the actions of a terrorist organization. This was not the mere stupidity of unqualified people in government. We have billionaires acting like usurpers, seizing power to force their vision of the future upon the rest of society.

This has been a direct assault to destroy and redesign the economy from the ground up. The patterns are completely different and display a frontal attack upon the economy. This is not a result of an unintended consequence of manipulating one market without comprehending the interconnectivity throughout the entire system. This has been a deliberate attempt to destroy the economy and our way of life as we have known it. Therefore, the stark difference has been the collapse of many sectors that have been set in motion deliberately. We then see European politicians gleefully looking at this as an opportunity to rebuild the economy from a green perspective. You have Spain introducing basic income which is all designed to move Europe into a full-blown Marxist state by eliminating paper currency. Soon, they will default on all debt by transforming all government debt to perpetual bonds when they realize they cannot sell debt anymore.

When we look at the 1987 Crash, the entire event was 8.6 weeks. It bottomed with the ECM, which was not the case this time.  Moreover, there was a set of Double Weekly Bearish Reversals at 286.10. Once they were elected, there was nothing on our system models, including technical, that would reflect any support until we reached the Monthly Bearish Reversal. Hence, the forecast we would drop 10,000 points and then bottom wit the ECM.

The Monthly Bearish Reversal was 180.30 and the low was 180.00. That met all our criteria perfectly. But look at the pattern for the recovery. We do not see the strong immediate bounce as we have seen this time. In fact, it took 41 weeks to elect the first Weekly Bullish Reversal. There was a slow but steady advance which was reflecting the underlying strength within the economy. There was no Paradigm Shift, but a disruption to the foreign exchange markets which is the foundation of international capital investment.

The G5 was created at the Plaza Accord in 1985, calling for the dollar to decline by 40% to reduce the US trade deficit. As the dollar fell too far, other members complained and this led to the Louvre Accord in February 1987, when they declared the dollar had declined far enough. The dollar kept falling, the sentiment shifted, and everyone began to question if the central banks were capable of doing anything. Hence, by October 1987, there was a massive panic selling in the dollar which led to selling dollar assets.

QUESTION: Marty; Your energy model seems to be warning that the bounce is not going to last. I have followed the reversals and they have been great for the bounce. What I have noticed is your energy model peaked two weeks before the low but as the market has rallied, energy has been declining. The 2018 December low your energy bottomed with the low and that was a good rally. This seems to be the opposite. Is my interpretation correct?

DF

ANSWER: Yes. We have a divergence on the weekly level with the typical novice rushing in to buy based upon the fact the market has simply rallied. They will always judge the next 5 years by a few weeks of price action. When we look at the monthly level, the peak in price was very high in energy which has been declining ever since. This also warns of caution. Keep in mind that we had a nice 11-year rally in the Dow & S&P500 from the 2009 low. That is a traditional bull market. But the NASDAQ bottomed in 2002, not 2009, so that was an 18-year rally, which is significantly different.

QUESTION: Mr. Armstrong, you have been targeting 2021 into 2022 as a critical time. Do you think this is unfolding faster than expected, or is this yet another sucker rally to get people all trapped in again on a bounce and then slaughter them? I find it curious how people get so bullish at every high and it smells that way now. What do you see in the near-term? I saw Socrates traded the rally in gold very good, but the ratio just shifted and it did not make a new high. It looks like weakness is coming back. All these people clamoring that they missed the NASDAQ rally look like they will be separated from their money really soon. What do you think?

FP

ANSWER: You have to subscribe to Socrates for each particular market. I do not have the time to comment on every single market and you cannot make a comment of the Dow and apply to another index any more than gold applies to silver or platinum. They are all different. Socrates is there for a reason. It is objective without bias and is not written by any person – it is totally computer generated which is a good thing in times like this. We all have our prejudices that can get in the way of objectivity. That is why people sell the low and buy highs.

We definitely have to be careful here for it is true that only fools rush in where wise men dare not tread. With all the chaos in the world, these people who think they missed everything with the NASDAQ rally merely illustrates how naive they are to even think the market can rally from here with no problems because some states are opening up. They will simply become the fuel for the moves ahead.

Those are the people who inevitably buy the high because they get so caught up always at the top. The pattern which seems to get the emotions flowing the most is always the Knee-Jerk Reaction before the high. This is often the strongest type of move just before the high which sucks them all in at the top thinking this is it and here we go. They want to pretend to be investors, but then they want to really trade every move.

When we look at the German DAX, there we have elected ALL FOUR Monthly Bearish Reversals from the February high but we also elected a Quarterly Bearish Reversal at the end of March. This is a clear warning that we have a very serious shift in the trend moving forward into 2022. We have not elected any Quarterly Bearish Reversal in the Dow, there is obviously a major shift in trend within the US v externally even with the lockdown.

We are NOT ahead of schedule. June remains a Directional Change and July is the next key target. We then have the 2020 elections coming and that will have a major impact upon the confidence behind the dollar into 2022.

Nobody is capable of forecasting this type of market from a gut perspective. This is the entire reason you need to look at Socrates per market and not assume anything. This is something that cannot be judged even fundamentally because there are so many things changing only a fool will assume they can see the future reducing everything to a single cause and effect.

So far, there is nothing that suggests the trend has accelerated. The swings are still within historical movements. The NASDAQ is different for its low was 2002 not 2009. Obviously, you cannot apply the same outlook to the NASDAQ as you see in the S&P500 or the Dow. To each its own, as they say.

We are creating a new index with 30 stocks to reflect the Paradigm Equity Shift. We are working on a special report to cover this event since it is the first time it has taken place since the 1930s.

China’s Communist Party will impose a sweeping national security law in Hong Kong during the annual meeting of its top political body, criminalizing “foreign interference” along with secessionist activities and subversion of state power. This is directed at the protests for independence. It is a very dramatic and bold move that unquestionably undermines Hong Kong’s autonomy. This will threaten Hong Kong as a global financial hub and is already impacting the HK$ peg which may break in June.

This has been a 23-year run under the “one country, two systems” framework that has allowed the territory to enjoy a level of autonomy. That is coming to an end. Hong Kong’s political freedoms have been eroding, but now Beijing signaled that the national security law will be a new tool that allows it to directly tackle the political dissent that erupted on Hong Kong’s streets last year.

Hong Kong has been able to hang on thanks to the US Federal Reserve cutting rates. While this has eased the pressure on the Hong Kong dollar in the midst of this deepening political crisis intermixed with the Coronavirus Pandemic everyone is using for political gains globally, the clock is ticking on the peg.

The Hong Kong Monetary Authority is clearly running out of options. Under this new threat from the political changes, the question is how long its currency can hold the line appears shorter by the Day. For the past 37 years, the city has run a managed peg, tying the Hong Kong currency to the US dollar after a long stint being tied to the British pound. Right now, the greenback trades in a narrow band between HK$7.75-7.85.

Traditionally, when a nation pegs its currency to another, then the differences in market interest rates should be marginal at best. However, this interest rate spread between the greenback and the Hong Kong market rates is warning that the economic differences are surfacing. The demand for the Hong Kong dollar is shifting, and this brings the currency in short supply given the economic contraction due to the virus. Add this new political shift and the Hong Kong Monetary Authority will have little choice but to increase the supply of Hong Kong dollars in an effort to support the economy and try to prevent interest rates from rise in the face of a new political risk.

The pressure to crack the peg will begin in June.

QUESTION: Martin –
In the video link you see the blank answer by former Fed Chairman Bernanke when asked, in a 60 Minutes interview, as to where he saw unemployment going/peaking in the last crisis of 2008 (at minute 3:27). https://www.youtube.com/watch?v=sKx1BZd9bjQ
How do you best explain Socrates being able to pick up so far in advance, the heights that unemployment would reach in this crisis; rivaling or exceeding that of the Great Depression, even with this seemingly contrived “virus” being such a curve ball, out of left field?
I’ve been to a David Copperfield magic show before, but this latest call by Socrates beats any illusion I can recall from his show.
T

ANSWER: It is very difficult to Explain. Everything is connected. I learned with the Cycle of War that the computer was picking up the subtle movements of capital well in advance. It becomes clear that if you were going to start a war, you move your money in advance. This is what these people have been doing. I believe it began last summer with the sudden collapse in confidence in Europe. We ended up with the REPO Crisis hitting in September and they tried to excuse it as a freak event. But Socrates was correctly forecast that as well. At the May Rome World Economic Conference, I put up this slide as to the key issues to pay attention to – the liquidity crisis which manifested into the REPO Crisis because banks were no longer trusting banks.

You will also notice on that slide #3 the Political Chaos and the Rise of Authoritarianism. The computer is monitoring absolutely everything. You cannot hide from Socrates. My job is only to relay what it is showing. This forecast is not me personally. Major institutions and government call on me for they know it is the computer – not me personally. No human can possibly analyze global trends with such proficient skills.

I know it is hard for some to accept because everyone is used to analysts claiming they called this or that. Most of these people make one lucky call and then lose their shirt thereafter. NOBODY can be trusted with forecasting from a gut perspective. You can get lucky once, but not consistently.

I had inside info that there were elites who knew there would be a virus “coming” and sold out. That was my connection. Personally, I questioned that forecast of how could unemployment rise so fast when even in the Great Depression it took 3 years to reach 25%. NEVER in my wildest dreams would I have personally been able to forecast that unemployment would reach Great Depression levels in a matter of weeks. We cannot make such forecasts in reality as a human being. Anyone who claims they did is a fraud or it was some lucky guess. This has NEVER taken place in history.

Socrates was picking up everything. It works out the trend from these subtle movements. This is why I had stated from the outset this was FAKE, it was manipulated, and their claims this virus would last for 18 months was a fraud. We have every disease in the system and there is NO precedent whatsoever for any virus do that. I reported the timing was for the peak would be the week of April 6th. Again, that was no some personal guess. I reported how long SAR lasted. There was absolutely ZERO support for this virus extending to 18 months. That was an outright FRAUD and it was without any scientific support.

All I can say is that the trend can be determined by Socrates because like war, instead of moving your money ahead of an invasion, this time they were doing that ahead of the revelation that they would use this virus as a psychological tool to shut down the world economy for Climate Change but use the scare tactic of the virus to create a global lockdown.