Tag Archives: Rule #1 Never Marry The Trade

Apr 23 2021

The Great California Tax Rush – The Exodus Right on Time


Armstrong Economics Blog/The Hunt for Taxes Re-Posted Apr 23, 2021 by Martin Armstrong

COMMENT: Mr. Armstrong, a close friend of my is a major celebrity in Hollywood. They too follow you and are joining the exodus from California. So many people are leaving it is remarkable. It looks like the buyers of these expensive homes are foreigners, mainly Chinese, who want the prestige of Hollywood but are exempt from the income taxes.

Just thought you might want to know.

Thanks for being a light in a new age of darkness.

HC

REPLY: Yes, the press seems to be filled with an endless stream of celebs selling their homes in California. I suppose they are all not leftists, or at least they are leftists only in rhetoric, but for themselves, they are more right. I suppose their destination is Texas or Florida.

What is really fascinating is that the great California Gold Rush (1848–1855) was a gold rush that began on January 24, 1848, when gold was found by James W. Marshall at Sutter’s Mill in Coloma, California. The mad rush really began in 1849 and that is when the US began minting California gold into coins. The news of gold brought approximately 300,000 people to California from the rest of the United States and overseas. If we look at 1848 and 2020, that is exactly 172 years or (2 x 8.6 = 17.2). The mad rush out of California is precisely in line. In fact, it was 1849 when Californians sought statehood. That was finally granted and California entered the Union as a free, nonslave state by the Compromise of 1850. California became the 31st state on September 9, 1850

Between 1849 and 1853, about 24,000 young Chinese men immigrated to California. Chinese immigrants soon found that many Californians did not welcome them. In 1852, California placed a high monthly tax on all foreign miners. Chinese miners had no choice but to pay this tax if they wanted to mine for gold in California. California has had a history of punishing people they do not like with burdensome taxation. Interestingly, 172 years from their punitive Chinese taxation will be precisely 2024. It does not look very good for California by 2024. They will realize they have lost their best people like “Atlas Shrugged.”

Apr 23 2021

Real Estate into 2023


Armstrong Economics Blog/Real Estate Re-Posted Apr 23, 2021 by Martin Armstrong

QUESTION: Marty, at the Orlando WEC, I asked you if your real estate forecasts for residential included condos. I believe you said no. I bought a house when your index elected a monthly bullish reversal in June 2020. Everything seems to have doubled since. Do you think your forecast into 2023 is influenced by the excessive spending of Biden?

Thank you.

KW

ANSWER: Yes, this is the single-family home index. It does not include commercial real estate or condos. It is always a combination of influences. It appears that Biden has provided the straw that broke the back of deflation. Central banks have been engaging in Quantitative Easing since 2008 without success. This has been largely caused by the collapse in confidence in the future. When people fear the future, they save. Increasing the money supply does nothing until the people decide to spend it.

One of the factors that confirmed to me that we would be heading into progressive inflation long-term was the fact that this Residential Index elected a Yearly Bullish Reversal at the end of 2012. That confirmed the long-term trend had changed. However, urban condo and commercial properties were forming a divergence. I assumed that was being caused by the debt and rising taxes in cities. In that regard, I suppose I was only partially correct, for the rest has been the brain-dead response to COVID.

For example, locking people down and causing them to lose jobs has resulted in a sharp rise in violence. Not just mass shootings, but all sorts of conflicts from domestic disputes to outright feuds. Cities, such as Philadelphia and New York, have sections in which the police have totally lost control. It is debatable if they will ever be able to restore civility to these regions. While Fauci claims to ignore the Constitutional violations, his agenda in helping Gates and Schwab is more than simply preparing society for the Great Reset. He is furthering the collapse of urban civility and this trend is part of what is driving this index.

I would expect to see this escalate and if we make a new high on this index and close above last year’s high, single-family homes outside of urban centers will rise sharply into 2023.

Apr 22 2021

Fourth Industrial Revolution Failure


Armstrong Economics Blog/AI Computers Re-Posted Apr 22, 2021 by Martin Armstrong

QUESTION: As a programmer and a client of Socrates, I can tell this is not some neural net or deep learning AI program. What you have created goes far beyond that. Do you care to share your design?

HS

ANSWER: No. I fooled around with neural nets back in the 80s. I could see they would never accomplish what was necessary for global analysis. The same was true about Deep Learning. Those are solutions for one-dimensional objectives, in my opinion. IBM spent untold amounts on its Watson. They thought it would be able to cure cancer. It failed.

What makes Socrates unique is that I had to TEACH it how I would analyze. It is not as simple as throwing in all the data and hoping something will create itself, as in neural nets. You can do that with a simple problem like creating an AI program to determine if making a loan will have a higher probability of default or not. You feed in all the past history and sort according to income, purpose, etc. That will work most of the time. However, what happens if there is an economic shock such as shutting down businesses due to COVID? Or perhaps a war emerges. No program created in such a manner will ever be able to forecast those external factors.

Even all the high-frequency trading programs are one-dimensional. The collapse of Archegos Capital is indicative of what happens with a one-dimensional program which inevitably will be used with personal opinion. Even the Long-Term Capital Management collapse was the same problem. They even wrote a book about that – “When Genius Failed.” These one-dimensional programs will work nicely until there is an outside external force that they can not see coming.

To accomplish what Socrates does is far beyond anything you can imagine. The variables are off the charts, and seeing the future even with the arrays involved 72 separate models. We must understand that most AI programs that people write are still very one-dimensional and lack nonlinear concepts.

Unfortunately, 99% of all programs that people claim are Artificial Intelligence are really just expert systems. For example, you could take every disease and list its symptoms. Then you add a query and the program would simply look up the disease based upon the symptom. This would probably be better than seeing most doctors for that is why they always say get a second opinion. This type of program is not AI, for there is no true independent thinking process taking place. Nevertheless, this is what is typically marketed as AI. This has created in and of itself a false impression of what Schwab calls the Fourth Industrial Revolution. Even facial recognition is simply a pattern comparison. Nothing is truly taking place other than a lookup system with a database.

What is online is a small fraction of what Socrates does. We intend to provide a desktop program that will be able to tap into language and voice capabilities. We can deliver voice via the internet, but trying to accept voice input from the client over the internet is a different problem altogether.

When Schwab boasts about the Fourth Industrial Revolution, he is clueless as to what that would even entail. You will not find even one mainstream media outlet that would dare to write a story that Socrates even exists. The analysis would change everything, for it is not based upon “opinion,” which they love to provide. Additionally, Schwab would block any press on Socrates because it also forecasts that this cabal of his fails in the end. Everything Schwab envisions is still one-dimensional. He has no idea of the complexity of the nonlinear design necessary to really provide a valid methodology for forecasting.

Apr 22 2021

DeSantis Extends Sales Tax Online in Florida for Unemployment


Armstrong Economics Blog/The Hunt for Taxes Re-Posted Apr 22, 2021 by Martin Armstrong

The Democrats are twisting the facts as always by claiming DeSantis is raising taxes on consumers and cutting taxes for business. The bill he just signed is estimated to tax consumers $1 billion a year, with the money first earmarked for the unemployment trust fund, which became depleted because of massive job losses during the COVID-19 pandemic. Businesses pay taxes that go into the trust fund and, without another source of money, would have faced higher taxes to replenish the fund. But what they do not tell the people is that pushing higher unemployment taxes on business actually means that comes out of your paycheck.

The Democrats just cannot bring themselves to ever tell the truth. While I am not in favor of raising sales taxes on everything I buy online, the net effect is that those with jobs would be paying the tax for those who lost their jobs thanks to lockdowns and COVID. Let’s call this what it really is — a COVID Tax.

Apr 21 2021

Public Corporate Political Activism is Fraud & Should Be DELISTED from Exchanges


Armstrong Economics Blog/Politics Re-Posted Apr 21, 2021 by Martin Armstrong

QUESTION: Would you cut off a corporate client who is endorsing this WOKE movement?

LD

ANSWER: Any corporation seeking to take out models while joining Schwab’s Stakeholder Corporate Activism can seek forecasting elsewhere. If Big Tech can have guidelines that justify stopping people from speaking or posting, then we too can adopt “community guidelines” because enough is enough. I have NO INTENTION of providing any assistance to any corporation that has joined Schwab in becoming a political activist. I personally think shareholders have a right to bring a lawsuit against the company and to remove all directors using corporate funds for their own political agenda. That, to me, is called FRAUD! Politics has no place in our sports any more than it does in the boardroom. Any company that allows its directors to use corporate funds to further their personal political agenda has no business in our economy.

The only time corporate activism is remotely justified is when some policy directly impacts the business of that corporation. Woke culture has nothing to do with the economy. I believe any public corporation engaged in “stakeholder economics” and political activism is at the personal decision of its directors, which is a violation of their fiduciary duty to their shareholders, and as such, should be DELISTED from any exchange!

Apr 21 2021

Who Are You Trading Against?


Armstrong Economics Blog/Basic Concepts Re-Posted Apr 21, 2021 by Martin Armstrong

QUESTION: Hi Marty,

hope your are doing well.

I have some question regarding trading to you.

Why is this game mentally and physically so hard to learn… normally every trade has a 50:50 chance but if I enter the market everything is going „different“. Just trade against me and you will become even much richer, its crazy!

I think my biggest mistake is to enter a trade way too early … when I read the market could turn (maybe in 2 weeks) my reaction was /is „going short immediately“ – its just so dumb – but that is what brought me the heaviest losses this year. Shorted the DOW from the 30k level again and again.

Socrates is like a market navigation – I know that – and when the navy says right I drove left – always in fear the market could crash like last February.

…

maybe you can wright a bit more on your blog – what were your easiest secrets to become a successful trader. maybe a sample account which etf´s / stocks are promising for the rest of 2021 or some live trading sessions via chat on your socrates platform.

…

Sorry for disturbing you again and again – but I know you are the only man who really know how this game works and you might understand my „little“ problems. BTW: nice call for the top in Bitcoin !!!

THANK YOU

Have a good day and best wishes.

O

ANSWER: The most common problems in trading have been (1) over-trading and (2) anticipation.

Many think they are limiting their risk by trading too frequently. They do not want to risk, say $100, so they continually anticipate a trade and lose $20 ten times in a row. The real secret to trading is recognizing that your opponent is really yourself.

The problem with systems that require human judgment is that they expose your human frailties. Whether it is looking at technical patterns, candlesticks, or wave patterns, all of these forms of analysis require experience and whether you have a natural tendency to be artistic. Those who have an artistic eye can see patterns easier than those that do not. They will see a face in a cloud shape, but others will say they are nuts as it’s just a cloud.

The key is to try to eliminate that human judgment as much as possible. You only need to look at the setup when the price is reached, but during the time target. The monthly Array pinpointed April since the start of this year. Then you look at the Weekly, and it targeted last week with a Directional Change and higher volatility starting this week. Then look at the Daily level. This way, you are not looking at patterns yourself and acting on a hunch. Even the Global Market Watch came up with April as a possible important high, and that is just a pattern recognition model.

With every trade, you must always define where you are RIGHT and when you are WRONG. There are no DEPENDS once you put on a trade. We only have a DEPEND in the setup. Did it reach the time and the price? Other than that, once you are in, some people hate to take the loss because it is acknowledging they were wrong. If you have the setup, then selling against the high on that target week or day with a stop above that high makes sense, and it is a lower risk. If you think it will crash, so you keep selling on a hunch, you will lose.

Consequently, people who are into gold and just blame others because gold has not rallied as they expected are simply people who will never learn how to trade. Mistakes are important. We pay dearly for them, so pay attention. That is how we learn and advance in life. Every parent tells their child not to stick their finger in the flame of a candle. We all do. We have to learn for ourselves.

Remember, you are your real opponent. So make peace with yourself. Come to a truce.

Apr 14 2021

Food Index


Armstrong Economics Blog/Agriculture Re-Posted Apr 13, 2021 by Martin Armstrong

In addition to our War Index and our Paradigm Shift Index, we are creating a Food Index based upon selected stocks. For now, keep an eye on the closing this month in our War Index. That is hovering right at the Monthly Bullish Reversal.

We are trying to provide tools free of conflicts of interest since we are not brokers in these instruments nor are we allowed to hold positions in them while providing forecasting. Such conflicts of interest are why those with such conflicts cannot be taken seriously by global institutions.

Apr 14 2021

Trouble Ahead, Inflation Jumps More than Expected – Gasoline Prices Increase 9.1% in One Month, Year Over Year Inflation 2.6%


Posted originally on the conservative tree house April 13, 2021 | Sundance | 333 Comments

The Bureau of Labor Statistics highlights some alarming inflation numbers today [Link Here] that are unfortunately, not unexpected…. unless you are a liberally trained economist (most of them) and so the results are surprisingly “unexpected”.    But the actual JoeBama-nomic policy is even worse because wages increased less than inflation increased, so real wages (actual purchasing power) decreased.  That spells trouble, Trouble.

Middle-class wage earners already know this problem; you are seeing it at the gas pumps and at the grocery store.  Fuel prices are rapidly increasing and the amount of inflation in the ‘at home’ food industry (grocery store) is even more concerning.

Let me first walk through the data and then provide some forward analysis with tips to help you offset what is about to hit.

First, it is important to know that BLS price survey data lags actual prices as felt today.  The prices you are seeing today/tommorrow at the store and gas pump will not show up in the rolled-up data for over a month….  So the data released today is unfortunately far behind what you are witnessing in real time.

Gas prices rose last month by 9.1%.  The year-over-year inflation number is an alarming 2.6 percent last month.  Keep in mind that retail grocery prices are not in the inflation number, and they generally follow the same price index as fuel; so it is safe to say monthly grocery store price increases are in the 8 to 10 percent range.

Part of the reason gas and food track together is fuel and energy prices are the #2 cost within the food sector.  With packaging prices increasing; with fuel prices and distribution costs increasing; with energy prices increasing; all costs associated with food production, processing, delivery, warehousing and distribution, all end up in the final price at the grocery store.

This problem with inflation is only going to get worse as the FED gets more involved (that’s coming), because interest rates are already disconnected from the economic costs associated with business investment. [Note: the Fed said last year that it would hold its benchmark interest rate near zero, for some time, even if inflation were to rise above its preferred rate.]  JoeBama is returning us to a “service driven economy”, and that is a problem for inflation.

President Trump’s MAGAnomic (USA First) increased wages and lowered prices (deflation) {Go Deep} but hurt Wall Street.  JoeBama’s globalist policies lower U.S. wages and increase prices (inflation) but increase Wall Street (via multinationals).

Gas prices are going to keep rising because JoeBama is shutting down U.S. energy sources, blocking pipelines and using regulation to stall energy development (including refineries).  We will be back to energy dependence soon.  This process will continue driving up food prices which is really bad for the middle-class.

In the longer term, the impact of wages purchasing less means middle-class housing prices will drop as people struggle to afford mortgages.  However, the Wall Street gains will keep the upper tier real estate market less impacted.  You can see how the wealth gap is directly attributed to policy.

Trump decreased the wealth gap with policies that disproportionately (in a good way) helped the middle-class and blue-collar worker by increasing wages.  JoeBama expands the wealth gap with policies that disproportionately (in a bad way) hurt the middle-class and blue-collar worker by decreasing real wages and increasing prices.  Under JoeBama-nomics the rich get richer and the poor get more poor.

If you know that fuel and food prices are going to increase, you can take action now to plan out your home budget in an effort to offset or cope with the inflation.  Example: buy bulk items that can last longer as ingredients.  You can also save money by making your own laundry detergent, shop sales, cut coupons and be proactive in preparation for a period of large price increases at the supermarket.  Use your freezer and eat out less.

Employment is going to be an issue again.  While the current employment picture is good, it will not last into 2022.  Make a safety net now (somehow) and start thinking about your longer term expenses and how you can take action now in preparation.

I am not a doomsayer… but I can see when supply chains start to fill up because overall demand begins to stall.  We are exactly at that point.

Apr 9 2021

BIDENomics – Weekly Jobless Claims “Unexpectedly” Higher With 744,000 New Claims


Posted originally on the conservative tree house April 8, 2021 | Sundance | 151 Comments

All of JoeBama’s economic policies mirror the Obama-Biden economic issues. Underline it; emphasize it; note the pattern.  The policies that intentionally held down the U.S. economy during the Obama administration are once again being duplicated.  It’s Déjà vu all over again.

JoeBama’s energy policy is crushing jobs in key regions where energy jobs are being lost in dramatic fashion.  Simultaneously the costs of energy, including gas, are skyrocketing.

The longer-term costs have not yet hit the consumer, but they will soon as inflation will jump dramatically while employment will continue to struggle because consumer demand will drop… The issues create a cascading cycle.

The Biden administration is hiding their actual policy impact by blaming COVID, but that’s not the issue that will hurt blue-collar workers in the longest term.  We are going back into the intentional disconnect I have talked about where the stock market (multinationals) will gain, but the U.S. worker economy will suffer lost jobs and lower wages. This dichotomy is by design and the corporate media economists never discuss it.

This reality is a big part of the reason why Pelosi and JoeBama needed to quickly pump money into the working class in order to avoid the pitchforks.  However, that $2,000 injection will not last and will be eaten up quickly by the larger and longer term Biden economic policy.

The U.S. economy, which is 70% dependent on consumer spending, is going to contract.  This contraction will be “unexpected” by the professional pundit class who check their stock holdings and smile.  However, this contraction will not be unexpected by the blue-collar workers who watch their paychecks shrink and their costs to live (electricity, fuel, food prices) increase beyond their earnings.

If you are a blue-collar or white-collar worker in a BLUE region or state, you will feel the impact first.  It is going to get very ugly, as noted by the disparity in the unemployment claims this week.  Weekly unemployment claims [Dept of Labor pdf here] tell the story.

(CNBC) – […] First-time claims for unemployment insurance rose more than expected last week despite other signs of healing in the jobs market, the Labor Department reported Thursday.

First-time claims for the week ended April 3 totaled 744,000, well above the expectation for 694,000 from economists surveyed by Dow Jones. The total represented an increase of 16,000 from the previous week’s upwardly revised 728,000. The four-week moving average edged higher to 723,750. (link)

The negative results are continuing on a ‘Red State’ -vs- ‘Blue State’ dynamic as noted in the Bureau of Labor Statistics (BLS) reporting: “In February, the highest unemployment rates among the divisions were in Los Angeles-Long Beach-Glendale, CA, 10.9 percent, and New York-Jersey City-White Plains, NY-NJ, 10.8 percent.”

For the weekly jobless claims, here’s the breakdown by state:

(Source pdf)

Do not dismiss these results as just bad policy.  There is also a strong ideological component as the Chicago Crew is driving the granular issues on a day-to-day basis.  The Obama team intentionally work to diminish the economy of the United States because their “fundamental change” requires it.   Joe Biden is an idiot and has no clue about what is structurally behind all the moves…. That’s why Obama installed Kamala Harris.

The professional republican class are corporatists; do not expect them to oppose any of these policies that undermine the U.S. economy and expand globalism.  The GOP is paid by the corporations to act stupid and go along.

The road to serfdom is paved with fraudulent intentions….

Apr 7 2021

Archegos Capital Management Crisis


Armstrong Economics Blog/Corruption Re-Posted Apr 7, 2021 by Martin Armstrong

The Archegos Capital was founded by the former Tiger Management equity analyst, Bill Hwang. Archegos Capital, the “home office” hedge fund owned by Bill Hwang, lost an unbelievable $110 billion in just five days. The strategy was the classic leverage using SWAPS. They never purchased shares of stocks in companies like ViacomCBS. Archegos Capital was entering into equity swaps with numerous different banks and investment banks in a similar manner to what would be called money laundering where we borrow from one bank to pay off another.

By engaging SWAPS, Archegos Capital never actually owned shares of the underlying stock. What they did was effectively leveraged themselves by as much as 500%, which would prove to be their undoing. The problem with such hedge funds is that they really take a personal view of the performance of the market going forward. This is ALWAYS the undoing of these hedge funds going back to Long-Term Capital Management which took a fundamental view that they would make a guaranteed fortune on the high interest of Russian debt and that bribes were being paid in the IMF that they thought would keep the loans going to Russia without end.

I cannot stress enough that ANY fund which is dominated by fundamental expectations that override quantitative models, should be AVOIDED like the plague. We are into a whole new world of finance which is moving in a counter-reaction to the Great Reset. There is NO QUESTION that the March 2020 crash was not only UNIQUE in history, it was clearly an assault that attempted to create another 2007-2009 economic contraction which would have made facilitated the Great Reset by the intentional destruction of the economy. They have had to rely upon the virus scare to accomplished what they had hoped would have be a far easier road.