Tag Archives: Understanding cycles

Mar 9 2020

A Real Fact Check on the Trump Tax Cuts


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 9, 2020 by Martin Armstrong

While the Democrats love to yell at the rich for always getting richer, in 2016, there were 541 US billionaires with wealth totaling about $2.4 trillion. In 2019, there were 607 US billionaires with wealth totaling about $3.1 trillion. Of course, this is based on stock market valuations and is not cash in the bank. There is no doubt that the wealthiest Americans have gotten wealthier under Trump, though others have also gained.

According to the Federal Reserve, the combined wealth of the top 1% of American households, which includes all members of Congress, increased 18% from the fourth quarter of 2016 to the third quarter of 2019 — from $29.18 to $34.53 trillion. However, the combined wealth of the bottom 50% of households actually increased 55% from $1.08 trillion to $1.67 trillion. In truth, there were far more people who have benefited from the Trump Tax Cuts than what the Democrats ever will admit.

That is a REAL Fact Check!

Mar 9 2020

South America – Economically & Politically on Fire


Armstrong Economics Blog/South America

Re-Posted Mar 9, 2020 by Martin Armstrong

South America has been intertwined with socialism and corruption. Political stability and economic recovery for South America have been a wish that has seemed to be always very elusive. But the hopes and dreams have never been fulfilled. In many countries, politicians with sole claim to power are pushing to power, heavily indebted countries are facing bankruptcy, the rich are getting richer, the poor are poorer, demonstrators and police are fighting bloody street battles. An entire continent is in turmoil — South America is on fire! There appears to be a political-economic crisis that is coming to a boil.

Today, South America appears to be unraveling economically and politically. It was only a decade ago when its future seemed bright and all we heard was about investing in emerging markets. Its economy was growing whereas poverty and income inequality were in decline. Yet, the economic boom came on the back of commodities. The abundance brought by high commodity prices even allowed counter-cyclical policies at the time of the US subprime crisis. As always, foolish investors pour in money without regard to historical problems with repaying debt.

As the economies implode and political chaos rises, commodity production will decline over the next two years and this may set things up for the commodity boom into 2024 based on a SHORTAGE OF SUPPLY rather than outright demand.

 

Mar 9 2020

2022 & Repo Crisis


Armstrong Economics Blog/Economics

Re-Posted Mar 9, 2020 by Martin Armstrong

QUESTION:  Mr. Armstrong I Hope your health is holding up with all the viruses. My first question is Feb 13 the Fed printing money increased by 13 billion however it is buying short term debt as in 1-day debt how long can they keep this up it is a fake stimulative of the stock market right?

The second question Do you still see something happening to Trump in 2021 ?

Thank you

S

ANSWER: The year 2022 looks to be more of an issue for the president. I do hope Trump is there for 2021, because I fear a career politician will not understand the Repo and Monetary Crisis. They will do whatever the Deep State instructs them to do. The Repo Crisis is in no way similar to people’s understanding of the crisis. I am not concerned about the amount of money. They are going to be forced to be the market-maker in Repo permanently.

Categories: Economics
Mar 6 2020

The European Bank Scandal Nobody Talks About


Armstrong Economics Blog/Banking Crisis

Re-Posted Mar 6, 2020 by Martin Armstrong

Last October, the European Union’s (EU) top court ruled in favor of Polish consumers who took out mortgages in Swiss Francs, allowing them to ask Polish courts to convert the loans into the local zloty currency in a blow for lenders. Back in October 2019, the Court of Justice of the European Union, based in Luxembourg, gave a judgment in favor of Polish victims of unfair mortgage agreements crafted by the banks. The bankers created mortgage loans in Swiss francs to be reimbursed in Polish zloty claiming that the currency was very stable and it was, therefore, a good deal. When the Swiss franc peg broke on January 15, 2015, mortgages throughout Europe were sent into turmoil for the bankers had been selling their mortgages linked to the Swiss franc.

The banks involved in crafting mortgages linked to the Swiss franc were Santander, BCP, BNP Paribas, and Commerzbank, as well as Poland’s biggest lenders PKO BP and Getin Noble Bank. Crafting such complex structures for the consumer is not something that will hold up very well in Europe moving forward.

Mar 6 2020

The Great Educational Fraud


Armstrong Economics Blog/Education

Re-Posted Mar 6, 2020 by Martin Armstrong

Students-1

QUESTION: Martin

Thanks for all you do. Being a student of stock market history I am never shocked by what I see in the market. I have been wondering for years what the catalyst will be for the correction of the insanity of student loan debt to pay for college. If students went on Shark Tank before going to college to say what they are going to do with the money and what they intend to study’s and put pen to paper of how they will pay that back. Most would be rejected by the sharks and should not go. Why is this so hard to figure out? Seems rational to me however what I see people doing is very irrational Thoughts?

Last I checked the library is free and has all the knowledge of the world available to us and at our fingertips with google and our phones. I guess people don’t like FREE.

They always say when the student is ready the teacher will appear. You always appear in all my searches for the truth and wisdom. Keep up the frat work

ES

ANSWER: Education has become a means of propaganda. People are told they will not get a job without a degree. I tell kids that it does not matter what you even get a degree in. Do it online and get a degree in basket weaving. It does not matter! You do not even need a degree to run for politics. You do not need a degree to be the president of the new head of the European Central Bank, as Christine Lagarde is a lawyer and not a trader or economist. So where is the justification that you need a degree to be qualified to do something the degree never covers?

Mar 4 2020

How to Determine When New Highs Are Coming


Armstrong Economics Blog/Forecasts

Re-Posted Mar 4, 2020 by Martin Armstrong

QUESTION: Marty, your explanation of the 1987 Crash and the Nikkei are very informative. Can you elaborate on how we can see that on Socrates?

Thank you for the education

UD

ANSWER: The easiest way to see that is by using the Energy Model I developed. The very purpose of the model is to measure the amount of energy in the system, which is not the same as looking at the price movement of charts thereof.

 

Compare how the Energy Model performed on the Great Depression and then look at the 2007-2009 Financial Crisis. The Dow did not make new highs on the Energy Model until 1954. That took 25 years to accomplish. This was a Public Wave where sentiment shifted to secure government bonds, and equities were viewed as the speculative play toys of the rabble.

Now, look at the 2007-2009 Financial Crisis. We were making new highs on the Energy Model by February 2010. This confirmed that we would be making new record highs and this became the Most Hated Bull Market in history.

The 1987 Crash was interesting, for the Energy Model continued to make new highs after the market peaked. This was a warning we were dealing with a short-term event, not long-term. However, that high in energy from 1987 was not exceeded until July 1995. From that point onward, the US market began to rally significantly.

The US share market broke out on our Energy Models in July 1995 while the dollar bottomed against the Japanese yen in April 1995. This also confirmed we were dealing with a capital flow shift that would turn toward the dollar and the US equities.

Our Energy Models were designed to provide a completely different view of market activity. Even if we look at the standard oscillator, it peaked in January 1925 and that was not exceeded even into 1929, It was finally marched only in February 1955. So that was no help in really forecasting the Great Depression or the rally thereafter.

The Energy Model offers a completely different perspective and it has nothing to do with oscillators or moving averages. Moving average convergence divergence (MACD) is one of the most commonly used technical analysis indicators. However, the MACD (26/12) did not cross until June 1930. So this trend following momentum indicator looks at an asset’s momentum to ascertain whether the trend is up or down, but it failed to provide a trading signal that would have gotten you out of the market for nine months after the high. Therefore, oscillators and moving averages can be good confirmation tools, but they are not consistent insofar as providing always an advance warning.