Europeans Pray for QE to End?


 

There is much hope buzzing around in Europe that Draghi is planning on ending Quantitative Easing. This is giving the Euro a bit of a lift in hopes that higher interest rates will stem to drastic capital outflows from Europe that resemble rats fleeing a sinking ship. Back on May 14th, Mario Draghi said the European Central Bank would avoid surprising investors with sudden changes to its stimulus plans. He further stressed that inflation was still too low and U.S. trade policies meant that a stronger Euro was a concern. Meanwhile, back in April, the ECB hinted that they would wait until the July meeting to talk about ending the QE program.

Meanwhile, the new Italian government has outlined the first guidelines of its economic policy. The new Prime Minister Giuseppe Conte said Wednesday that he wanted to organize the cooperative banking sector differently than the previous governments. His plan will most likely meet with considerable resistance from the financial sector and most likely Brussels. He seems to be toying with the idea that he wants to separate the banks as Glass-Steagall did during the aftermath of the Great Depression. He wants the future investment banks to be separated from retail banks.

The banking crisis in Europe has been perpetuated by the fact that there is the prejudice to actually merge economies despite a central government structure in Brussels. In the USA, the bad loans were taken from the banks whereas in Europe that has not taken place. The Italian banks are still sitting on a huge mountain of bad loans. If the ECB had actually created a program like the USA to take the bad loans from than banks, then this would have resulted in a disparity among member states. The southern states would have received a bailout at the expense of the northern members. This is the same structural problem of the Euro which infects almost every crucial policy to actually make the Eurozone function as a collective economy.

Winnipeg Grain Exchange Closing Right in Time for the Cycle


 

Canada’s last commodity exchange is closing. The Winnipeg Grain Exchange, which was established in 1887, will shut down for good after its owner transfers the bourse’s only remaining futures contract to New York. It is ironic that when a decision like this is made, it is often a sign of a major change in trend. Wheat peaked during the first quarter of 2008. We are just now starting to play with the Downtrend Line in preparation for a commodity boom into the 2024 time period.

I have been focusing on the energy output of the Sun declining and how we are headed back toward the climate getting much colder. People like Al Gore are politicians. He has no expertise in climate whatsoever. Nevertheless, he runs around the world arguing for global warming, preaching something that to him has become just a religion. He is THE person who made global warming a presidential issue that has stigmatized the entire world and prevented people from actually just looking at how everything works.

The markets are lining up and what they are showing is that we are in store for climate change, but it’s getting much colder and that is far worse than global warming. Civilization expands when the climate warms, and it contracts when it gets cold. This is also why Kim Jong-Un of North Korea used missiles to force the West to accept his country back into the world fold. Why? North Korea lost more than 2 million people when the crops failed in 1995/1996. The summer of 2017 saw a dramatic decline in crop production in North Korea, down by some 30%. They are headed to another cycle of cold and starvation. His father’s policies of feeding the army first has created a 1 million man army with nothing to do. People joined the army just to eat.

Everything we see in the computer’s projections WARNS that we are indeed in for climate change, but it is a natural cycle not caused by humankind. We are looking at a sharp rise in food prices in the years ahead. The closing of the Winnipeg Grain Exchange is strangely the way the commodity industry always works. You see mining companies close at the lows and expand at the highs. They can never see the future even when it punches them in the face. So stockpile food as we enter this period of rising prices. There will be shortages in the years ahead.

Fed is Moving to Allow Proprietary Trading Again?


 

QUESTION: Why is the Fed moving to relax the Volcker Rule and allow banks to once again engage in proprietary trading?

I figure if anyone knew the truth, it would be you

Thank you in advance

PH

ANSWER: Yes, the Federal Reserve Board wants to roll back the Volcker Rule, which was imposed to make banks safer after the 2008 meltdown. The Fed is moving to begin the administrative process aimed at significantly reducing compliance costs for financial firms but ALSO the problem behind the curtain has been that the LIQUIDITY in the markets has collapsed. Since remaining participation in the markets is still about 50% of 2007 levels, removing the banks from proprietary trading has contributed to a completely new risk – the flash crash.

The rule was intended to bar banks with federally-backed deposit insurance from suffering counter-leveraged losses by restricting their ability to bet with their own capital. Financial firms have been arguing that the rule is unnecessarily complex and almost impossible to adhere to. This is partially true. However, prosecutors who do not know how the financial markets truly function have been bringing criminal actions and demanding huge fines for basic things that have always existed and are part of any poker game. They have turned “spoofing” into a crime when in fact if you have a large position, you cannot let the other side know what you intend to do or they will front-run you every day of the week. So if you pretend you will be a buyer so you can sell, that is the nature of the game. Even the Libor Scandal was not “manipulation” of the trend in interest rates. That’s is what central banks do. They were playing within the “noise” of any market gunning for stops as the floor brokers have done since the birth of trading. They by no means altered the trend of interest rates – that is the privilege of central bankers.

Revising the Volcker rule is now something quietly supported by five agencies and among policymakers behind the curtain and it is all being driven by the lack of LIQUIDITY. Even the high-frequency trading systems shut down in the middle of high volatility. With retail participation minimal, banks out of the game, turn up the volatility and the high-frequency traders abandon ship rapidly. This allows for wide gaps in trading that are a concern for the future.

The proposed changes will be opened up for public comment for 60 days. But do not expect any serious discussions with respect to the crisis building in the decline in LIQUIDITY.

The proposal calls for the removal of an assumption included in the original rule that positions lenders hold for fewer than 60 days are proprietary. Meanwhile, the plan would scrap a component of the test for determining whether a trade is for a bank’s account. It would be replaced with new criteria based on how the bank accounts for the trades, according to the summary. They want to provide banks with more flexibility to execute trades that serve as hedges against potential losses. Banks now have to submit continuous and precise documentation to prove they are hedging. This is really onerous and in a crisis, it will magnify the events if banks cannot hedge. Nonetheless, the central purpose of the regulation of the regulation to prohibit banks from speculative trading will be maintained, but there will be a wide lateral movement to really allow them back at the speculative table. They can alter regulations but they CANNOT repeal the Volcker Rule for that would require an act of Congress.

German Healthcare Deficit 300% Greater than Expected Due to Refugees


Healthcare costs have been exploding even in Germany. The revisions in healthcare of about two years ago did expand the coverage, but the expanded costs were completely unexpected. That means Germany is also looking to now raise taxes to cover the higher costs due to their legislative reforms. The reforms have brought in more people in need of care and relatives than expected.

Currently, the tax contribution rate for healthcare in Germany is 2.55% of the gross wage and those who are childless pay even more since they lack a family to burden part of the costs. Their rate stands at 2.8% of their gross wage. In the United States, the Medicare tax is a fixed percentage of your gross pay as well with the percentage rate of 1.45%. There is no income cap for Medicare tax, so all of your gross pay is subject to this tax. Your employer pays another 1.45%.

The statutory long-term care insurance deficit in Germany came in at about three billion euros, which was much higher than expected. In fact, it was about 300% higher than the government’s forecasts. The Central Association of Statutory Health Insurance (GKV) has come out and stated that the sharp rise in the deficit was triggered by the reforms of the past two years. The move is to raise taxes even further since once benefits are given, they cannot just take them back. But what is absent from the discussion is the deficit has risen not simply because of the reforms. This sharp increase is due to the refugees who must be taken care of even though they do not work or pay the tax

Scandinavia Receiving Capital Inflows As Well As Poland & Hungary


Just to Clarify, we are also picking up Capital Inflows from the EU moving into Scandinavia – Denmark, Sweeden & Norway. We also see money moving into Poland and Hungary which appears to be some diversification movement. What has become increasingly apparent is the mere fact that confidence among SERIOUS money is starting to realize the EU is a failure.

As I have stated previously, the failure to consolidate the debts (see our original reports on the Euro) reflects the failure to really respect the different cultures within the EU no less trust them. This is why the debt was never consolidated and they adopted bail-ins so that one country would NOT be bailing out banks in another. This has all reflected at its core a refusal to accept the principle of a federalize Europe that MUST include transfer payments among states without prejudice.

You cannot have a system that dictates from the center but then refuses to actually respect the member states are one political body. This European Experiment has been a complete failure because it is trying to create some sort of half-baked-country in name only.

The EU should have remained as simply a trade union. Leave it at that. Centralized control was the downfall of Russia and China under a communist state system. People know best how to expand and respond to economic conditions. Germany depends on an export model and Greece depends on a tourist model. These are starkly different economics models.

Moreover, the EU should respect the individual member states that one-size does not fit all. Furthermore, the average family is better equipped to save for their future than pretend social programs that if operated by a private individual would be a criminal charge of frau

The Uses of Children


By Tabitha Korol

Using children in war situations is not a new phenomenon.  They are the most vulnerable to the ruling powers, easily taken from unarmed parents and pressed into service by a government. Czarist Russia drafted children for 20 years, at least 300,000 non-Jewish and 75,000 Jewish Cantonists. Hitler’s Germany drafted thousands of young boys, Hitler youth, indoctrinating them to dedicate their lives for the Reich, unto death if necessary, and most were poorly trained and sent on suicide missions.  As many as 40 million children, orphaned by AIDS, and controlled by drugs and religious or political fervor, were recruited in Africa.

Today, nearly 80 percent of about 30 conflicts worldwide have as many as 300,000 young combatants, ages 7 through 15, serving the war effort as scouts, messengers, looters, sex slaves, minesweepers, laborers, makers of bombs and terror tunnels, advance ambush, and suicide bombers.  Nearly a half-million children serve in armies not at war – duped, exploited and wasted.

The use of children extends to indoctrination.  In Islamic shame/honor cultures, the child is forced to learn the Koran with punishment by the whip, bonding them with violence for life.  The child bride, often bartered or kidnapped, becomes an uneducated, incompetent and irresponsible mother, who is still dealing with the abuse, anxiety and trauma of having her female identity excised – female genital mutilation.  The ritual produces a damaged self-image, the shame of being female and a self-hatred that is passed on to her numerous children who may well be the result of rape in a forced marriage.  Shaming fuels violent aggression that reinforces the male’s brutality, not unlike the self-pity and sense of victimization that fueled Nazism.

Defenseless children may also be used as human shields and jihadis to increase their own death toll and net sympathy from the United Nations, and the girls often serve as “comfort women” for their commanders, to become impregnated and sent into combat with their babies strapped to their backs. The mothers consider their children expendable because they themselves were expendable. Called “the martyr in his mother’s womb,” the fetus is dedicated to death even before his birth.  The cause of Islamic conquest is foremost, and the youths who do survive their horrific experiences are so severely scarred that they will suffer lifelong mental health problems. Despite the changes in war and engagement, the aggressor’s agenda is always expansionism, acquisition, domination, and elimination, and the disposable children are sent away for hijrah, jihad by emigration.

If war is the annihilation and replacement of one population by another, then America is experiencing a silent assault and eradication.  One method of societal reduction or eradication is the promotion of a woman’s right to abortion over the right of the child to live and prosper.  The child is mere material, to be used or discarded, as in Aldous Huxley’s Brave New World.

The schools are now devaluating sexual differences, first with language, replacing accepted pronouns with gender-neutral sounds and, second, with denying the child’s nature, in the interest of “complete equality.” Teaching staff are encouraging homosexuality, to emasculate the boys and erase the desire for courtship, marriage and reproduction, reinforced by Walt Disney films that encourage a “gay agenda.”  Family Research Council has just revealed that hours of instruction on evolving “sexual identity,” contraceptive drugs and devices, and consenting to sex, are taught in Fairfax County School. The appalling curriculum includes (1) gender fluidity: biological sex is meaningless, (2) embracing gender transitioning, (3) encouraging risky sex, (4) discontinuing abstinence education, (5) teaching use of all contraceptive devices without divulging health risks, (6) parents may not opt children out of 8th grade comprehensive dating lessons, and (7) stripping the word “clergy” from adult consultants.

Social engineering is another exploitation of children.  Groups, such as the Boy Scouts, established to prepare boys for manhood, independence, strength, creativity, adventure and daring, pride in country and the will to defend our country, are seeing drastic deviations.  In a “celebration of cultural exchange, mutual understanding, peace and friendship,” the 2019 World Scout Jamboree event will host thousands of attendees from more than 200 countries and territories and make condoms readily available.  For 108 years, the Boy Scouts of America’s flagship program has been known simply as the Boy Scouts.  With girls soon entering the ranks, the group says that iconic name will change to Scouts BSA next February, 2019.

America’s Common Core standards disrespect Biblical and Judeo-Christian values and substitute a whitewashed Islamic and Marxist ideological indoctrination. The storyline is equality of rules and regulations fed by academia, the caliphate, duma, or “Sorospolis” to a passive student body.  As in any fascistic system, information is controlled, and dissimilar publications banned.  The students are methodically poisoned, their morality shifted from general ethical principles, such as the Golden Rule, to strengthening the Leftist cause.

Because parents protested Common Core, Jeb Bush deceptively introduced his “personalized learning.” Better characterized as “depersonalized training,” it puts children on computer screens that track their thoughts and determine their futures, and features less interaction with teachers and fellow students, allowing for complete indoctrination. The American Psychological Association found increased stress and anxiety for teens (8.7%/2005, 11.5%/2014), due to more restrictive schooling and grading, and doubled suicide rate (tripled for girls).

Already employed in some schools is the deliberate dissuasion for children to bond and develop close and lasting friendships, thereby creating feelings of loneliness and isolation and rendering the children vulnerable to ideological brainwashing.  Researchers have said that music, usually a reflection of the times, has been getting sadder over the last 30 years.  The “maleness” of songs has also decreased.

The schools and media are promoting a false narrative of multiculturalism, when the goal should be multi-ethnicities, religions and races, living harmoniously under the host’s culture. Migrants to America should be seeking America’s peace and prosperity; to deny its existence is to deliberately propose her people’s destruction – ethnocide.  As such, the accusations of racism and colonization of “white-supremacist Europeans or Americans” prepare the groundwork for the annihilation of our heritage and language.  Islam has declared its purpose to replace our culture with theirs against a backdrop of hate spewed by progressive faculty, black activists, feminists, and pro-Muslim organizations that demonize Israel and Jews, Christians and America.  The children are the war materiel.

Universities are keeping their students ignorant, unskilled, and fearful of hearing opposition to the leftist agenda.  They offer protection from the outside world in safe spaces, cry closets and therapy animals.  Taught to fear self-reliance, the resultant adults will require government welfare programs, monthly stipends, and healthcare that includes heavy medication for cooperation.

It is time to connect the dots, because each of these instances has one thing in common, the abuse and destruction of children, which, in turn, removes future adults and decreases world population.  This silent war of annihilation is being waged by the United Nations; their UN 2030 Agenda describes their plan to control every nation, and the methods are already in operation.  While some believe this to be a desire for Utopia, others may relate it to guilt for Europe’s hand in World War II.  Whatever the motivation, the ruling class is creating an obedient underclass.  In point of fact, this is a fascist agenda of conquest, to stunt natural growth, and prohibit the use of our natural resources to nourish our survival.  The result will achieve what other tyrants have achieved with weapons and bloodshed – depopulation, except on a now much larger scale, using children.

The Globalists of the United Nations are dedicated to one world, unified under one flag or governing body, and the elimination of countries’ borders, sovereignty and of individual’s natural rights, and of that historic bulwark against the abuses of tyrants, the nuclear family, best attacked through the children. They seek complete freedom of migration worldwide to “increase liberty, reduce global poverty, and accelerate economic growth.”  However, where there is mobility of capital and labor, increases in capital cause decreased labor, resulting in disproportionately low wages, reduced healthcare and education, and shrinking businesses.  Unrestrained immigration brought us 14 million illegals by 2012.  It does not produce assimilation, but a higher incidence of crime and conflict from dissimilar ideologies and the depopulation objective of our silent warriors – our endangered children.

 

Euro & Varying Volatility


QUESTION: Hello Mr. Martin Armstrong. Why is it that if EURUSD goes down 20 – 30 pips other pairs with the EUR – such as the EURAUD or EURNZD go down 50 – 150 pips? Why such difference and volatility with these pairs?

JMF

ANSWER: The reason for this is simply that the US dollar is in a broader bull market. This is how the world monetary system collapses. A lower dollar devalues debt and everyone is fat and happy. You determine a trend by monitoring the performance of any market and observing it from a host of different perspectives. Each market is reflecting the differences in trends that are influenced by both domestic political trends and the local business cycle, as well as by the external influences from capital flows moving in or out of a country. Keep in mind that we have some countries that are PUNISHING foreign investors for daring to invest in their country. They are deliberating trying to prevent a rise in real estate and that sets in motion an economic decline domestically since it tends to reverse the capital flows altogether.

Knee-Jerk v Reactions v Trend Changes


QUESTION: Hi Martin
Was curious if you could address what Socrates has popped up on the last report….of a “Knee Jerk Low” this quarter. Is this a possibility that we should be on guard for?
A very thankful follower of your work!!
C

ANSWER: The terminology I have developed is unique and it comes from actually studying market behavior. I have explained that a “reaction” is limited to the time period of three or less be it a day, week, month, quarter, or year. Move beyond 3 years and you are changing trend. Keep in mind that when we are dealing with the higher level such as yearly, the percentage movement can be dramatic. But also the more dramatic the higher the probability that it will remain as a reaction. For example, the Dow Jones Industrial Index peaked in September 1929 at 386.10 and crashed going into July 1932 bottom at 40.56. That still qualified as a “reaction” being 3 years compared to the Nikkei which crashed but progressively moved lower into a bear market trend that bottomed in 19 years falling from 38957.44 to 6994.90.

The Knee-Jerk events can be highs or lows but are confined to one unit of time. They refect choppy markets. Here is Singapore share index. Note that there were three back-to-back Knee-Jerk events. This is what the Global Market Watch is forecasting. Not necessarily a change in trend, just a choppy move normally in the opposite direction.