Spanish Stock Market Reflects The Bearish Outlook for Spain


The one thing I have always said, markets never lie. The fact that Spain is showing that its government is still fascist is reflected in the performance of the share market. Spain has never exceeded its 2007 high and it is warning that a lower closing for 2017 may just see this market collapse into 2020. We will be looking at Spain closely at the WEC. This chart has been screaming – all is not well in the European project.

Spain Showing the World It is Still A Fascist Government – Sell Spanish Debt


The Spanish government is facing the real moment of truth. It is displaying that it is by no means concerned about human rights nor is it a true democratic system. Spain has reverted to Franco fascism as now more than 40,000 people have gathered in Barcelona to protest over the Catalan independence vote being shut down as the Spanish Government sends in 16,500 troops to deal with the activists. This is showing just how far out of touch this entire EU anti-democratic government has gone. The people no longer matter – the elite know what is best for them.

This is 86 years from the beginning of the Second Republic in Spain so 2017 is precisely on target for this type of civil unrest. What this is demonstrating is the old adage – the king is dead, long live the king. No matter what form of government takes power, it will ALWAYS, and without exception, seek to act only in its own self-interest precisely as Thrasymachus argued against Socrates.

You cannot short Spanish debt. So those who hold it, had better sell it to the ECB before it is too late. This is a very serious event that reflects upon the entire European Project. It should have been a trade union – not a political union by force of arms. Napoleon and Hitler tried that one before. It cannot work. Human rights include the dignity to assemble and the freedom of thought. Article 17 provides that no one may use the rights guaranteed by the Convention to seek the abolition or limitation of rights guaranteed in the Convention. This addresses instances where states seek to restrict a human right in the name of another human right, or where individuals rely on a human right to undermine other human rights (for example where an individual issues a death threat). Human Rights includes the freedom to hold opinions, and to receive and impart information and ideas. Spain has ignored the European Convention on Human Rights and is pretending that its national security overrides human rights – i.e. self-interest.

 

Dow High or Low


QUESTION: Hi Martin,

I am confused with the Dow Jones Index, could the index explode up through 23,000 to 40,000 from here or does there need a downward move then explode up through 23,00 (a sling shot).  Could you tell us what you see for the next 6 to 9 months.  Probably the most important investment for us all!
Thank you for all your help!
KC
ANSWER: The cycle is in the basing mode. Therefore, it need not drop sharply. Remaining within the channel is perfectly fine. A Slingshot would be more powerful to retest the bottom of the channel.  The explosion to the upside is still not yet unfolding and we need to be concerned about 2018 and the year-end closing. We will issue a special report to deal with that issue.
Part of the basing is concluding this year from political hell. The German elections are the 24th. Keep in mind that AfD will gain seats for the first time. Merkel has NEVER won a majority and she relies upon the FDP to hold power. The more the FDP declines and seats are taken by the AfD, the more chaos will unfold.

Central Banks Investing in Equities


QUESTION: There is a new trend that central banks are investing in the stock markets Is this true? What is the impact of this move?

ANSWER: Yes. The reason has been rather straight forward. The only game in town has been US government bonds. Many have seen this as a problem the defeats diversification. Consequently, there has been a major effort to attempt to diversify into the private sector when there has been such uncertainty in the public sector. Behind the Curtain many are simply asking of Europe: What the hell is going on? This has been a “euro crisis” that simply never seems to end. What has happened to Greece, Portugal, Italy, Spain, Holland and now even France. Many outside of Europe are simply asking has Europe just lost its mind? Hence, there has been a move to diversify out of government debt by central banks themselves.

Spain Invades Barcelona & EU Shows Its Fascist Character


 

Spain has invaded Barcelona sending in an army of 16,500 as pretend riot police to effectively suppress and intimidate the people. Armed police have seized almost 10 million ballots for the referendum to shut down any democratic process showing the entire world that Spain is still fascist and that is really supported by Brussels. The Spanish police have beaten citizens as if this were some third world dictatorship demonstrating the democracy is truly dead in Europe.

Catalonia represents a fifth of Spain’s 1.1-trillion-euro ($1.32 trillion) economy and enjoys wide self-government, although key areas such as infrastructure and taxes are in the hands of central authorities. The region has about 5.5 million eligible voters.

 

The Spanish police have raided several print works and newspaper offices in Catalonia hunting for voting papers, ballot boxes and leaflets to be used in an October 1st independence referendum which Madrid vehemently opposes. Madrid has revealed its true nature to the entire world on center stage and this is starting to show up in our models for Europe.  The Global Market Watch picked up patterns yesterday warning that there is trouble in the wind.

Thousands have taken to the streets in protest of what is clearly a full blown restoration of Spanish fascism. Meanwhile, shorting Spanish bonds has been outlawed. The free markets have been utterly destroyed. The ECB is buying all Spanish debt trying to pretend that confidence in Spain is strong. Clearly, any institution holding Spanish debt at this point should sell it to the ECB before it is too late.

The EU is starting to shape up as you can check in, but you cannot check out. This is certainly more of a fascist system than democratic. This is reflecting the serious political issues for the EU looking into the next few years.

Catalonia Independence Vote October 1st


The Spanish government refuses to listen to anything from Catalonia  and announced it would intervene in Catalonia’s finances to ensure that “not one euro” of public money was used to fund the “illegal” vote. Meanwhile, the Spanish police arrested 13 people in the region of Catalonia and Madrid for their alleged involvement in planning a vote to secede from Spain. This is clearly demonstrating that the Spanish government is reverting to its old fascist ways for it is the boldest move yet by Spanish authorities to stop the separatist movement.

It was 1931 when the nations defaulted on their debts that saw Estat Català and other parties began to form Esquerra Republicana de Catalunya (Republican Left of Catalonia)(ERC). The ERC won a dramatic victory in the municipal elections that year and this is when we must regard the first major step in the separatics movement.

Francesc Macià founded Estat Català (Catalan State) and proclaimed the Catalan Republic. However, after negotiations with the leaders of the new Spanish Republic, he instead accepted autonomy within the Spanish state. In the Spanish Civil War, General Francisco Franco abolished Catalan autonomy in 1938. Following Franco’s death in 1975, Catalan political parties concentrated on autonomy rather than independence.

To put this in context, it was 1931 which gave birth to the Second Republic of Spain on April 14th, 1931 after the departure from Spain of King Alfonso XIII, following local and municipal elections where republican candidates won the majority of votes in urban areas. Though Alfonso did not formally abdicate, his departure from the country led to a provisional government under Niceto Alcalá Zamora. It was at this time that a constitution was drawn up.

The Second Republic of Spain in 1931 raised the hopes for the Spanish people that the middle and lower classes would be allowed to at last advance. This included at the time women rights and for the curtailment of special privileges for the Church. It was Spain’s attempt to establish a non-religious basis for national culture and citizenship.

Nonetheless, there was the largest working-class party that was the Socialists. Their principal goal was Marxist-inspired economic and social change, but they strongly favored a republic. The situation changed dramatically on May 10, 1931, as a result of the “Burning of Convents”. The provisional government of the Second Spanish Republic had little interest in restraining manifestations of anticlericalism, as became apparent shortly after the proclamation of the Republic. Many of the new political leaders were openly anti-Catholic. So we had at this time a growing Marxist movement in Spain as well. Then on May 10th, 1931, the playing of the monarchist anthem or hymn at a royalist club in Madrid provoked an attack by supporters of the Republic that soon degenerated into three days of violence directed primarily against churches, convents and monasteries. Rioting soon spread from Madrid to Seville, Malaga and four other cities. The government at first did nothing to quell the growing violence. This fragmentation would lay the foundation for the rise of Franco and the Civil War.

The Spanish Constitution of 1931 was approved by the Constituent Assembly on December 9th, 1931. It remained in force only until  April 1st, 1939. This was the second period of Spanish history in which both head of state and head of government were democratically elected.

The planned referendum will take place on October 1st. Madrid refuses to address any issues despite the Catalan President and the mayor of Barcelona appealing for an agreement on a vote and issuing “a new call to dialogue” without preconditions. The 1931 movement for independence was the watershed moment. Cyclically, this is now 86 years in 2017. There is no question that independence will eventually succeed, but this is also coming at a critical time to try to save the EU. Cyclically, this is simply right on time 2017.

A comment from a reader in Barcelona says it all how memories still run deep:

“I follow your blog out of curiosity since I am a person with low income … I have been Catalan independentista since the 10 years 1980 i agree wth that all my life . my grandfather was in prison for speaking Catalan and my father forced him to learn fascist hymns, also spanish fascim of franco favored Spanish immigration in catalunya to Spanishize the region… my convictions that I am Catalan and I fight for a nobler cause of freedom not only for the interests of taxes that come from Madrid, if my main anger is by its stupid laws inherited from fascism to its inherited legacy of an old fallen Catholic empire, I consider that my struggle it is a struggle for the diversity of languages, the diversity of cultures which in this global world are being eaten lenguajes to extind in the name of great dictadors gloval interests.”

Louvre Accord v Plaza Accord


QUESTION: I notice you often cite the *Plaza Accord* when on the topic of central bank currency manipulation. That accord was signed in 1985 with an aim to devalue the USD. Could you write a little on the *Louvre Accord” signed just two years later, in 1987, with an aim to reverse the unwanted effects of the *Plaza Accord*. Thanks – cheers,

TGM

ANSWER: The Louvre Accord was an agreement, signed on February 22, 1987 in Paris, that aimed to stabilize the international currency markets and halt the continued decline of the US Dollar caused by the Plaza Accord. The agreement was signed by France, West Germany, Japan, Canada, the United States and the United Kingdom. Italy declined to sign the agreement.

The G7 meeting of central bankers and finance ministers in Paris announced that the dollar was now “consistent with economic fundamentals.” The announced that they would only intervene when required to ensure foreign exchange stability. The objective was then to manage the floating currency system. Democrats gained control of Congress in 1986 and immediately called for protectionist measures. The dollar depreciation agreed to in 1985 at the Plaza Accord, failed to really improve the trade perspective. In 1986, the trade deficit actually rose to approximately $166 billion with exports at about $370 billion and imports at about $520 billion. The object of manipulating currency to try to create jobs and alter trade flows proved to be completely false.

My concerns warning that volatility would increase made back in 1985 were materializing. What they did not understand was the lowering the dollar in value also led to a shift in capital flows and the selling of US assets. Foreigners were suffering loses by financing U.S. trade through purchasing United States Treasury bonds in an attempt to ease the trade deficit criticism. We were advising Japanese to buy gold on the New York COMEX, export it, and then resell which would also make it appear that the US exports were increasing. However, the lower dollar was then resulting in the importation of inflation into their own nations.

We can see that first of all the dollar had already begun a decline prior to the Plaza Accord in August 1985. By the time we arrived at the  Louvre Accord, you can also see that the dollar continued to decline. The attempt to manipulate the foreign exchange markets proved to beyond the capacity of the G5 which had been expanded to G7 and today is now G20. We can see the capital flow data between the USA and Japan began to move in early 1984 establishing the trend that nobody seemed to pay attention to at that moment.

The price action of the dollar clearly proves that the central banks lacked the power to truly influence the markets. The trend had begun prior to the Plaza Accord and it continued to decline following the Louvre Accord.

Understanding Cycles


Cycle targets that we provide are TURNING POINTS. This means an event normally takes place at that time be it a high or low. If ideally something should produce a low but does not and produces a high, it is typically extending the cycle to the next TURNING POINT. It looks at this time that the next important turning point is the week at the start of Sept. There is of course the Fed meeting. But then there is trouble among debt ridden nations and then there is Iran.

Keep in mind that for some strange reason, geopolitical events tend to also happen in the Aug/Sept time frame. Besides war, there was even 911. On 28 June 1914, Archduke Franz Ferdinand of Austria was assassinated. World War I began officially 28 July 1914 and lasted until 11 November 1918. It was August when things really got underway. World War II began when Germany attacked Poland on September 1, 1939. Most stock market crash events take place after highs in early Sept such as 9/3/1929. Even the 1987 Crash 10/19/1987.What it is about this time of the year who knows. Where December is the time to be jolly, Sept is the time for chaos. Never look for a particular event high/low. It is a TURNING POINT that sometimes can invert and produce the opposite largely because everything is connected. It is always an action/reaction.

Cycle of Knowledge


QUESTION: Hello,

I am a French Astrophysicist and I end up watching with great interest a TV story about Martin Armstrong. As a scientist I am really curious and keen to build new connection between our way of describing the Universe and the bias introduced by our own vision and history. Hence I was wondering if the algorithm that Martin has developed was ever tested on human knowledge discovery or if this is something that could be interesting to do.

Kind Regards,

IA

ANSWER: Absolutely. There is cycle to knowledge that I have also encountered and found fascinating. We reach period of knowledge and then we seem to lose it all and reboot. Society before the Dark Age knew the Earth was round and not flat.  For example, if we look at the ancient Greeks, the knew the Earth was round and not flat. They burned people like Giordano Bruno (1548–1600) alive at the stake for claiming the world was round and it revolved around the sun instead of the other way around. The Greek philosopher Aristotle (384-322 BC) argued in his writings that the Earth was spherical, because of the circular shadow it cast on the Moon, during a lunar eclipse. Another reason was that some stars visible from Egypt are not seen further north. Aristotle wrote:

The evidence of the senses further corroborates this. How else would eclipses of the moon show segments shaped as we see them? As it is, the shapes which the moon itself each month shows are of every kind — straight, gibbous, and concave — but in eclipses the outline is always curved: and, since it is the interposition of the earth that makes the eclipse, the form of this line will be caused by the form of the earth’s surface, which is therefore spherical.

Again, our observations of the stars make it evident, not only that the earth is circular, but that it is a circle of no great size. For quite a small change of position to south or north causes a manifest alteration of the horizon. There is much change, I mean, in the stars which are overhead, and the stars seen are different, as one moves northward or southward. Indeed there are some stars seen in Egypt and in the neighborhood of Cyprus which are not seen in the northerly regions; and stars, which in the north are never beyond range of observation, in those regions rise and set.

All of which goes to show not only that the earth is circular in shape, but also that it is a sphere of no great size: for otherwise the effect of so slight a change of place would not be so quickly apparent. Hence one should not be too sure of the incredibility of the view of those who conceive that there is continuity between the parts about the pillars of Hercules and the parts about India, and that in this way the ocean is one.

(Aristotle, “On the Heavens,” Book II, Chapter 14, The Works of Aristotle, Oxford University Press; pp. 297-298.)

Aristotle, on the other hand, disagreed with the Atomic theory developed by Democritus (460—370 BC) in 465BC. He believed that instead of being matter being made of tiny particles (atoms) that they were all fundamentally air, fire, water, and earth. The Atomic theory was actually first proposed by Leucippus (c 5th cent. BC), and was then adopted by Democritus. The Atomic theory stated that “The universe is composed of two elements: the atoms and the void in which they exist and move.” According to Democritus atoms were miniscule quantities of matter, which he believed could not be destroyed, differ in size, shape and temperature. They were also in constant movement yet could not be seen with the naked eye. He believed that there are an infinite number of atoms.

Then there was the Alexandrian philosopher Eratosthenes (c. 276BC–195/194BC) who actually estimated how large the Earth was. Eratosthenes learned that on midsummer day (June 21) in the town of Syene in southern Egypt, the noontime Sun was reflected in a deep well for it was directly overhead on that one day. Eratosthenes in Alexandria which was about 5000 stadia north of Syene. In Alexandria the Sun on the corresponding date did not quite reach zenith (perfectly overhead), and vertical objects would cast a short shadow. Hence, Eratosthenes calculated that the direction of the noon Sun differed from the zenith by an angle that was 1/50 of the circle, that is, 7. 2 degrees. With this realization, ,Eratosthenes estimated the circumference of the Earth to be 250,000 stadia.

 I have stated before that after Rome fell, the financial capitol of the world moved to Constantinople in Turkey. After the Byzantine Empire fell, that financial capitol moved to India. It was because of the importance of India that Columbus set sail on a mission to India based upon a wrong calculation of the size of the earth. Columbus relied upon the calculations of the earth from Ptolemy. Ptolemy influenced Strabo who in turn reduced the 250,000 Stadia of Eratosthenes to 180,000, and then stated that half of that distance came to just 70,000 stadia, making India reachable by sailing West. So India has played a very important role for Europe bumped into the Americas by trying to sail to India.

This is only one example of how there has been a cycle to knowledge. It is by no means linear. Knowledge is built from experience. Thus, we have to go through the business cycle to advance. This was in part included in Schumpter’s explanation of the business cycle that there are waves of innovation. He did not see what I see studying history that there is also a peak and then a decline to the level of knowledge as well and it is not linear as Schumpter imagined from a small data set.

China a Different Breed of Government


QUESTION: Why do you say China will replace the West when their government is still the communist party?

ANSWER: China is no more communist than Donald Trump. There is a cycle of life through which we all pass including governments. China revolted against communism. The government may retain that name, but they are no communist in that sense of the word.

I have explained before that Russian communism was concerned about what you thought where as China adopted the tall poppy policy. If Stalin thought you would be a threat to his power you were killed. In China, you could think what you wanted provided you did not step up publicly.

China is not at the same place in the cycle of life as we see in Europe and America. Therefore, China is on the rise and will replace the West which is burdened with socialism they cannot possibly afford.  China learned its lessons and is moving forward despite the name of the government party.

If things got worse in the West, I would apply to China for political asylums.