Armstrong Economics Blog/Economics
Re-Posted Nov 5, 2019 by Martin Armstrong
COMMENT: I find it interesting how the rest of the world is declining and Socrates forecast that the US economy would be only slightly weak going into January 2020. It is interesting how it picks up the major differences. They are blind to the trend. You bring together the world. Thank you for that and there will always be idiots who cannot comprehend the trend and think Warren Buffet is a great investor when he was just a buy and hold no different than Trump. They both made money simply because of the inflationary asset trend since 1985.
Great forecast
KL
REPLY: The US economy was not poised for a major recession that everyone was forecasting because of the China trade dispute. It is softer, yes, but it is really holding up the entire world economy. The third quarter GDP was still up 0.8% whereas the prior quarter was up 1.1%. So yes, it was a slight decline. But we do not show a major economic decline in the USA.
As long as stocks have been in a bull market since 1985, then buy and hold works. But they lose in downtrends. Everyone forgets that. The year 2008 was the worse year Buffett had in 44 years. Most people cannot hold through such declines. This is why institutions have used us for decades. They cannot buy and sell like short-term investors. They need to know when to flip a major portfolio. Truly smart value investors hedge. That eliminates the risk of having to declare bankruptcy during the declines.
Norway – the Confusion in Trend
Armstrong Economics Blog/Scandinavia
Re-Posted Nov 5, 2019 by Martin Armstrong
QUESTION: Dear Mr. Armstrong.
Does Socrates have an explanation of what is happening to the Norwegian Kroner? All the financial newspapers and banks here in Norway are scratching their heads and don’t have an explanation of why it’s devaluating against the Euro and Dollar. The central bank of Norway has an interest rate of 1.50%, while Euro has an interest rate of -0.5%.
BT
ANSWER: Norway’s currency has been declining recently over concerns with regard to the US-China trade dispute given the fact that it is highly exposed to the US-China trade situation. Additionally, the sharp decline in crude oil prices has also impacted the currency given the oil and gas industry accounts for more than 1/20th of Norway’s gross domestic product and about 2/3rds of its exports. Therefore, Norway’s economy has been highly correlated with oil prices.
Nevertheless, in Korona, the price of oil is rising given the decline in the currency (click on the image). The analysis never looks at everything from an international perspective. Your currency is retesting the 2000 high in the dollar.
The Two-Tier Currency Rate in Argentina
Armstrong Economics Blog/South America
Re-Posted Nov 4, 2019 by Martin Armstrong
QUESTION: Dear Mr. Armstrong,
Can you please explain how the Contado con Liquidacion exchange rate works in Argentina? It’s now at around 80 pesos per dollar, while the official rate is 58.37. Is it possible for the average person living in Argentina to get the Contado exchange rate? Also, do you have any advice for the new government? https://www.ambito.com/contenidos/dolar-cl.html
Thank you,
JT
ANSWER: The Cotización del dólar Contado con Liquidación exchange rate is a form of a two-tier currency which is a way to buy dollars and move your money out of Argentina. This is an operation that can be performed both with bonds and stocks that are trading within Argentina but also in the United States. There are a number of Argentine stocks that trade in the USA (see list). Smart investors have used this as a vehicle to buy dollars as well as companies. However, the government has imposed a USD $10,000 per month limitation as of September 2nd, 2019.
You or a company can buy public security or share in the local Argentine market that is also listed in New York. The purchase of that bond or share is made with pesos. You then ask the broker to transfer the title or share abroad and once they are received in New York, you can sell them and the proceeds of that sale are then credited in US dollars in your account in the USA. To carry out this type of operation, you need an account in Argentina and an account in the USA which you are obligated to report to the AFIP in Argentina. Therefore, it is a legal way to get your money out of Argentina provided you report your foreign account, but there is a $10,000 per month limitation.
Ever since the election on August 11th, 2019 when Argentina’s currency collapsed along with stock and bond prices not witnessed in 18 years on schedule with the 18-year Monetary Crisis Cycle, the currency has reflected the collapse in international confidence. Voters turned to interventionist economics rejecting President Mauricio Macri and his free-market approach in favor of the opposition. The Argentine peso dropped 30%, to a record low of 65 per one United States dollar, following Alberto Fernández dominated the primary by a 15.5% point margin which was substantially more than local polls expected. Then on October 28th, 2019, Alberto Fernandez became the new President but immediately he faces suggestions that he is a puppet for ex-president Cristina Kirchner. This has led many to assume that she will really be running the country. This is not a great position for confidence in his administration.
When President Cristina Fernández de Kirchner reached her two-term limit in 2015, many believed it was for the best. She was flamboyant and divisive and became the populist Peronist politics. She believed in economic interventionism and was a strong nationalist and to a large extent that underlying position has dominated Argentina for the majority of the past 80 years. Under Argentine election law, a president may serve no more than two consecutive terms. They can run again only after sitting out a term. In the case of Cristina Kirchner, she has reemerged as the running mate rather than the top of the ticket. This is what many now assume Alberto Fernandez is just a puppet. It is hard to imagine that someone has tasted power and is willing to just walk away. Time will tell, but many suspects she will be the real power behind the throne.
Nevertheless, when we look at the chart of the Argentine Peso, we can clearly see that the fall in the Peso began when she left office in 2015. From the average person’s perspective, it is not hard to imagine what the people were voting with her on the ticket as Vice President. From a cyclical perspective, we see that we will have a Panic Cycle and major turning point shaping up in Argentina during 2024 in line with the peak of the next Economic Confidence Model wave.
BREXIT – Live Decline & Fall of Western Society
Armstrong Economics Blog/BRITAIN
Re-Posted Nov 4, 2019 by Martin Armstrong
Prime Minister Boris Johnson apologized on Sunday to Conservatives for failing to take the U.K. out of the European Union by Oct. 31st. Nigel Farage said he won’t personally run for a seat in Parliament. The plan to leave by Oct. 31st was blocked by the Remain crowd who refuse to accept any democratic process because they lost the vote. This is what is behind the decline and fall of western civilization. The losing crowd to any election is unwilling to ever accept a loss and move on. We have entered the second half of the Economic Confidence Model wave where governments simply lose all-purpose. The Remain crowd prevented a BREXIT without a divorce deal. They required Johnson to seek a BREXIT extension. The EU has granted a three-month Brexit extension until Jan. 31st, 2020.
Johnson has pushed for an early national election on Dec. 12th in which he hopes to get a more BREXIT-friendly Parliament. Nigel Farage has, in turn, pushed for his BREXIT Party to team up in a coalition with Johnson’s Conservatives for the December election. However, Johnson has so far refused the offer. That seems to be a wrong decision on Johnson’s part. This has resulted in Farage vowing that his party will contest every seat in England, Scotland and Wales against the Conservatives unless Johnson drops his BREXIT agreement, which Farage and his party believe is far worse than a no-deal BREXIT. Nigel told the BBC he will travel within Britain to support some 600 BREXIT Party candidates rather than by seeking a seat for himself. It is ironic that probably the best-qualified person to lead BREXIT is Farage, but he told the BBC: “I don’t want to be in politics for the rest of my life.”
Major Canadian Company Moving to USA
Armstrong Economics Blog/Canada
Re-Posted Nov 4, 2019 by Martin Armstrong
COMMENT: Here in Canada we just received devastating news this morning that our greatest company/ multinational is leaving & never to return. ENCANA has announced its intention that it is leaving the country of its birth !!
Thank goodness for socialism!! Wonder how public servants will feel who voted for this “ snowboard instructor “ will fell when their social insurance/ pensions get slashed??
DL
REPLY: Yes, ENCANA has switched its domicile from Canada to the USA because of Trump’s tax reform and the insanity of Canadian environmentalists. Don’t worry, when the Democrats get hold of the presidency, they will reverse Trump’s tax reform and drive companies back out of the USA just as Canada is doing up there.
BYE BYE BETO
Beto O’Rourke has dropped out of the presidential race. He ran for a Senate seat in Texas against Ted Cruz and lost. Apparently he thought the notoriety he received during that race would carry over toward a presidential one. It didn’t.
Beto came across as a spoiled and foolish man who wanted to merge the US with Mexico. That is, he wanted a complete erasure of our southern border along with free stuff to anyone who wandered north into our country. He had a fake Spanish nickname and often spoke in Spanish to prove his allegiance to Mexico.
He pitched the usual climate change nonsense, outright gun bans, a Green New Deal, and more abortion. He wanted to tax Christian churches if they refuse to support gay marriage. In short, he wanted to strip away more liberty from Americans while subjecting them to higher taxes, more government tyranny, and crime.
He said he was born to be president (or some such statement), but instead he’s headed into the sunset. He’s a hand waving, virtue signaling beta male who deserves his place in the dustbin of history.
Hasta la vista, Señor Beto.
—Ben Garrison
Nigel Farage Interviews Donald Trump
Armstrong Economics Blog/BRITAIN
Re-Posted Nov 3, 2019 by Martin Armstrong
The International Politics is Impacting Where People Can Travel
Armstrong Economics Blog/World Economic Conference
Re-Posted Nov 3, 2019 by Martin Armstrong
COMMENT: Marty; I don’t think you realize that when Nigel Farage said your events are the alternative to Davos, there is no other event that has such attendance. I have been to other trading conferences. They are lucky to have half your attendance and you have more institutions than even Davos. I know you keep trying to limit the size of these events, but we get to meet so many people from all over the globe. Your staff said you had attendees from over 50 countries this year. Please don’t reduce the size.
Thanks for the great conference. It was spectacular and provided detail that is really not available anywhere.
Cheers
Keep up the good work
EK
REPLY: I appreciate your perspective. We have over 1,000 attendees at these events each year and the demand keeps growing. This year, politics was playing in the background. The biggest institutions from China could not attend because of the trade dispute. They did not want to apply for a visa. So we will have to hold one in Shanghai in the Spring. Politics will only get worse. I do not know if we will be able to hold any in Europe starting 2021 due to the changes in the law for visas there. It is getting worse by the year. Our own staff in India were denied visas to attend the conference this year.
Many do not want to travel to the States and we have to accommodate our international clients. Each year it is getting more difficult.
Limo-Left Turn to Buttigieg to Save Them…
November 2, 2019
The clock is ticking faster now. Beto crashed miserably; Kamala’s giggling high-school schtick is embarrassing herself and others; the DNC has run out of handlers for Biden’s frequent episodes; Bernie is still yelling at trees; and now Warren has outed her plan to tax everyone into oblivion to fund her $52 trillion, yes TRILLION, healthcare scheme.
Hence, the New York Times jumps into action… Buttigieg is now their latest hope. Quick dispatch all immediate narrative engineers to the typeset:
[…] Ms. Warren appears to have solidified her gains in the first voting state while Mr. Buttigieg has climbed quickly to catch up with Mr. Sanders and overtake Mr. Biden, the onetime front-runner. Ms. Warren is drawing support from 22 percent of likely caucusgoers, while Mr. Sanders is at 19 percent, followed by Mr. Buttigieg at 18 percent and Mr. Biden at 17 percent.
The survey is full of alarming signs for Mr. Biden, who entered the race in April at the top of the polls in Iowa and nationally. He is still in the lead in most national polls, but his comparatively weak position in the earliest primary and caucus states now presents a serious threat to his candidacy.
With the Iowa caucuses just three months away, Mr. Biden’s unsteadiness appears to have opened a path in the race for other Democrats closer to the political middle, particularly Mr. Buttigieg. (read more)
Watch how this pro-Buttigieg narrative evolves.
The DNC relies on Wall Street/Hollywood donor funding. Warren is a non-starter, and Sanders is ‘all-in’ for socialism. Even Teh One, Obama, is warning about the political nonsense behind the woke movement from his new $15 million mansion on Martha’s Vineyard.
By the end of the month they’ll have a bumbling Biden eating baby food through a straw as he’s wheeled on stage with a lanyard full of acrylic reminder cards: “Joe, you’re in Iowa”…
The club is now moving to Buttigieg.
If famously horrible Amy Klobuchar can quit cursing and screaming at her staff over their forgetting to pre-open the 42.5° Perrier bottles, she might stand a chance next.
A Domestic Violence GAME CHANGER
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